I organisation of sports clubs and sports governing bodies
i Organisational form
The United Arab Emirates (UAE) law requires that sporting activity should be pursued under the aegis of the General Authority of Sports (GAS),2 which is the supreme government authority responsible for the sports sector.3 It is responsible for ensuring that there is a national governing body (typically a federation or an association)4 in existence to sanction events5 and carry out any required government procedures in relation to a given sport. As the UAE is a relatively young jurisdiction and is actively developing its sporting culture, applicant bodies should consult with the GAS to determine whether their sport has the status of a new sport with a need to establish a new national governing body in accordance with GAS guidelines, or whether a national governing body already exists and the sport is eligible to seek official membership through an existing federation or association.
Once the GAS has ensured that there is an appropriate national governing body under which the elements and activities of a sport can proceed and develop, a framework within which other entities that typically comprise a sport (clubs, teams, academies and various commercial entities, etc.) can be established.6 For sports clubs, associations, unions and committees seeking to provide a service that aims to develop a sports activity, an application needs to be made to the GAS and certain supporting documentation submitted.7
GAS will provide guidance to applicants on completing the process in accordance with its rules and regulations, and there will be no registration processing fee for the clubs or associations.
In respect of commercial or private entities seeking to act within the sphere of sporting activities, once an applicant for a commercial licence has consulted counsel or other advisers, or both, approached the relevant department of economic development and chosen its preferred corporate vehicle, it will be referred to the GAS if a proposed activity on its trade licence involves the sports sector. Any such commercial endeavour will be subject to compliance with the standard established requirements for corporate set-up (a limited liability company is the most common choice, but there are other corporate structuring options) along with an additional requirement for GAS approval in respect of any sporting activity. Depending on the nature of the chosen activity and the sport or sports involved, approval may require coordination or membership with the relevant federation or association to ensure compliance with any regulatory standards or membership requirements, and to ensure there are no objections to a chosen activity, etc.
ii Corporate governance
In principle, a legal entity (including a club) is a legal person with its own capacity to create rights and bear liabilities, and as such can own property, enter into contracts with other parties and be involved in a dispute with other legal people. A company can only enjoy those rights and incur those liabilities through decisions made by the parties that own or control the company. The day-to-day management of a company is usually entrusted to its directors. The law imposes duties upon directors of a company based on the particular nature of that company.
Since the financial crisis, significant effort has been made to develop corporate governance in the UAE. Some of these developments required internal committees and external auditor oversight. Each company's constitutional documents – just like each sports club or association's by-laws or charter – should include management's duties, responsibilities and any limitations set upon the authority of those holding positions of responsibility, thereby setting forth good corporate governance.
The UAE has undertaken significant measures to safeguard its reputation as a regional hub for international business, and anti-corruption measures play a strong role in all corporate activities, including the legal framework surrounding sports. In this respect, the UAE has implemented a comprehensive Anti-Money Laundering and Counter-Terrorist Financing Law,8 which was last amended in 2018,9 and is supported by regulations and circulars issued by the Federal Cabinet and the Ministry of Justice as necessary.
iii Corporate liability
Sporting organisations are governed by Federal Law No. 2 of 2015 concerning commercial companies, unless they are operating exclusively in a free zone within the UAE or are an exempted industry.10 Companies are defined as economic enterprises aiming at profit.11 If a company is not validly incorporated, persons concluding contracts in its name are individually and jointly liable for the performance of obligations arising out of those contracts.12 Managers authorised to manage the company must exercise power to maximise the benefits for the company.
