Investment Policy Perspectives in the United Arab Emirates

3. Navigating the legal framework for investment

Abstract

This chapter examines the legal framework for investment in the UAE. It provides an overview of domestic investment-related laws and regulations and explores ways to enhance the governance of the regulatory framework for investment framework in the UAE.

3.1. Summary and recommendations

The way that investment policy is formulated and revised plays a critical role in shaping investment decisions. The non-discrimination principle, the degree of openness to foreign investment, the protection of investors’ property rights are core investment policy issues that underpin efforts to create a quality investment environment for all. Equally important is the quality of regulation, which has a significant influence on the climate for business and investment (OECD, 2015[1]).

The UAE’s domestic legal framework for investment is shaped by its federal structure, which results in distinct legal regimes across each Emirate. Constitutionally, key legislations affecting business and investment, such as corporate law and intellectual property (IP) rights, are regulated on a federal level. Matters not expressly assigned to federal authorities under the Constitution fall within the jurisdiction of individual Emirates. This includes certain areas that directly impacting the legal framework for investment, such as land tenure regimes. Within this framework, Emirates are also responsible for operationalizing federal laws within their own jurisdictions, including through the enactment of local legislation that gives effect to federal requirements. The additionally lead their own investment promotion strategies, as discussed in Chapter 6.

At the federal level, the UAE has undertaken significant legislative reforms, leading to a progressively more open environment for foreign direct investment (FDI) and establishing a robust IP protection regime that ranks among the strongest in the region.

At the Emirate level, the level of legal protection and accessibility to relevant regulations varies significantly across jurisdictions. In some Emirates, investment-related legislation is readily available online in both Arabic and English, while in others, such information remains unevenly accessible. These inconsistencies have raised concerns amongst both public and private stakeholders regarding the transparency and accessibility of the legal framework for investment.

In light of its mandate to lead investment policy reforms, to address challenges to FDI and to eliminate obstacles hindering the retention of FDI, the Ministry of Investment (MoI) could consider targeted measures to enhance the coherence and transparency of the regulatory environment – as further explored in Chapter 6 below. These could include the development of a publicly accessible, centralised legal database containing all relevant FDI legislation, available free of charge in English and Arabic. To further support regulatory quality, the MoI might also consider conducting ex post evaluations of existing laws and regulations to assess their continued relevance and effectiveness, and to inform future amendments to the legal framework. The MoI could also support Emirates in conducting ex post evaluations for legislations at Emirates level.

Recommendations

• Consider creating a centralised, publicly accessible information portal that consolidates all investment-related legislations and regulations at both the federal and Emirate level. While the federal legal framework for investment in the UAE is generally transparent and accessible, regulatory access at the Emirate level remains uneven. In several cases, relevant legislation is difficult to locate or not available online, leading to a decentralised and uneven legal landscape. This inconsistency may hinder legal transparency, reduce predictability for investors, and ultimately undermine the framework for investment. A unified investment-focussed database could provide an up-to-date repository of federal laws (e.g. commercial, corporate and investment laws) and regulations at an Emirate level (e.g. expropriation, real estate and land tenure). Ensuring free, equal, and user-friendly access to legal information would promote transparency, support informed investment decisions, and contribute to a more predictable and coherent regulatory environment across the country.

• Strengthening engagement in public consultations with both public and private stakeholders on legislative and regulatory reforms and consider reinforcing the consultation framework by institutionalising early, inclusive, and transparent stakeholder engagement, particularly for reforms with significant implications for the investment climate. While some recent reforms have involved public consultation, other critical amendments to the legal framework governing FDI, such as Federal Decree Law No. 26 of 2020 on Amending Certain Provisions of Federal Law No. 2 of 2015 on Commercial Companies appear to have been enacted without prior public consultations. To enhance the quality and legitimacy of future regulatory changes, the MoI could consider designing and implementing consistent and transparent consultation practices. This could include combining a broader range of consultation tools – such as online platforms, targeted outreach, and public forums – to engage with the appropriate stakeholders and ensure timely and meaningful input.

• Consider conducting an ex post regulatory evaluation, notably of significant laws governing FDI, such as Federal Decree Law No. 32 of 2021 on Commercial Companies. Over the past decade, the UAE has implemented significant reforms to its investment legal framework, which have been largely welcomed by investors. However, the accelerated pace of reform underscores the importance of ensuring that these regulations remain up to date, cost-effective, and consistent with their original goals. Ex post regulatory evaluations offer a valuable tool for assessing whether laws are delivering their intended outcomes. In line with its mandate to drive policies, strategies and laws related to FDI and to address challenges to FDI, the MoI could initiate an assessment of the impact of the existing stock of FDI regulation, including of Federal Decree Law No. 32 of 2021 on Commercial Companies, to evaluate whether it is still up to date, cost effective and meets its intended objective and inform future policy reforms if necessary. The MoI could also consider providing support to Emirates in conducting ex post evaluations for legislations at Emirates level, where appropriate.

3.2. Enhancing the role of the MoI in driving investment policy reforms

With its mandate and attributed powers, the MoI would be well positioned to play a strategic role in shaping the UAE’s domestic investment policy. As the lead institution for designing and implementing investment policies, the MoI can ensure that regulations are transparent, predictable and deliver the intended policy outcomes.

Federal Decree No. 37/2023 on the Establishment of the Ministry of Investment confers to the new ministry the powers to suggest, prepare and amend policies, strategies and laws and regulations related to inward FDI, in co‑ordination with the relevant entities, and to oversee their implementation after adoption by the council of ministers. The MoI is mandated to work on removing challenges and barriers to ensure a stable ecosystem for FDI.

In practice, the MoI, which caters to all Emirates, focusses on improving the investment climate for FDI at a national level, and acts as an advocate for policy reform where needed. It can drive needed regulatory reforms, which can increase efficiency and effectiveness and create better balance in delivering social and economic policies over time.

