A Guide to Doing Business in the United Arab Emirates
I. The Country at a Glance
The U.A.E. is a federation of seven Emirates comprising Abu Dhabi, Ajman, Dubai, Fujairah, Ras Al Khaimah, Sharjah and Umm Al Quwain. Of the country's total population, the vast majority of those residing in the U.A.E. are not native to the country. Arabic is the official language; however, English is the de facto business language and is spoken by most. The Muslim faith is practiced by the overwhelming majority, although there are a significant number of adherents of other faiths, particularly Christianity and Hinduism.
Arab and Islamic cultural nuances can be found throughout the country, even in business. However, western culture plays an important role and business practices closely resemble those in the United States and Great Britain. Although Islam is a source of legislation, it is not strictly applied in business as it is in some other Middle Eastern countries.
The U.A.E. has a well-developed infrastructure. The capital city of Abu Dhabi and the city of Dubai are very modern. There are extensive bus systems, highway systems, commercial seaports and international airports located in the major cities of Dubai, Abu Dhabi and Sharjah, as well as a new driverless metro network in Dubai. The country also boasts a number of government-run and private hospitals.
Like its neighbors in the Arabian Gulf, the U.A.E. is primarily known as a petroleum-producing economy which has achieved tremendous economic and social development in the last two decades. Most of the U.A.E.'s petroleum reserves are located in the Emirate of Abu Dhabi. While the petroleum sector has dominated economic development in the U.A.E., attempts are being made to diversify into other sectors. Although the country is a federation, the member Emirates largely pursue their own policies. The Emirate of Dubai, the commercial hub and second largest Emirate in the U.A.E., in particular has positioned itself as a regional trade center, information technology and transportation hub and tourist destination.
The U.A.E. Federal Constitution (the "U.A.E. Constitution") apportions powers between the Federal government (based in Abu Dhabi) and the governments of the constituent Emirates. Some fields are regulated only at the Federal level (e.g., immigration) although local interpretations and practices sometimes differ from one Emirate to another. Other matters are regulated only at the Emirate level (e.g., each Emirate retains sovereignty over its own natural resources, including its petroleum reserves). Still other matters are regulated at both the Federal and Emirate levels (e.g., company formation and registration).
This summary provides a brief overview of certain key issues relevant to foreign investors wishing to establish a business presence in the U.A.E. In each case (other than establishing a presence in a free zone), the involvement of a U.A.E. national - whether as agent, partner or "sponsor" - will typically be a prerequisite.