Any provision in the memorandum or articles of association authorising the company to agree to exempt officers from personal liability that they bear in their capacity as current or former officers of the company for their acts or omissions shall be void.13 Similarly, managers are personally liable to pay compensation for damage suffered by the company, its partners or third parties because of a breach of the memorandum of association of the company.14 Further, each manager is liable for any fraudulent acts, the improper use of power, the contravention of any law, the memorandum of association or contract appointing the manager, or for any gross error on his or her part.15
II THE DISPUTE RESOLUTION SYSTEM
i Access to courts
The default forum for resolving disputes arising out of contracts concluded, enforced or to be executed in the UAE is a local court. This default forum is derived from the general principle of the right of access to justice as regulated under both the UAE Constitution16 and the UAE Civil Procedural Code17 (the CPC). There is no specific limitation as to sports-related disputes set forth in either the Constitution or the CPC. According to the UAE Federal Supreme Court,18 the right to seek justice through the ordinary judicial system can be neither fettered nor restricted.19 While this is the general principle, sports federations regulate internal justice (i.e., dispute resolution) through internal regulations.
By way of example, Article 25 of the UAE Football Association (UAE FA) statute restrains the UAE FA, its members, players, agents and administrators from resorting to local courts, unless expressly allowed under the statute or otherwise under the FIFA Regulations. This article further states that any dispute is to be referred to the relevant dispute resolution body within UAE FA, FIFA or the Asian Football Confederation. Article 126 of the same statute adds that domestic disputes are to be referred to the UAE FA, whereas international disputes are to be referred to the Asian Football Confederation.
Moreover, the UAE FA has issued several regulations regarding dispute resolution committees and arbitration committees that have jurisdiction of disputes relating to football. UAE FA Regulations regulate appeals filed in respect of appeals of decisions made by the Dispute Resolution Committee and appeals of decisions made by the Appeal Committee. That committee has jurisdiction to decide on appeals against decisions by the Appeal Committee20 and it is expected to remain so until the UAE promulgates the law relating to the National Sports Arbitration Centre (NSAC).
ii Sports arbitration
In line with international practice, sports disputes are routinely referred to arbitration. The relevant contract or governing body's regulations, or both, will generally determine the appropriate forum for disputes to be resolved. Ordinarily, first instance disciplinary decisions are handed down by a non-arbitral dispute resolution chamber of the relevant governing body, usually with a right to appeal the decisions to an arbitral body either internally (i.e., an arbitral body set up by the governing body), nationally (e.g., the NSAC) or internationally (e.g., the Court of Arbitration of Sport (CAS)).
Domestic arbitration and commercial dispute related to sports – the basic arbitration framework
Generally, arbitration is a significant feature of commercial sporting life in the UAE, and as the national courts may be slow or lack the necessary specialisation to interfere in a sports dispute resolution process, parties may prefer arbitration.
The seat of any sports arbitration will determine, among other things, the procedural law that applies to the arbitration. The procedural law will often determine issues such as arbitrability and the availability of interim measures. If an arbitration is seated in the UAE (and unless otherwise agreed by the parties), the UAE's new arbitration law, introduced in 201821 (the UAE Arbitration Law) will apply. If an arbitration is seated within the Dubai International Financial Centre, the DIFC Law No. 1 of 2008 (the DIFC Arbitration Law) will apply. If an arbitration is seated within the Abu Dhabi Global Market (ADGM), the ADGM's Arbitration Regulations 2015 will apply (the ADGM Arbitration Law). All three arbitration laws are modelled on the UNCITRAL Model Law.
As regards the validity of an arbitration agreement, the UAE Arbitration Law, the DIFC Arbitration Law and the ADGM Arbitration Law require that at a minimum the arbitration agreement be in writing22 and be entered into by a person with proper capacity and authority. The extent of what constitutes 'in writing' and 'proper capacity and authority' varies across the jurisdictions.