3.3. An overview of the domestic legal framework for investment

3.3.1. A rapidly evolving legal framework

In accordance with the Constitution, business and commercial matters, including FDI, are regulated primarily at a federal level.

As such, prior to 2015, inward FDI was mainly covered by Federal Law No. 2 of 2015 on Commercial Companies, pursuant to which foreign companies incorporated in the UAE had to have at least one national partner with shares of no less than 51% of the company’s capital, cross-sectoral, except for general or limited partnerships. In 2018, Federal Decree Law No. 19 on Foreign Direct Investment (FDI Law of 2018) was promulgated and constituted a major step forward in the UAE’s legal investment framework:

• Article 7 lifted restrictions on foreign investment through the adoption of (i) a negative list approach, by defining sectors and activities that are not open to FDI, and (ii) a positive list, which would subsequently determine the sectors and economic activities available to invest in by a foreign investor of up to 100%.

• Article 8 provided a list of incentives and standards of protection for FDI Projects as defined therein. It granted national treatment of FDI, recognising that foreign investment companies as defined therein were granted the same treatment as national companies, to the extent permitted by legislation in force. It also allowed for the repatriation of returns and repatriation of salaries, compensation, and entitlements for employee.

• Article 9 protected FDI against expropriation, in whole or in part, except for public interest and in exchange for fair compensation calculated at the time of the expropriation, in line with international standards.

• Article 12 provided that disputes arising therefrom could be settled by litigation and “by all alternative means of dispute settlement”. While this article does not provide specific information as to the available alternative means of dispute settlement, this term is widely understood to encompass conciliation, mediation and arbitration.

In 2020, Federal Decree Law No. 26 of 2020 Amending Certain Provisions of Federal Law No. 2 of 2015 on Commercial Companies (Federal Decree Law No. 26 of 2020) repealed the FDI Law of 2018 and brought significant amendments to Federal Law No. 2 of 2015 on Commercial Companies. Federal Decree Law No. 26 of 2020 abolished the general requirement for a UAE company to have 51% Emirati ownership, thus allowing foreign investors to unconditionally establish their company without a local partner and to own 100% of UAE companies in all economic sectors, except for activities deemed as having a “strategic impact” which are subject to additional requirements. Other amendments brought by Federal Decree Law No. 26 of 2020 include the removal of the obligation for branches and representation offices of foreign companies to have a local service agent with 100% UAE ownership and the abolishment of the general requirement for the chairperson and majority of the board of a Joint Stock Company (JSC) to be UAE nationals.

Federal Decree Law No. 32 of 2021 on Commercial Companies repealed Federal Law No. 2 of 2015 on Commercial Companies and incorporated most of the provisions of Federal Decree Law No. 26 of 2020. Current regulations offer foreign investors a range of legal forms for commercial companies to be constituted under UAE law.

In November 2022, the UAE issued Federal Decree Law No. 25 of 2022 regarding the Regulation and Development Industry. This law establishes a national industry registry with a database to help investors evaluate investment opportunities and to provide data on industrial facility performance, licensing procedures, permits and exemptions.

These reforms represent a commendable step towards opening the economy to both domestic and foreign investors. They reflect a strong policy commitment to fostering a more predictable, transparent, and investor-friendly environment. Importantly, these reforms also signal a sustained institutional will to continuously refine investment policy and regulatory frameworks in response to emerging trends and evolving global dynamics.

In addition to federal laws, each Emirate retains the authority to regulate some aspects of FDI, such as determining the percentage of nationals’ participation in the capital or in the board of directors of companies incorporated within their jurisdiction, approving applications for incorporation of companies and determining applicable fees.1

Financial freezones, namely the Dubai International Financial Centre (DIFC) and Abu Dhabi’s Global Markets (ADGM), are exempt from the application of federal laws and regulations governing commercial matters. Instead, they operate under their own distinct legal and regulatory frameworks, established by their respective authorities. FDI within these jurisdictions is therefore subject to the specific legal regimes of the DIFC and ADGM, rather than the broader federal legal framework applicable across the mainland. This regulatory autonomy allows the DIFC and ADGM to adopt common law legal standards and financial practices mainly inspired from English law, thereby offering investors flexibility in the choice of legal system.

3.3.2. A relatively open economy to FDI

An open and non-discriminatory investment environment is a central tenet of an attractive investment climate as it helps to ensure that investors are treated alike in similar circumstances (OECD, 2015[1]). For foreign investors, adherence to the derivative principle of national treatment is of particular importance, as it ensures a level playing field between domestic and foreign-owned investors.2 The Constitution of the UAE provides that all individuals are equal in law and that foreigners shall enjoy the rights and freedom stipulated in international agreements and treaties in force and to which the UAE is a party.

The UAE recently implemented significant reforms to pursue investment liberalisation. As of 2020, Federal Decree Law No. 26 of 2020, abolished the general requirement for a UAE company to have 51% Emirati ownership. Only activities deemed as having a “strategic impact” remained subject to specific conditions and approvals. Pursuant to Cabinet Resolution No. 55 of 2021, the following activities are identified as having a “strategic impact”: (i) security, defence and military-type activities, (ii) bank, exchange bureau, finance institutions and insurance activities, (iii) currency printing, (iv) telecommunications, (v) hajj and umrah services, (vi) holy Quran recitation centres and finally (vii) fisheries. Many of these activities are also restricted to FDI in other countries, albeit to varying degrees (OECD, 2024[2]).

In March 2024, the Cabinet issued Resolution No. 23 of 2024, whereby nationals of states of the Co‑operative Council of Arab Gulf States (GCC) are granted national treatment, to the extent that they are permitted to practice all economic activities in the UAE to the exclusion of (i) Hajj and Umra services, (ii) exclusive commercial agencies services and (iii) fisheries services.

