UAE issues law for financial contracts

dubai — His Highness Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, has issued Federal Decree Law No. (10) of 2018 regarding netting, where it shall apply to all qualified financial contracts which are entered into by any person in the country.

However, the law does not apply to the financial free zones and financial institutions where there are similar legislations.

“This law shall lead into reducing credit and settlement risks and increase the effectiveness of its regulatory procedures, inclusive of safeguards related to netting. This in turn shall strengthen oversight and governance frameworks, improve the performance of the national economy and attract more foreign investment for the state,” said Sheikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and Minister of Finance.

Netting shall include cases of termination, liquidation and/or acceleration of any payment, obligation to deliver entitlement or obligation to make, receive or require payments or deliveries, under a qualified financial contract entered into under a netting agreement or to which a netting agreement applies.

The most important feature of this law is that all qualified financial contracts referred to in this law shall be final and enforceable and shall not be considered void, unenforceable or not final for any reason related to aleatory contracts (Gharar) provisions referred to in the civil transactions law.