As to abitrability, namely the issue of what disputes may and may not be subject to arbitration, this also varies across jurisdictions and can be a complicated issue. In respect of arbitrations that are subject to the UAE Arbitration Law, matters for which conciliation is not possible are not arbitrable.23 The UAE's federal laws clarify these matters to include those related to public policy, criminal matters and family matters. Also, certain commercial agency and distributorship disputes,24 and labour disputes,25 are not arbitrable. The DIFC and the ADGM are bound by the federal laws of the UAE, save for civil and commercial matters. Therefore, similar restrictions as apply in onshore UAE, also apply in the ADGM and DIFC. ADGM Arbitration Law contains no express language regarding arbitrability. The DIFC Arbitration Law permits arbitration in relation to consumer contracts and employment disputes where the consumer or employee has provided consent after the dispute has arisen.26
The procedural law will often determine the availability of interim measures. The UAE Arbitration Law, the DIFC Arbitration Law and the ADGM Arbitration Law provide for the tribunal or the appropriate courts, or both, to order interim measures in support of arbitrations.27 The extent to which the tribunal or courts, or both, are able and willing to provide such support varies across the jurisdictions.28
Specific sports arbitration developments
Legislators are mindful of the potential benefits of having a forum dedicated to resolving disputes in the sports sector at the national level.
In 2013, the UAE Minister of Youth, Culture and Community Development formed a committee to draft the articles of association for a new sports arbitration centre, prompted by a decision of the UAE National Olympic Committee that, among other things, approved the formation of such an entity. A draft law creating the NSAC has since been prepared though has not yet come into effect. This draft law envisages the NSAC having jurisdiction to hear appeals challenging the decisions of UAE sports federations.
For the time being, some UAE sports federations have made their own arrangements in respect of dispute resolution. For example, Article 128 of the UAE FA statute stipulates that, for the 2018–2019 sporting season, internal decisions may be appealed before the CAS pending the establishment of the NSAC. To facilitate optimal access to the CAS, the Abu Dhabi Judicial Department entered into a cooperation agreement with it in 2012, launching a CAS Alternative Hearing Centre in the UAE.
Disciplinary measures or other decisions by sports organisations are usually self-enforced or carried out in accordance with the rules and procedures of the relevant sports organisation.
Similarly, arbitral awards may be voluntarily complied with by the parties. However, where an arbitral award is not voluntarily complied with, a party can seek to enforce the award through the relevant domestic court.
The law surrounding the enforcement of domestic and foreign awards in the UAE has been subject to changes recently. It is too early to tell how these changes will work in practice. In short, the UAE Arbitration Law makes provision for the enforcement of domestic awards but is silent as to the enforcement of foreign awards. However, Cabinet Decision No. 57 of 2018, which entered into force in February 2019, deals with the issue of the enforcement of foreign awards in the UAE.
The UAE is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards29 (the New York Convention). The DIFC and the ADGM are bound by the New York Convention as they are part of the UAE.
III ORGANISATION OF SPORTS EVENTS
i Relationship between organiser and spectator
The UAE is primarily a civil law jurisdiction, and the UAE Civil Code30 and the Commercial Transactions Law31 govern commercial transactions – including transactions between ticketholders and event organisers. This means that the provisions of the Civil Code will effectively be read into the contractual arrangement and will apply in the event of certain prescribed circumstances. However, all rights and obligations are not necessarily within the four corners of any contractual document entered into. For example, any attempt to contractually limit liability for personal injury will be void by operation of the Civil Code. Likewise, any attempt to contractually fix damages will be subject to the court's discretion to award actual damages sustained in an event of a breach.
Where the organiser is also in control of the venue or facility at which the event is taking place, in addition to the commercial contract formed by the purchase of the admission ticket, there will be statutory requirements and regulations the venue will need to remain compliant with (e.g., in terms of health, safety and environmental regulations). There are a multitude of risks that require consideration, risk management analysis, control and mitigation measures, including fire safety, security, crowd control, public hygiene, food safety and controls against prohibited items or hazardous substances entering the stadium.32
Notable among federal laws applicable to organisers of sporting events are the implementing regulations to an existing law concerning sports facilities, fan conduct and corruption in bidding for sports events33 (the Resolution). The Resolution is now the primary vehicle through which the Ministry of Interior will oversee elements of safety and security at sports events in the UAE, leveraging the police, civil defence and other relevant authorities as necessary.34 All sporting events should have a flexible administrative and organisational guide,35 including necessary measures relevant to the nature and scope of the event (e.g., detailing proposed access or egress routes, safety procedures, security plans, communication protocols), as well as specifics on the venue. This guide is subject to approval by a designated police contact.