Foreign investors wishing to engage in activities with strategic impact are subject to pre‑approval procedures and specific restrictions, varying from one activity to another. For instance, telecommunication activities are subject to the approval and specific requirements of the Telecommunications and Digital Government Regulatory Authority and security, defence and military type activities subject to the approval and specific requirements of the Ministry of Defence and the Ministry of Interior. Foreign investors are categorically barred from engaging in fishery activities.

Despite the UAE’s significant efforts to open its economy to foreign investors and to relax restrictions on foreign ownership of companies, some FDI regulatory restrictions remain in place. In addition to the activities with strategic impact mentioned above (and which pertain to important service sectors including finance and telecommunications), restrictions to FDI still exist in some sectors, such as real estate.3 While almost all governments discriminate among domestic and foreign-owned investors in one way or another, policies that favour some firms over others tend to involve a cost, notably in terms of competition/contestability and possibly in terms of allocative efficiency (e.g. inefficient capital allocation across firms and sectors). Even if some investors may still invest in the presence of partial entry barriers and operational restrictions, particularly when other attributes of the investment climate are favourable, statutory restrictions on FDI have been found to result in less FDI overall. They affect the attractiveness of both restricted and non-restricted activities due to industry interdependencies. FDI restrictions in services sectors, for instance, have been found to also constitute a barrier for investment into downstream manufacturing activities (Mistura and Roulet, 2019[3]). For this reason, exceptions to non-discrimination need to be evaluated with a view to determining whether the original motivation behind an exception remains valid, supported by an evaluation of the costs and benefits, including an assessment of the proportionality of the measure (OECD, 2015[1]).

3.3.3. A differentiated regulatory regime for protection against expropriation across Emirates

The protection of investors’ property rights serves as a cornerstone for building a conducive investment environment and it is therefore essential to establish a transparent and predictable legal framework governing expropriation. Expropriation should only be permitted under clearly defined conditions: when carried out for a legitimate public purpose, in accordance with due process of law, in a non-discriminatory manner, and accompanied by prompt, adequate, and effective compensation (OECD, 2015[1]).

Article 21 of the Constitution of the UAE guarantees the protection of private property and provides that no person shall be deprived of their personal property except in circumstances dictated by the public interest in accordance with the provisions of the law and upon payment of a fair compensation; according to this article, conditions relating to expropriation shall be prescribed by law. Article 39 of the Constitution further provides that confiscation of private property may only occur by court judgement. Protection against expropriation is reiterated in Federal Law No. 5 on the Civil Transactions Law of the UAE, albeit limited to real rights and with no further indication as to the applicable regime.4 To date, the UAE has not enacted federal laws regulating expropriation beyond the scope of real estate and associated real rights, by contrast to Article 9 of the FDI Law of 2018, which protected investors against the expropriation of any economic activity as a whole.

Although Article 121 of the Constitution grants the federal government exclusive legislative authority over real property ownership and expropriation for public interest, in practice, expropriation procedures are mainly governed through each Emirate’s own land tenure laws. This is in line with Article 125 of the Constitution, which requires Emirates to take appropriate measures to execute federal laws, including through the enactment of local laws. Table A ‎A.2 set outs an overview of laws regulating expropriation at both a federal and Emirates level.

As seen in Table A ‎A.2, apart from Fujairah, all Emirates have enacted legislations regulating expropriation of real property and real rights in addition to federal provisions. While applicable laws uniformly require that expropriation be carried out for a public purpose, against a fair compensation, and in accordance with the law, the scope and detail of regulation vary across Emirates. For instance, Dubai, Sharjah, Ajman and Ras Al Khaimah have adopted standalone laws on expropriation resulting in comparatively stronger legal safeguards against expropriation. In contrast, Abu Dhabi and Umm Al Quwain address the issue of expropriation within broader legislative frameworks, namely in laws regulating real estate and land ownership. Laws regulating expropriation are mostly available online, to the exception of those in Umm Al Quwain and Fujairah – though some are difficult to locate. Relevant laws in Sharjah, Ajman and Ras Al Khaimah are only available in Arabic on respective governmental portals, while those in Dubai and Abu Dhabi – and at the federal level – are available both in Arabic and English.

3.3.4. A restrictive regime for foreign ownership of land across Emirates

Secure land rights encourage new investment and the upkeep of existing investments as well as sustainable land management. To perform this function, the administration should be accessible, reliable and transparent (OECD, 2015[1]).

In the UAE, laws and regulations concerning property ownership by foreign investors are mainly regulated at a local level and vary from one Emirate to another. Table A ‎A.3 set outs legislations regulating land tenure in all the Emirates.

Table A ‎A.3 shows that foreign ownership of land is subject to varying limitations across all Emirates and foreign freehold ownership is only allowed in strict conditions. Limitation to ownership rights of foreign investors varies across Emirates. For instance, in Abu Dhabi, foreign ownership is restricted to floors, rather than land, within designated investment areas, whereas other Emirates permit freehold ownership either under specific conditions (e.g. approval from the ruler in Ajman and Sharjah) or within particular property types and zones (e.g. in Dubai and Ras Al Khaimah). Foreign investors in Abu Dhabi, Dubai, Sharjah, and Ajman may acquire in rem rights, such as usufruct and musataha, for a maximum duration of 100 years, often subject to specific conditions (e.g. location-based restrictions). Emirates generally require registration of real property and rights in a dedicated register. Laws regulating land tenure are mostly available online but not always available on official platforms. Laws applicable in Umm Al Quwain and Fujairah do not appear to be available online. Relevant laws in Abu Dhabi, Dubai and Ajman are accessible online in both Arabic and English.

3.3.5. A strong regime for the protection of intellectual property rights

IP rights constitute an incentive to invest in research and development, therefore encouraging the creation of innovative products and processes. A robust framework for intellectual property rights protection and a clear and efficient registration system are crucial for investors, not only for large and multinational firms but also or SMEs (OECD, 2015[1]).

