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Questions to Ask When an Employer Wishes to Pay a Subcontractor Directly

By Eric Teo – Head of International Practice & Special Projects   What are the questions to consider if an employer wishes to pay directly to a subcontractor - bypassing payment to its main contractor but without taking over the liability of the subcontract?  Lately, I have received an increasing number of enquiries concerning such a situation. The increase could be a sign of the COVID-19’s impact on the UAE’s construction industry, exposing the precarious position of those main contractors who are facing serious liquidity issues. Paying subcontractors directly indeed has its o...
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Is Your Project’s Documentation Ready to Face the COVID-19 Financial Crunch?

Project documents Covid crunch By Eric Teo - Head of International Practice & Special Projects Perhaps the current slow-down in the construction industry (whether in the UAE or internationally) brought on by the COVID-19 pandemic allows industry players some breather to focus their attention to the state of their project’s documents management and records keeping systems. Why is this important? It is important so that parties do not succumb to the harsh reality of their claims (or rebuttal) getting substantially reduced or rejected either during negotiations or in legal proceedings...
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COVID-19 – The Impact on Agency and Distribution Agreements: FAQ Agency Agreements

- By Avv. RA Dr. Massimo Fontana Ros Each principal who decides to benefit from the activity of a commercial agent makes a prior assessment of the relevant business costs, in particular regarding commission, expense reimbursements and amount of the indemnity for termination. Therefore, it is quite clear that during the exceptional measures introduced by the Italian Government due to the COVID-19 emergency, the most frequently asked questions by agents and principals are the following: I) Can the principal demand that the commercial agent still visits potential clients, claiming that in th...
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The Impact of the so-called “Decreto Liquidità” on Corporate Matters in Italy

- By Avv. RA Dr. Massimo Fontana Ros Decree-Law No 23 of 8 April 2020 (hereinafter referred to as “Liquidity Decree”) provides for a series of measures aimed at safeguarding business continuity throughout the emergency phase, particularly in respect of businesses that before the crisis were considered viable and that presented an ongoing prospect in terms of business continuity. A table summarizing the changes applied to corporate matters by the Liquidity Decree can be found as follows.   Provisions relating to reduction of Share Capital (Article 6) Initial measures have been in...
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COVID-19 and its possible classification as a Material Adverse Effect

What is a Material Adverse Effect? Interpretation of a Material Adverse Effect (MAE) may vary depending on a certain situation; as it is used to measure an effect of an event, and how it may or may not impact a small business or a larger corporation in various aspects. When related to finance, a MAE occurs when the following 3 matters are affected: A particular business and its assets, properties, liabilities, operations, financial conditions or prospects for the future. A loan contract, and its need to perform its obligations under any clause. The validity or enforceability o...
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Precautionary Measures by the UAE government to Curb the Spread of Novel Coronavirus

Ministerial Resolution No. (279) of 2020 on Employment Stability in Private Sector during the Period of Application of Precautionary Measures to Curb the Spread of Novel Coronavirus. Federal Law No. (1) of 1972 on the Functions of the Ministries and Powers of Ministries and its amendments; Federal Law No (8) of 1980 regarding the Organization of Labour Relations; and as part of the States efforts to combat and contain the spread of Covid-19; and upon the proposal of the Undersecretary of Human Resources Affairs; and for Public Interest. They have established that all entities working in ac...
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Force majure and Frustration under Indian Law

The spread of COVID-19 has occasioned serious implications for the global economy. It has also affected, in particular, party obligations under contracts. In this light, the present note provides a broad overview of the principle of force majeure and the doctrine of frustration under Indian law. This note does not constitute legal advice. Force majeure literally means a ‘superior force’. Broadly, it refers to circumstances where performance of a contract is prevented by an event or circumstance beyond that party’s control. Instances of such events include war, natural calamities, civil ...
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Force Majeuere Claims and Construction Contracts in the UAE

Eric Teo – Head of International Practice & Special Projects “Force Majeure” is a buzzword in these uncertain times that we face the COVID-19 outbreak. I have received several questions about it in relation to construction contracts in the UAE. This article provides a general guideline that I would like to share. In respect of contractual obligations, there must be an element of “impossibility” to carry out the obligations before the affected party can rely on Force Majeuere under UAE law to either terminate its obligations under the contract or seek other kinds of reliefs. By prac...
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Service of Proceedings

The UAE cabinet recently approved amendments to Federal Law No. 11 of 1992 on the Civil Procedure Law by supplementing certain provisions via cabinet resolution number 57/2018 which came into effect on 16 February 2019. In this article we will stress on enhanced changes made to the “Service of Proceedings” by highlighting the below salient points; as follows: 1. The time scale for the serving of court notices has been extended between 7 am to 9 pm, which previously could only take place between 7 am to 6 pm. Moreover, such services can take place at any time during non-business days by a...
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Economic Substance Regulations

The UAE Cabinet has issued Ministerial Resolution No.31 of 2019, requiring all in-scope UAE entities which conduct certain activities (Relevant Activities) to have demonstrable economic substance in the UAE. As a result of the promulgation of the Resolution, the UAE was removed from the European Union's blacklist by the Code of Conduct Group on Business Taxation. The Regulations apply to all UAE onshore and free zone companies (including in the financial free zones) that carry on and generate income from one of the “Relevant Activities” listed below (Relevant Entities): Banking D...
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