The control of fire risks is crucial to the safe management of sports and major events. New buildings and stadiums in the region are built to international standards.36 Older buildings are required to bring fire safety equipment up to date. In Abu Dhabi, additional instruments requiring compliance are in force.37 Any major incident at a large stadium that has the potential to cause serious injury or fatalities could lead to both criminal and civil sanctions, commercial implications, and the suspension or revocation of a trade licence.
ii Relationship between organiser and athletes or clubs
While in the UAE it is anticipated that the detail given to commercial benefits and obligations will be more significant in a contract between an organiser or venue and a team or athlete than it would be in the case of a fan admitted on the basis of a ticket stub (and perhaps some standardised terms and conditions of entry incorporated by reference to a venue website), the principles of the legal relationship will largely be as noted in the previous section; the organiser or venue is subject to certain regulations and standards while hosting events on its site, and that dynamic will inform the legal relationship with those participating in and viewing the event.
iii Liability of the organiser
Civil liability arises under the law of contract or tort, or both. The seven emirates of the UAE each have a civil law system. The laws of the emirate in which a claim against an organiser is brought, as well as federal laws applicable in that emirate, will govern the liability of a sports organiser for death, personal injury, illness or damage to property.
The Civil Code contains the statutory framework for contractual and tort-based liability and is applicable in all emirates. It provides for liability to make compensation under a contract where there is a breach by one party, loss incurred by another party and a causal link between the two. The statute contains a non-exhaustive list of the acts that might cause harm, and the national courts have discretion in deciding what amounts to harm.38 For example, the organiser of an event would be liable for harm caused by the collapse of a building unless he or she was not guilty of any wrongdoing or default.39
The organiser may also have a vicarious liability for employees or officials under his or her supervision, even if he or she may not have been free in choosing them (such as officials provided by the governing sport body).40 An employee or official may also be liable to provide compensation on the basis outlined above. Similarly, the organiser of the event may be individually and jointly liable for the acts or omissions of athletes and spectators, but only if they are under his or her supervision. If not, the injured party may bring a claim in tort against the athlete or spectator directly.
We are not aware of any decision in which the organiser of an event in the UAE has been held liable for the acts or omissions of an athlete or spectator, although event organisers routinely take measures to reduce the likelihood of this liability.41
With respect to ex officio investigations, a criminal act, in principle, is punishable in and of itself. The relevant state actors (police, etc.) are authorised to take action and do not require a specific complaint before taking measures to uphold UAE law. As noted, the Resolution also imposes event management obligations on organisers and facilities; venues and event organisers can be subject to fines of up to 500,000 dirhams for non-compliance with those rules.
iv Liability of the athletes
Liability of the athletes related to their actions during the course of the competition is usually regulated internally by relevant sports federations or the organiser of the competition, mainly by a disciplinary or ethics code, or both.
A civil or a criminal liability may be brought against an athlete for his or her actions during or outside the competition. UAE laws do not set specific requirements for bringing an action against an athlete – the common provisions civil and criminal laws shall apply.
v Liability of the spectators
As a result of the Resolution, spectators face tougher fines for criminal actions conducted at sports events. The law does not replace the existing Penal Code42 it complements it. This means that committing a Penal Code offence at a sporting event may now be considered an aggravating factor and, as such, may attract greater punishment than if it had been committed elsewhere.43
There are numerous other restrictions, but generally the changes bring the UAE legally in line with global best practice when it comes to the conduct of fans. Breaking the law can now have dramatic consequences. Depending on the severity of the crime, it can result in imprisonment of three months and a fine up to 30,000 dirhams.
vi Riot prevention
The Resolution clarifies the Sports Facilities and Events Security Law,44 requiring organisers to coordinate safety and security for events with the authorities so that potential crowd control and other security risks are proactively managed. These measures include requirements such as the need for a designated and qualified event security officer to coordinate with a police observer, as well as the use of the latest technology in communications and crowd management, effectively mandating a combination of common sense and modern capabilities to increase safety and security as appropriate for modern-day sporting entertainment.