In the UAE, the protection of IP rights is regulated at federal level. The Ministry of Economy and Tourism (MoET) serves as the central authority responsible for IP policy development, registration, and legislative oversight. It manages the administration of patents, trademarks, industrial designs, and copyrights, and provides digital platforms to facilitate efficient access to IP services for rights holders.

The UAE’s legislative framework for IP is one of the most comprehensive in the region. At an international level, the UAE has ratified several international agreements related to intellectual property, including the World Intellectual Property Organization Treaties on Copyright and Related Rights and the Agreement on the Trade Related Aspects of Intellectual Property Rights (TRIPS). At a federal level, IP is governed by a strong set of regulations, in line with the UAE’s international commitments (Table A ‎A.1). Federal Decree Law No. 11 of 2021 on the Regulation and Protection of Industrial Property Rights provides protection for a wide range of IP assets, including patents, utility certificates, industrial designs, trade circuit and integrated circuit. Federal Decree Law No. 36 of 2021 on Trademarks regulates the registration of trademarks and rights associated thereto, and expands legal protection to non-traditional trademarks, such as sound, scent, hologram and three‑dimensional rights. Federal Decree Law No. 38 of 2021 on Copyrights and Neighbouring Rights provides for the protection of copyrights and related rights, including moral rights and economic rights. In addition to federal laws, free zones often have additional layers of IP-related control. In the DIFC for instance, Intellectual Property Law No. 4 of 2019 and its corresponding regulations apply to entities operating within its scope, as well as those engaged in commercial activities linked to it. This layered approach allows for regulatory flexibility but also requires careful legal navigation by rights holders and investors.

The UAE’s robust legal framework for the protection of IP rights reflects a strategic commitment to strengthening IP protection and aligning the national legal framework with international best practices, particularly in response to the demands of a rapidly evolving technological landscape. The 2024 edition of the U.S. Chamber of Commerce’s International IP Index ranks the UAE 34th out of 55 global economies, (U.S. Chamber of Commerce Global Innovation Policy Center, 2024[4]) emphasising the UAE’s particular strength in trademark protection. The Global Innovation Index 2024, published by the World Intellectual Property Organization, similarly ranks the UAE 32nd out of 133 economies, continuing an upward trajectory from its 38th place ranking in 2018 (WIPO, 2024[5]). This improvement underscores the country’s constant investment in innovation systems and legal modernisation.

3.4. Strengthening the transparency and predictability of the legal framework

A fair, transparent, clear and predictable regulatory framework for investment is a critical determinant of investment decisions and their contribution to development. It is especially important for SMEs that tend to face challenges to entering, and abiding by the rules of, the formal economy. It is also important for foreign investors who may have to function with very different regulatory systems, cultures and administrative frameworks from their own (OECD, 2015[1]). The OECD Recommendation of the Council on Regulatory Policy and Governance [OECD/LEGAL/0390] emphasises the need for transparency and predictability of the legal framework to ensure that regulations in place serve the public interest:

• Ensuring the transparency of the legal framework requires all regulations to be readily accessible to the public. Such accessibility increases regulatory transparency and reduces possibilities for abuse of discretion and for corrupt behaviour from public officials (OECD, 2012[6]).

• Equally important is the promotion of policy predictability by ensuring that potential changes involve inclusive and structured public consultation processes during the drafting of new regulations, including with private sector actors, workers’ organisations, and other relevant stakeholders (OECD, 2015[1]).

A systematic approach to communication, consultation and engagement which allows for public participation of stakeholders can help governments understand citizens’ and other stakeholders’ needs and improve trust in government (OECD, 2012[6]).

In the UAE, federal laws and decrees are published in the Official Gazette, issued by the government of the UAE, within a maximum of two weeks from the date of signature by the President. The Official Gazette does not appear to be available online. Instead, the UAE “Legislation Platform”, developed by the UAE cabinet, is the official platform on which federal legislations are published both in Arabic and English. Similarly, the Ministry of Justice’s (MoJ) website hosts a legal portal that contains various legal material, including federal laws and regulations, published both in Arabic and English. Other online governmental sources, including the website of the MoET, also publish relevant federal laws and regulations, both in Arabic and in English. To date, the MoI’s website does not inventory existing laws and regulations governing FDI.

Local laws and decrees are published in the local official gazette of each Emirate. For instance, the Official Gazette of Abu Dhabi is issued monthly both in Arabic and English and is accessible online free of charge; Dubai’s Official Gazette, issued through its Supreme Legislation Committee, is published regularly in Arabic and is freely accessible online. Official gazettes of Sharjah, Ajman and Ras Al Khaimah are also available in Arabic online, free of charge. Umm Al Quwain and Fujairah do not appear to provide online access to their respective official gazettes.

Limited and uneven access to legislation and regulatory information at the level of Emirates – hinders the transparency and predictability of the legal framework governing investment. Both public and private stakeholders have expressed concern over the lack of equal and timely access to relevant laws and regulations, which can lead to legal uncertainty and administrative inefficiencies. This issue is further compounded by the absence of formal dissemination channels, such as bar association communications.

To address disparities in access to regulatory information, and in line with findings in Chapter 6 below, a practical approach would be the development of a complete and up-to-date legislative and regulatory database freely available to the public in a searchable format through a user-friendly interface over the Internet, as suggested by the OECD Recommendation of the Council on Regulatory Policy and Governance [OECD/LEGAL/0390]. The creation of a unified, publicly accessible legal information database would represent a strategic opportunity for the MoI to strengthen regulatory transparency and accessibility of the investment policy framework at the national level. Such a portal could serve as a comprehensive repository for applicable legislation at both federal and Emirates’ level, ensuring that investors – irrespective of location or size – have equal access to accurate, up-to-date legal information. Such a database would provide an integrated overview of the legal environment for investment, covering both core legislations (e.g. commercial, corporate, and investment laws) and other regulations affecting FDI (e.g. land tenure, intellectual property rights, dispute resolution mechanisms, and sector-specific requirements).

