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Commercial Contracts and Regulations

The current UAE guidelines in the field of attestation of commercial contracts

Precautionary measures are in place to limit the movement of people. Shopping malls, restaurants, gyms, fitness centers and other entertainment venues such as cinemas, nightclubs, bars, pools and beaches in Dubai are closed as of mid-March 2020.

Recently, the National Disinfection Program was implemented, which shall remain in place until April 5, 2020 and which imposes restrictions on movement outside the home, between 8 pm and 6 am, in order to allow disinfection of public places. Consulting a commercial attorney in Dubai, Abu Dhabi, UAE, specializing in commercial contracts with limited exceptions for emergencies. Outside of these hours, members of the public have been asked to stay home unless they need to leave for essential reasons such as grocery shopping, visiting the pharmacy, or unless they work in a vital sector such as healthcare, water, police or banking, among others.

While outside the home, individuals shall adhere to the rules of social distancing. A fine of AED 2,000 shall be imposed on anyone who leaves their home for non-essential reasons. In the “remote work for the private sector” notice from Dubai Economy, the Dubai Business Regulatory Authority, all private sector companies and commercial establishments (with the exception of pharmacies, cooperative societies, grocery stores and supermarkets) have been instructed to commit to implementing remote work systems for 80% of their employees until 9 April 2020. A similar notice has been published by the Dubai International Financial Center (DIFC), advising all DIFC organizations to implement a remote working from home policy for at least 80% of employees as of 26 March 2020 until further notice.

In addition, widespread travel restrictions have been imposed. The UAE has canceled all entry visas for tourists (except for those from certain countries) and suspended entry for residence visa holders for 2 weeks from 19 March 2020. On 23 March 2020 all passengers` flights to and from the UAE were suspended for 2 weeks as of 25 March 2020. The above procedures may be subject to change within short time.

Issues for companies to consider

It is important for companies to assess the potential impacts of global restrictions arising from Covid-19, particularly in relation to supply chains and the potential impact on contract performance. This includes reviewing their existing contracts, with particular focus on provisions dealing with extension of time and delay, force majeure, default events and insolvency risk. Contractual clauses that provide for liquidated damages for certain default events or that provide for an express duty to mitigate losses after breach of contract shall also be carefully considered.

Companies shall check for any relevant material adverse change clauses in both lending and acquisition-related documents, which may act to prevent the withdrawal of funds or to allow the parties to terminate the contract. Companies shall also check their insurance policies to see which insurance is applicable in the event of business disruption. In all cases, special attention shall be paid to notification and reporting requirements.

Procedures in attestation of commercial contracts

Companies shall document the reasons for any failure to perform contractual obligations or even any difficulty in performing these obligations. This shall include any impacts from government guidelines or restrictions that have been implemented due to Covid-19. These documents may later become important in any court case or insurance claim. For example, Companies shall record any social distancing measures or travel restrictions such as those listed above if they prevent them from operating at their usual capacity.

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