The Resolution also formalises crowd restrictions on entering the field of play, bringing prohibited or dangerous materials into a venue, taking to, or acquiring weapons inside, a venue, violent conduct, throwing materials, insulting, racially abusing or gesturing inappropriately to other people, disregarding facility rules and using a venue for political purposes. Breaches of the law may lead to fines and imprisonment.
IV COMMERCIALISATION OF SPORTS EVENTS
i Types of and ownership in rights
The UAE is a sophisticated transactional market and, although still developing, the Civil Code incorporates elements from a long and illustrious mercantile history. The core elements of sponsorship, broadcast and merchandising agreements negotiated and drafted for use in the UAE broadly reflect global practices. Part of the reason for this is undoubtedly the growth of major sporting events in the region, both those hosted in the UAE and those hosted elsewhere but sponsored by UAE-based corporate entities.45 The chain of ownership in such rights reflects this reality. Entities that design and organise events own the commercial rights to the events and exploit them accordingly through those revenue channels. Local teams and clubs are increasingly aware of their intellectual property portfolios, and individual athletes likewise seek sponsorship where appropriate. As noted in Section IV.ii, UAE law recognises and protects these rights as an element essential to development and sustainability.
ii Rights protection
In relation to the commercial aspects of sporting activities, protecting the rights of those who invest as sponsors, broadcasters or merchandisers is fundamental to sustainability by encouraging continued investment. UAE law aims to protect intellectual property on a number of fronts. Laws regarding intellectual property include trademarks,46 copyright47 and related rights, industrial property,48 and press and publishing law.49 Federal government authorities, as well as local government authorities in several of the emirates, have jurisdiction to enforce intellectual property laws, and have trained personnel ready to carry out raids of shops and warehouses, seize goods and levy fines on offending parties. Customs authorities also have the right to seize and destroy illegal goods.
In part because of largely ubiquitous high-speed internet access and a significant expatriate population with a broad array of international sporting interests, the UAE has seen significant recent growth in broadcast piracy with respect to premium sports content. Strong measures have been taken to combat broadcast piracy in the UAE.50 The primary statutory tool of the copyright law (which includes, inter alia, prison terms), taken together with a recently formed Anti-Piracy Coalition51 – including leading networks and various elements of government from the Criminal Investigations Department and the Department of Economic Development at the emirate level – have led to significant enforcement activity.
Many of the practical problems that could occur to aggrieve a rights holder in the UAE will be familiar issues in many jurisdictions. Sponsorship is relatively contained, because parties can cooperate where a mutually beneficial arrangement is struck, and commercial terms will be enforceable by contract and reference to the courts or other agreed dispute resolution mechanisms.
iii Contractual provisions for exploitation of rights
The commercial acquisition of rights to sporting events is transactional and largely subject to the nature of the bargain reached between the respective parties in the context of the Civil Code. One particular difference is more practical than legal, but should nonetheless be reflected in rights acquisition agreements, and relates to the term of the agreement and the price of rights exploitation. Because many events are being developed or brought to the region for the first time, the history of success and data concerning target demographics that sponsors want to see is often absent. This can introduce an element of risk and speculation that may reduce the cost. Understanding and preparing for these issues in advance of negotiations allows for creating rights agreements that suit both parties and can lay a foundation for relationship development, which is highly valued in the UAE market.
Additionally, in terms of sponsorship agreements, some elements of the contract that may differ slightly in the UAE context taken against the larger sports markets in America and western Europe may require greater attention for detailed and tailored drafting. This can include an appreciation of local publishing laws,52 which tend to reflect greater sensitivity to public morality concerning matters of dress and behaviour as well as restrictions on the advertising of certain types of products (alcohol,53 tobacco, etc.). Likewise, while it is true that sponsors are sensitive to negative impacts on brand management across the globe, in the wake of recent scandals concerning doping and personal conduct involving household-name athletes, these issues are potentially more injurious in the UAE, so robust morality clauses are commonplace inclusions in sponsorship contracts.