With respect to public consultations, the UAE government operates a dedicated consultation webpage hosted on the Sharik platform – an interactive portal created to facilitate engagement with the government via e‑participation. This platform provides access to consultation documents from various entities, including draft laws prior to their enactment, and in some instances, allows for public input. According to the UAE’s Digital Participation Policy, feedback received through consultations is reviewed and analysed by the relevant authority.

Federal Decree Law No. 26 of 2020 – which brought significant amendments to the legal regime applicable to FDI, including the removal of key restrictions – does not appear to have been subject to public consultations. The draft law does not appear to have been published on the Sharik platform or any other public forum prior to its enactment. Stakeholders reported limited opportunities for consultation on the objectives or expected content of the regulatory changes introduced by this legislation.

By contrast, Federal Decree Law No. 32 of 2021 on Commercial Companies – which repealed Federal Law No. 2 of 2015 on Commercial Companies and incorporated most of the provisions of Federal Decree Law No. 26 of 2020 – was made available for public consultation via Sharik for a period of six months. The aim of the public consultations was to collect stakeholders’ opinions and suggestions regarding the draft law, with the view to further enhance the investment climate, facilitate commercial and administrative procedures for companies in the country and increase capacity to attract SMEs. According to the Sharik website, development proposals and observations of stakeholders were taken into consideration “to help in the formulation of future economic policies in the interest of establishing an encouraging economic environment and enhancing the ability of the corporate sector to contribute more to driving the UAE's economic growth”. In practice, it appears that proposals and observations will be considered in the development of corrective measures and law amendments to suit the needs and aspirations of investors and company owners.

In addition to the absence of public consultation on a major legislative reform – namely, Federal Decree Law No. 26 of 2020 – stakeholders have noted that while legislative and regulatory reforms in the UAE have generally contributed to improving the legal and institutional environment for investment, concerns remain regarding the pace and manner in which some of these reforms are implemented. In certain instances, stakeholders observed that reforms are introduced hastily, with limited consultation or insufficient lead time for businesses to adjust to the new requirements.

Limited stakeholder consultation combined with the fast-paced implementation of legal reforms can undermine the quality of the investment climate in the UAE. As highlighted above, engaging all relevant stakeholders throughout the regulatory process is crucial for enhancing policy predictability, securing reform outcomes, and sustaining investor confidence. Gradual implementation of significant reforms may also curb the risk of grievances and disputes, by allowing investors sufficient time to make the necessary adjustment (UNCITRAL WGIII, 2024[7]). Future amendments – particularly those involving significant changes to the legal or regulatory regime, such as Federal Decree Law No. 26 of 2020 – should be prepared and implemented with appropriate care and deliberation.

The 2012 OECD Council Recommendation on Regulatory Policy and Governance [OECD/LEGAL/0390] stresses the need to establish public consultation mechanisms that recognise disparities in stakeholders’ access to resources and opportunities to express their views. To ensure inclusiveness, it is essential to provide multiple channels through which different perspectives can be communicated. Stakeholders should also be given adequate time to review draft regulations and engage meaningfully in the policymaking process. The UAE should therefore continue to engage in early and meaningful consultations with relevant stakeholders and eventually consider more formalised and structured consultations practices to support more predictable policymaking. To improve effectiveness, a wider spectrum of consultation tools could be adopted as to engage with a broader pool of stakeholders. The UAE could draw on international experiences to identify consultation practices that align with its institutional and legislative context, while advancing its broader investment policy objectives.

3.5. Assessing the impact of the existing regulatory framework for investment

Over the past decade, the UAE has implemented substantial reforms to its legal framework investment. While these reforms have been broadly welcomed, their accelerated pace highlights the importance of ensuring that the resulting regulations remain relevant, coherent, and effective in achieving their intended objectives. Regular review of these reforms is critical to maintaining a conducive environment for investment, ensuring that regulations are up to date, proportionate, cost-justified, and aligned with national policy goals. Indeed, the evaluation of existing policies through ex post impact analysis is an important tool to ensure that regulations are effective and efficient. It can contribute to reducing regulatory burdens and streamlining regulations (OECD, 2015[1]). The 2012 OECD Recommendation on Regulatory Policy and Governance [OECD/LEGAL/0390] invites countries to “conduct systematic programme reviews of the stock of significant regulations against clearly defined policy goals, including consideration of costs and benefits, to ensure that regulations remain up to date, cost justified, cost effective and consistent, and deliver the intended policy objectives”. In practice, ex post assessments of regulatory performance involve verifying that stated objectives have indeed been met, determining whether there have been any unforeseen or unintended consequences, and considering whether alternative approaches could have done better. This requires clarity about the intended objectives and/or outcomes sought. It also needs data requirements to be embedded such that outcomes can later be measured (OECD, 2020[8]). The OECD Best Practice Principles on Reviewing the Regulatory Stock defines key aspects of an ex post regulatory evaluation (Box ‎3.1).

Box ‎3.1. OECD Best Practice Principles for Reviewing the Stock of Regulation

The overarching principles for ex post evaluation are that regulatory policy frameworks should explicitly incorporate ex post reviews as an integral and permanent part of the regulatory cycle. A sound system for ex post review should ensure comprehensive coverage of the regulatory stock over time, while also quality-controlling key reviews and monitoring the functioning of the system as a whole. Reviews should include an evidence‑based assessment of the actual outcomes of regulations against their original rationales and objectives, identify lessons learned, and make recommendations to address any performance deficiencies.

