Abstract
[Extract]
This report considers the treatment of executory contracts upon the default of a debtor company under the three main jurisdictions in the United Arab Emirates (‘UAE’). Depending on the financial situation of the business, a default could result in the commencement of restructuring or liquidation procedures. The analysis will focus on the enforceability of ipso facto clauses upon the commencement of restructuring proceedings where a moratorium is imposed.
The UAE has a unique legal system because it has three jurisdictions with their own separate insolvency regimes. Businesses have the option to choose between the Dubai International Financial Centre (‘DIFC’) and the Abu Dhabi Global Market (‘ADGM’), which are located in free zones, and the new federal insolvency legislation, which applies in the rest of the UAE. This chapter will consider these three regimes separately.
This chapter fills a gap in the legal literature by providing a detailed comparative analysis on the treatment of executory contracts on the insolvency of a business in the various UAE jurisdictions. In order to provide some context, it provides a summary of the insolvency procedures available to a business in distress under the previous insolvency regime; yet the main focus is on the insolvency regime in the DIFC and the new UAE federal insolvency legislation. Furthermore, it provides an exhaustive description on the treatment of executory contracts negotiated by the parties during solvency should one of the parties enter into insolvency proceedings, with a particular focus on ipso facto clauses and close-out netting. It extensively examines the factors that shaped the insolvency regimes in the UAE and considers areas where the law requires further reform.
This report considers the treatment of executory contracts upon the default of a debtor company under the three main jurisdictions in the United Arab Emirates (‘UAE’). Depending on the financial situation of the business, a default could result in the commencement of restructuring or liquidation procedures. The analysis will focus on the enforceability of ipso facto clauses upon the commencement of restructuring proceedings where a moratorium is imposed.
The UAE has a unique legal system because it has three jurisdictions with their own separate insolvency regimes. Businesses have the option to choose between the Dubai International Financial Centre (‘DIFC’) and the Abu Dhabi Global Market (‘ADGM’), which are located in free zones, and the new federal insolvency legislation, which applies in the rest of the UAE. This chapter will consider these three regimes separately.
This chapter fills a gap in the legal literature by providing a detailed comparative analysis on the treatment of executory contracts on the insolvency of a business in the various UAE jurisdictions. In order to provide some context, it provides a summary of the insolvency procedures available to a business in distress under the previous insolvency regime; yet the main focus is on the insolvency regime in the DIFC and the new UAE federal insolvency legislation. Furthermore, it provides an exhaustive description on the treatment of executory contracts negotiated by the parties during solvency should one of the parties enter into insolvency proceedings, with a particular focus on ipso facto clauses and close-out netting. It extensively examines the factors that shaped the insolvency regimes in the UAE and considers areas where the law requires further reform.
| Original language | English |
|---|---|
| Title of host publication | Executory Contracts in Insolvency Law: A Global Guide |
| Editors | Jason Chuah, Eugenio Vaccari |
| Place of Publication | Cheltenham |
| Publisher | Edward Elgar Publishing |
| Chapter | 35 |
| Pages | 665–686 |
| ISBN (Electronic) | 978 1 78811 552 0 |
| ISBN (Print) | 978 1 78811 551 3 |
| DOIs | |
| Publication status | Published - 2019 |
| Externally published | Yes |