In respect of statutory provisions, sponsors should be aware of the rights of registered agents for sales and distribution under the Commercial Agencies Law54 where they are involved in exclusive arrangements. This law exposes sponsors to significant extra-contractual obligations, which can result in the imposing of protective measures for agents that can effectively hinder termination rights, lead to significant unplanned costs and even permit restrictions on importation to the country in the event of a dispute.
v Professional sports and labour law
i Mandatory provisions
UAE Federal Law No. 8 of 1980 and its amendments (the Labour Law) sets out the basic employment requirements for private sector employees, including professional athletes.
Given the relatively short careers of top-level athletes, the high risk of premature career-ending injury and the sports specificity, the vast majority of athletes are employed on fixed-term contracts. This is also the case with managers and head coaches.
According to the Labour Law, fixed or limited-term contracts can be renewed as many times as required, but should be for a duration of no more than two or four years each. If the employment continues beyond the expiry of the fixed term, the contract will generally automatically convert into an unlimited-term contract (depending on the location of the employer). All other terms of employment (e.g., salary, vacation allowance) will remain the same. In practice, several athletes sign limited duration-contracts up to five years.
There are no express laws surrounding salary protection; however, those employers located onshore (or within certain free zones) are required to pay salary via the UAE Wage Protection System (WPS). The WPS is a clearing system that ensures that employees' wages are paid in full and on time.
If an employer wishes to reduce an employee's salary (irrespective of where they are based in the UAE), consent must be obtained from the employee in writing. If the employer decided to implement changes in any event, without obtaining the written consent, the new terms would be rendered unenforceable and would likely result in an employee commencing proceedings for breach of contract or 'constructive dismissal', or both.
In relation to the termination of a limited-term contract, if an employee's contract is terminated during the term for reasons other than gross misconduct, he or she is entitled to three months' full salary (or to the salary due for the remainder of the unexpired term – whichever is less) by way of compensation (in addition to his or her contractual entitlements, including notice, if provided for). There is no defence to a termination claim other than for gross misconduct.
Conversely, in respect of an unlimited-term contract, if the employee's contract is terminated for reasons other than gross misconduct, he or she can file a claim for unfair dismissal and claim up to three months' salary (again, in addition to his or her contractual entitlements). A defence to the claim (and associated compensation) can be mounted if there is a documented disciplinary process.
Clubs and sporting organisations typically have a list of gross misconduct grounds under which an employee may be terminated summarily, including:
- bribery and match-fixing;
- adverse media exposure and commitments;
- injury where incapacity is unconnected with the player's employment;
- disparagement of sponsors and usage of a club's or sponsor's logo; and
- use of performance-enhancing drugs.
The threshold for a gross misconduct dismissal is extremely high and can require a criminal conviction prior to dismissal. As such, while a club or sporting organisation may include examples of gross misconduct in their contracts of employment, ultimately the Labour Court will only consider conduct to be gross if it matches the definition in the Labour Law, and even then would expect to see criminal findings to uphold certain allegations (e.g., dishonesty or bribery). From a practical perspective, therefore, a sporting organisation or employer may not be minded to wait for a judicial process to reach completion (including appeals), so in certain cases the decision is made to terminate the employee in the knowledge that there is a legal risk of a compensation claim.
ii Free movement of athletes
Given that the population of the UAE is approximately 90 per cent expatriate, it is no surprise that there are few internal restrictions on foreign athletes taking part in all the major sports. Some sports do impose a cap on the number of non-nationals who can be included on a team.