Specific principles relate to several elements of the ex post review system, including system governance; the main approaches to conducting reviews, such as programmed reviews, ad hoc reviews, and ongoing stock management; and the governance arrangements for individual reviews. They also concern the key questions to be addressed in reviews, including the appropriateness, effectiveness, efficiency and possible alternatives to existing regulations. Additional principles relate to the methodologies used in reviews, the role of public consultation, the prioritisation and sequencing of reviews, the need for capacity building, and the importance of committed leadership to support the overall system.

Source: OECD (2020[8]) Reviewing the Stock of Regulation, https://doi.org/10.1787/1a8f33bc-en ; OECD (2022[9]), Regulatory Reform in Brazil, https://doi.org/10.1787/d81c15d7-en

Three broad types of reviews exist, namely programmed reviews, ad hoc review and ongoing stock management. In conducting ex post reviews, essential questions to be answered are whether a valid rationale still exists for regulating (appropriateness); whether the regulations achieved their objectives (effectiveness); whether they have given rise to unnecessary costs or other unintended impacts (efficiency), and whether modifications, removal or replacement are called for. The governance and resourcing of reviews, and the approaches employed, need to be proportionate to the nature and significance of the regulations concerned. For many regulations, evaluations will be best conducted within the departments or ministries having policy responsibility (OECD, 2020[8]).

In 2020, around 60% of OECD Members provided guidance on conducting ex post evaluations to the teams carrying out the assessment (OECD, 2022[9]). The implementation of the ex post evaluation of regulations differs from one member country to another. A relevant example of ex post evaluation is the case of Australia’s post-implementation reviews, which was introduced as one of its tools to evaluate the effectiveness, validity and relevance of existing regulations (Box ‎3.2).

Box ‎3.2. Australia’s post-implementation reviews

Australia’s Post-implementation Reviews (PIR) aim at assessing the effectiveness, validity, and relevance of an existing regulation. The results of the assessment should inform decision making as to whether keep, modify, or eliminate a regulatory disposition. It is important to point out, that regulators need to follow a holistic approach to rulemaking. 

Regulators must answer a set of pre‑defined questions when they submit their PIR to the Office of Best Practice Regulations. The scope and length of the answers to each one of the points below depend on the regulation and its impacts. The questions that should be included in the PIR include:

• What problem was the regulation meant to solve?

• Why was government action needed?

• What policy options were considered?

• What where the impacts of the regulation?

• Which stakeholders have been consulted?

• Has the regulation delivered a net benefit?

• How was the regulation implemented and evaluated?

Source: OECD (2022[9]), Regulatory Reform in Brazil, https://doi.org/10.1787/d81c15d7-en

Whichever approach is adopted for ex post evaluations, it is essential to have in-house capability, both in order to conduct reviews internally as well as to oversee those commissioned externally. Capacity enhancement needs to be pursued through the training of existing staff as well as through recruitment, with on-the‑job learning an important element.

In the context of the UAE, and in line with its mandate to drive investment policy and legal reforms and to remove challenges and barriers to ensure a stable ecosystem for FDI, the MoI could consider undertaking a review of the existing stock of regulation relating to FDI. This could include, for example, assessing the overall impact of Federal Decree Law No. 32 of 2021 on Commercial Companies and examining whether restrictions to activities deemed to have strategic importance remain necessary and proportionate. An ex post regulatory evaluation of Federal Decree Law No. 32 of 2021 on Commercial Companies would enable the MoI to determine whether the law does indeed achieve its intended objectives as defined in Article 2 thereof – namely to contribute to the development of the business environment and capacities of the state and its economic standing by regulating companies in accordance with global variable. Conducting an ex post regulatory evaluation of significant laws on regulating FDI could also inform the MoI on whether restrictions in place for activities deemed as having a strategic impact still serves the original motivation behind it and remain valid and whether the proportionality of the measure, including in terms of costs and benefits, is still justified.

References

[3] Mistura, F. and C. Roulet (2019), “The determinants of Foreign Direct Investment: Do statutory restrictions matter?”, OECD Working Papers on International Investment, No. 2019/01, OECD Publishing, Paris, https://doi.org/10.1787/641507ce-en.

[2] OECD (2024), “OECD FDI Regulatory Restrictiveness Index: Key findings and trends”, OECD Business and Finance Policy Papers, No. 72, OECD Publishing, Paris, https://doi.org/10.1787/c56f8a14-en.

[9] OECD (2022), Regulatory Reform in Brazil, OECD Reviews of Regulatory Reform, OECD Publishing, Paris, https://doi.org/10.1787/d81c15d7-en.

[8] OECD (2020), Reviewing the Stock of Regulation, OECD Best Practice Principles for Regulatory Policy, OECD Publishing, Paris, https://doi.org/10.1787/1a8f33bc-en.

[1] OECD (2015), Policy Framework for Investment 2015 Edition, OECD Publishing.

[6] OECD (2012), Recommendation of the Council on Regulatory Policy and Governance, OECD Publishing, Paris, https://doi.org/10.1787/9789264209022-en.

[4] U.S. Chamber of Commerce Global Innovation Policy Center (2024), International IP Index Executive Summary, https://www.uschamber.com/intellectual-property/2024-ip-index.

[7] UNCITRAL WGIII (2024), Possible of investor-State dispute settlement Draft toolkit on prevention and mitigation of international investment disputes, https://docs.un.org/en/A/CN.9/1185.

[5] WIPO (2024), Global Innovation Index 2024, https://www.wipo.int/gii-ranking/en/united-arab-emirates.

[10] WTO (2022), Trade Policy Review - United Arab Emirates, https://www.wto.org/english/tratop_e/tpr_e/s423_e.pdf.

