9 leading UAE cassation judgments on foreign investment, summarised in English with the articles they apply and a link to the judgment on the court’s official service.
The legislation on this topic: Foreign investment — UAE legislation.
A nominee Emirati partner's stake is sham, and courts must apply the 2021 Companies Law allowing full foreign ownership
Simulation (a sham arrangement) is established where parties conceal their real dealings and legal positions behind an outward contract made as a front to the public, while a separate writing or agreement governs between them; once proved, the hidden…
A buyer's claim to validate a Sharjah apartment sale cannot be dismissed without examining the foreign-ownership rules
An action for validity and enforcement of a contract is a merits action: the court examines whether the contract was validly formed and enforceable, including the parties' capacity and any nullity of public order, so that its judgment can stand in place of…
Those who act in the UAE for an unlicensed foreign company are personally and jointly liable for its dealings
Under Articles 313 to 316 of the Commercial Companies Law then applicable (Federal Law No. 8 of 1984), a company incorporated abroad could carry on business in the UAE, or open an office or branch, only after obtaining a licence from the Ministry with the…
An LLC cannot be annulled because its Emirati partner was nominal; it converts into a company of the real partners
Some Dubai judgments had held that proof that the real partners differed from those in the memorandum of association meant an LLC lacked its essential elements and was absolutely void, leading to dissolution and liquidation. The General Assembly held…
A claim that the Emirati partner was nominal fails where the memorandum and audited accounts show its capital was paid
Sham (صورية) means that the parties agreed on an apparent transaction that is not real and conceals their true relationship; the sham act has no existence in their intention, and the hidden agreement is the one in force between them. Whether a transaction…
A claim that an Emirati partner's 51 per cent holding was nominal cannot be sent to arbitration
Arbitration may not be agreed on matters that cannot be the subject of compromise (Article 4(2) of the Federal Arbitration Law). A claim that a UAE national's 51 per cent holding in a company was nominal, brought on the footing of the former rule requiring…
A purchase registered in a nominee's name belongs to the hidden principal, but the principal must prove the arrangement
Contracting through an intermediary is permitted unless the law provides otherwise. A person who lends his name to a purchase is merely an agent of the true buyer under an undisclosed agency, so registration of the sale in his name transfers ownership, as…
A sale of RAK property to a buyer not entitled to own it there is void and only the price is returned
A contract is void if the law prohibits dealing in its subject matter (Article 201 of the Civil Transactions Law). In Ras Al Khaimah, freehold ownership by others than UAE and GCC nationals was confined to the investment projects designated by the…
Partner arrangements that keep UAE nationals at 51% of an LLC do not breach the share-transfer restriction
The rule in the Companies Law that a transfer of shares must not reduce the UAE national partners' holding below 51% of the capital prohibits only a reduction of the nationals' share. It does not invalidate partners' dealings designed to bring their…
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