In June 2018, UAE Cabinet Resolution No. 27 was issued to allow certain categories of non-UAE nationals to participate and compete in official domestic sports competitions, offering the non-UAE nationals, mainly children of Emirati mothers, expats born in the UAE and expats resident in the UAE for at least the past three consecutive years, to become professional athletes.
iii Application of employment rules of sports governing bodies
Despite the Labour Law stating that limited-term contracts should be restricted to two to four years, certain national sports governing bodies set limited term contracts up to five years as enforced by the international federation to which it is affiliated. Despite the five-year contract being contrary to the provisions of the Labour Law, the question has never been raised before local courts.
vi SPORTS AND ANTITRUST LAW
The UAE Competition Law came into force in February 2013, although generally speaking, substantive guidelines have not been provided to date by either the authorities or the courts regarding the interpretation and application of the Law (we are not aware of any cases in respect of this Law to date). Further in this regard, the Law contemplates the promulgation of implementing regulations that will provide further clarity on the application and enforcement of the Law.
The enforcement of competition law to the sports sector is very restricted; at this stage, we do not feel that there are concrete concerns that directly impact sports rights holders or governing bodies.
Broadly, the Competition Law aims to protect consumers by regulating any activity that attempts to curb competition, including:
- conditions on sale;
- collusion in tenders and bids;
- freezing commercial activity;
- curbing the free sale of goods or agreeing not to purchase products from a trader;
- market segregation and geographical allocation or client allocation; or
- any measures that curb market access to competitors, drive them out of the market or constitute a barrier to joining existing agreements and associations.
VII SPORTS AND TAXATION
There is presently very light taxation in the UAE, including that which may affect sports events hosted therein.
From a direct tax perspective, there is no personal income tax. There is corporate income tax at the emirate level, but it is not enforced in practice except on businesses engaged in upstream oil and gas activities. Further, certain emirates levy a tax on the income obtained by branches of foreign banks. In addition, there is no domestic obligation to withhold tax. Therefore, sports events that take place in the UAE currently should not result in UAE direct tax implications.
From an indirect tax point of view, there is value added tax (VAT) and excise tax. VAT has applied at the federal level since 1 January 2018. It is imposed on supplies of goods and services, and on imports of goods and services at the standard rate of 5 per cent, unless the supply or import is subject to VAT at the rate of zero or exempt from VAT.
While persons with no place of residence for VAT purposes in the UAE are generally not required to register for VAT therein, they may be required to register if they make supplies that are subject to VAT, and no other person in the UAE is required to account for or pay the VAT to the Federal Tax Authority. As each case is unique and dependent on many factors, specific advice should be sought in all instances to determine whether foreign persons may have an obligation to register for VAT in the UAE.
Excise tax has also applied at the federal level since 1 October 2017. It is imposed on the production, import, release or stockpiling of certain goods as set out in legislation, including but not limited to carbonated and energy drinks. Similarly, detailed advice should be sought in every case to ascertain whether any envisaged activities in the UAE may result in excise tax implications.
VIII SPECIFIC SPORTS ISSUES
The UAE National Olympic Committee has a broad mandate to improve standards in respect of UAE sports and to enable participation in accordance with international practices. In particular, the National Olympic Code was adopted by the National Olympic Committee in 2013, which, inter alia, empowers the Committee to apply international conventions as they relate to sports (e.g., including the International Olympic Committee's medical regulations). Even prior to the adoption of the National Olympic Code, the UAE ratified the International Agreement on Anti-Doping55 and established the UAE National Anti-Doping Organization, which, subject to coordination with the GAS and the National Olympic Committee, is responsible for overseeing the implementation of the UAE National Anti-Doping Code. The UAE NADO is a signatory to the WADA Code and is recognised by the WADA.
The UAE NADO is cognisant of the WADA's efforts during the past decade to harmonise testing and sanctions in comparable cases across international sports, and the continued recognition of those standards is anticipated in the UAE. This expressly extends to the procedural conduct of hearings, and the range and imposition of sanctions against transgressor athletes.
Recently, framework legislation has been enacted in the UAE that criminalises doping in horse racing and equestrian events.56 The objective of the law is to combat the trading or use of banned substances in those sports in the UAE to further develop detection and preventative strategies, and to educate owners, horse trainers, vets, stable workers and any other persons dealing with horses.