Annex 3.A. A benchmark of selected domestic laws and regulations governing the investment climate

Annex Table ‎3.A.1. Benchmarking the UAE’s legal framework for IP against the TRIPS Agreement

Aspect	TRIPS Agreement	Federal Law No. 36/2021 (Trademarks)	Federal Law No. 38/2021 (Copyrights)	Federal Law No. 11/2021 (Industrial Property)
Protection Scope	Copyrights, Related rights, Trademarks, Geographic indications, Industrial designs, Patents, Integrated circuits, Undisclosed informations, Anti-competitiveness licences	Wide mark definition incl. 3D, sound, smell (Art. 2)	Broad works incl. software, apps (Art. 2)	Patents, industrial designs, integrated circuits, undisclosed information, utility certificates (recorded in the State including free zones) (Art. 3)
Moral Rights	Not required, per Berne	Not covered	Strong perpetual moral rights (Art. 5, 16)	N/A
Economic Rights	Reproduction, distribution, rental, etc.	Assignment, transfer, mortgage, licensing (Art. 28‑34)	Full economic rights with modern use modes (Art. 7‑10, 17‑19)	Extensive rights incl. manufacturing, licensing (Art. 19, 46, ff)
Term of Protection	Copyright: life + 50 (see Art. 12 for exception) Related rights: 50 min (performers and phonogram); 20 for broadcasting org (Art. 14.5) TM: renewable every 7 (Art. 18) Industrial designs: max 10 (Art. 26.3) Patent: max 20 (Art. 33)	Renewable every 10 years (Art. 21)	Life + 50; 25 yrs for applied arts; 50yrs performers; 20 yrs for broadcasts (Art. 20)	Patents: 20 yrs; Designs: 20 yrs; Utility Cert.: 10 yrs; IC layouts: 10 yrs (Art. 18, 45, 59)
Registration Requirement	General rule (Art. 15) TM	Mandatory for TM protection	Optional registration (Art. 4)	Mandatory for patents, designs, utility certs (Art. 11, 40)
Enforcement	Civil/criminal sanctions, injunctions, border measures	Customs seizure, court orders, admin penalties (Art. 35‑37)	Civil/criminal, injunctions, customs, grievance committee (Art. 35‑39)	Damages, lien, confiscation, imprisonment, committee (Art. 67‑74)
Trade Secrets	Covered under unfair competition	N/A	N/A	Comprehensive regime for undisclosed info (Art. 61‑66)

Source: OECD analysis.

Annex Table ‎3.A.2. Regulating expropriation at a federal and Emirates’ level

	Federal	Abu Dhabi	Dubai	Sharjah	Ajman	Umm Al Quwain	Fujairah	Ras El Khaimah
Law	Articles 21 and 39 of the Constitution Article 1 135 Federal Law No. (5) of 1985 concerning the issuance of the civil transactions law of the United Arab Emirates	Article 8 of Law No. 19 of 2005 concerning real estate ownership as amended by Law No. 13 of 2019	Law No. 2 of 2022 concerning the acquisition of real property for the public benefit	Decree‑Law No. (2) of 2020 on the expropriation of real estate for the public benefit in the Emirate of Sharja	Ajman Law No. 1 of 2023 On Regulating the Expropriation of Real Estate Properties for Public Benefit in the Emirate of Ajman as amended by Law No. 1 of 2024	Umm Al Quwain Law No. 1 of 2021 On Real Estate Ownership in the Emirate of Umm Al Quwain as amended by Law No. 1 of 2023	No general law regulating expropriation	Law No. 9 of 2012 Concerning Expropriation, as amended by Law No. 3 of 2019 Amending Law No. 9 of 2012 On Expropriation.
Publicly available	Yes Constitution in Arabic and English on official website Federal Law No. (5) of 1985 in Arabic and English on official website	Yes Law No. 19 of 2005 and Law No. 13 of 2019 in Arabic and English on official website	Yes Law No. 2 of 2022 in Arabic and English on official website	Partially Decree-Law No. (2) of 2020 in Arabic on official website	Partially Ajman Law No. 1 of 2023 and Law No. 1 of 2024 available in Arabic on official website	No	N/A	Partially Law No. 9 of 2012 available in Arabic on official website Law No. 3 of 2019 not available
Scope	Constitution appears to have a broader scope than Federal Law No. (5) of 1985 (private property vs. rights in rem)	Real property and in rem rights	Real property and in rem rights	Real property	Real property and real rights	Real property and real rights	N/A	Real property and real rights
Conditions	Public interest or lawful cause Just compensation Court judgement In accordance with law	Public interest Fair compensation In accordance with the law	Public benefit Fair compensation In accordance with the law	Public benefit (as defined in Decree Law No. 2 of 2020) Fair compensation (as defined in Decree Law No. 2 of 2020) In accordance with the law	Public benefit (as defined in Law No. 1 of 2023) Fair compensation (as defined in Law No. 1 of 2023) In accordance with the law	Public benefit In accordance with the document creating that right Fair compensation In accordance with the law	N/A	Public benefit (as defined in Law No. 9 of 2012) Fair compensation (as defined in Law No. 9 of 2012) In accordance with the law
Procedure for expropriation	No Reference to the necessity of a court judgement in the Constitution, which does not appear in 1 135 Federal Law No. (5) of 1985	No Reference to expropriation pursuant to the document establishing such right	Yes Article 9 of Law No. 2 of 2022 concerning the acquisition of real property for the public benefit	Yes Article 8 of Decree Law No. 2 of 2020	Yes Articles 9 to 12 of Law No. 1 of 2023	N/A	N/A	Yes Articles 4 to 7 of Law No. 9 of 2012
Competent Authority	N/A	N/A	Acquisition Committee	Compensation Committee and Grievance Committee.	Committee for acquisition of property for public benefit	N/A	N/A	Compensation committee
Appeal/Review procedure	N/A	N/A	Yes: Objection to the amount of compensation (but not the type before the Acquisition Committee Challenge to the validity of the procedures for execution of the expropriation resolution before the competent court	Yes: Grievances with respect to the amount and type of compensation, before the Grievances Committee Challenge to the decision to expropriation as per implementing regulations	Yes: Grievances with respect to the amount of the compensation before Committee for acquisition of property for public benefit Challenge to the validity of the expropriation, the amount or type of compensation before competent courts	N/A	N/A	No

Note: The table above maps laws publicly available online and does not map implementing rules, circulars, decrees and other regulations.

Source: OECD analysis.

Annex Table ‎3.A.3. Comparing land tenure regulations amongst Emirates

	Abu Dhabi	Dubai	Sharjah	Ajman	Umm Al Quwain	Fujairah	Ras El Khaimah
Law	Law No. 19 of 2005 concerning real estate ownership as amended by Law No. 13 of 2019	Law No. 7 of 2006 concerning real property registration in the Emirate of Dubai Regulation No. 3 of 2006 Determining Areas for Ownership by Non-UAE Nationals of Real Property in the Emirate of Dubai	Law No. 5 of 2010 on the real estate registration in the Emirate of Sharjah as amended by Law No. 2 of 2022 Executive council resolution No. 26 of 2014 concerning the usufruct of real estate property in the Emirate of Sharjah	Amiri Decree No. 7 of 2008 regarding acquisition and registration of land ownership in the Emirate of Ajman	Umm Al Quwain Law No. 1 of 2021 On Real Estate Ownership in the Emirate of Umm Al Quwain as amended by Law No. 1 of 2023	Fujairah Local Order No. 2 of 1987 on the Registration of Lands in the Emirate of Fujairah Law No. 3 of 2023 on real joint ownership in the Emirate of Fujairah	Law No. 11 of 2021 on the Real Estate Register in the Emirate of Ras Al Khaimah
Publicly available	Yes Law No. 19 of 2005 as andLaw No. 13 of 2019 in Arabic and English on official website	Yes Law No. 7 of 2006 and Law No. 7 of 2013 in Arabic and English on official website	Partially Law No. 5 of 2010 in Arabic on non-official website Law No. 2 of 2022 available in Arabic on official website Executive council resolution No. 26 of 2014 not available online	Yes Amiri Decree No. 7 of 2008 available in English on official website	No	No	Partial Law No. 11 of 2021 in Arabic on official website
Types of ownership	Original real rights, rights derived from ownership right (usufruct, use, residence and mustahab rights) and subordinate real rights (mortgage, possessory lien and right of preferential lien)	Freehold ownership of real property and usufruct or lease rights in real property	Original real rights and ancillary rights in rem	Freehold ownership of real property and usufruct	N/A	N/A	Freehold ownership of real property
Ownership right	Ownership of real estate limited to (i) nationals and their equivalent (ii) PJS companies in which contribution of non-nationals does not exceed 49% and (iii) person designated by Crown Prince or Chairman of the Executive Council Resolution	Ownership of real estate restricted to (i) UAE nationals, (ii) nationals of GCCs and (iii) companies fully owned by these and PJS companies	Ownership of real estate limited to (i) UAE nationals, (ii) GCC nationals, (iii) others if designated by the Ruler, in the event of transfer of inheritance by virtue of legal notification, in the event of assignment by y the owner to one of his first-degree relatives or in real estate development areas and projects determined by the Council	Ownership of real estate restricted to (i) UAE national, (ii) nationals of GCCs, (iii) companies wholly owned by nationals of the UAE or GCCs and (iv) public shareholding companies established in the States and public institutions and bodies established in the UAE	N/A	N/A	Ownership of real estate limited to UAE nationals and companies and GCC nationals and companies
Freehold foreign ownership	No Foreign ownership allowed (principal and collateral rights) in investment areas but limited to floors (land excluded)	Yes Freehold foreign ownership allowed in areas determined by the Ruler without restriction of time	Yes Ownership rights can be granted to other than UAE and GCC nationals (i) by decision of the ruler (ii) by inheritance, (iii) by assignment of the owner to first degree relative and (iv) In specific zones and development projects pursuant to specific conditions	Yes Freehold foreign ownership allowed by the Ruler without restriction of time	N/A	N/A	Yes Freehold foreign ownership allowed in areas determined by the Ruler and for diplomatic reasons
Foreign ownership limited to types of land	Yes Investment zones (Yas Island, Saadiyat, Reem, Mariya, Lulu, Al Raha Beach, Sayh Al Sedairah, Al Reef and Masdar City)	Yes Areas to be determined by the Ruler	No	No	N/A	N/A	Yes Areas to be determined by the ruler
Other in rem rights open to foreigners	Usufruct and mustaha in Investment Zones for a maximum period of 100 years	Usufruct or leasehold of real property in areas determined by the Ruler for a maximum period of 99 years	Usufruct over vacant plots for a period of 100 years under specific conditions	Usufruct including the right of a monopoly lease for a period of 50 years subject to extension with the consent of the Ruler	N/A	N/A	No
Obligation to register	Obligation to register real property, usufruct right and mustahab right must be registered	Obligation to register all dispositions that create, transfer, amend or extinguish real property rights	Obligation to register original real rights and ancillary rights in rem	Obligation to register real property and usufruct rights	N/A	N/A	Obligation to register any action that creates, transfers, changes or removes real rights

Note: The table above maps general laws and regulations on real estate in different Emirates that are publicly available.

Source: OECD analysis.

Notes

← 1.  Article 121 of the UAE Constitution; Article 10 of Federal Decree Law No. 32 of 2021 on Commercial Companies.

← 2.  “National treatment” is the commitment by a country to treat enterprises operating on its territory, but controlled by nationals of another country, no less favourably than domestic enterprises in like situations.

← 3.  See section A restrictive regime for foreign ownership of land across Emirates.

← 4.  Article 1 135 of Federal Law No. 5 on the Civil Transactions Law of the UAE provides “1. No one can be deprived of his property without lawful reason. 2. Expropriation for public utility may take place against a far compensation and in accordance with the law provisions”.