Gambling is prohibited by the Penal Code and punishable by up to three years' imprisonment. For those who open or manage a gambling establishment, a prison term of up to 10 years may be imposed. In terms of online betting, the Cyber-Crimes Law57 specifically addresses content distribution via the internet, and includes significant fines and prison terms among its range of sanctions.
Where financial incentives are used as part of a match-fixing scheme, subject to the specific facts, this would likely constitute bribery, which is addressed by the Penal Code.58 Passive and active bribery occurring in both the public and private sectors are criminalised, with bribery in the private sector carrying a penalty of up to five years' imprisonment. Additionally, the Resolution removes a measure of self-regulation from sporting bodies and brings it under federal law.
Moving forward, it will be interesting to monitor the interpretation and scope of enforcement of this provision within the Resolution, to see whether its application could be used more broadly to address some of the issues surrounding match-fixing and cheating that have plagued international sports in recent times.
iv Grey market sales
Most ticket sales for events are subject to commercial contracts between the event organisers and the ticket resellers, so sales in contravention of agreed parameters would be punishable under civil law. In the case of high-profile events where branding is involved, copyright and trademark misuse can come into play, which can provide sufficient grounds for cease-and-desist requests. Whether the sales could constitute a crime under the Penal Code would depend on the particular circumstances (e.g., whether there were elements of fraud or misrepresentation involved). If and to the extent there are civil or criminal breaches, auctioning on the grey market online would not be a barrier to enforcement, as the Cyber-Crimes Law would potentially apply.
IX The Year in Review
In May 2018, the Al Ain Court of Appeal issued a judgment related to an employment dispute between a football trainer and a football company stating that UAE employment courts do not have jurisdiction over disputes arising between members affiliated with the UAE FA since Articles 119 and 120 of the UAE FA statute forbid any affiliated member to bring a dispute before a local court, and that the dispute shall be resolved internally through the competent body.
This is the first time in the UAE that a court of appeal declined jurisdiction in such a matter.
X OUTLOOK AND CONCLUSIONS
Interest in sport is not a new phenomenon in the UAE. Its sporting calendar is becoming increasingly packed with events that have included, inter alia:
- the annual F1 race in Abu Dhabi;
- top-class professional cycling events in both Dubai and Abu Dhabi;
- the Annual Horse Racing World Cup;
- well-established professional tennis and golf events;
- FINA swimming tournaments;
- FIBA basketball tournaments;
- marathons; and
- ocean yacht racing.
We anticipate this growth will persist as sponsors continue to identify these events as key opportunities to invest in brand building, with major insurance and financial institutions joining others in determining that there are sustainable returns on their investment or credible corporate social responsibility initiatives, or both, in doing so.
Sport has also been identified as a key lifestyle factor capable of improving the health of the UAE's citizens. For example, there are ongoing concerted efforts to tackle the region's diabetes epidemic (e.g., the establishment of the Diabetes Centre for prevention, treatment and research in the UAE, and annual events such as the Imperial College London Diabetes Centre walkathon in Abu Dhabi and the Train Yas weekly fitness event sponsored by ActiveLife programmes to encourage public participation) and to implement some of the strictest measures against tobacco advertising and consumption59 to date. This national push to promote health by building on the existing cultural attachment to sport in the UAE by encouraging public activity suggests that the growth in sports will continue and the legal framework will need to grow alongside that.
1 Steve Bainbridge is a partner, Jane Rahman is senior counsel, and Xavier Solanes and Daniel M Louis are associates at Al Tamimi & Company.
2 Originally established pursuant to Federal Law No. 25 of 1999.
3 Pursuant to Federal Decree Law No. 7 of 2008 as amended by Federal Decree-Law No. 15 of 2017.
4 No more than one federation may be declared for the same game, sport or activity in the UAE (Article 2, Chairman's Resolution No. 40 of 2014 concerning the amendment of Chairman's Resolution No. 69 of 2011 concerning the executive regulation of sports federations).
5 There may be cases in which new sporting events could be held prior to the establishment of a national governing body (e.g., an exhibition match of a sport new to the UAE); however, this would need to be done in conjunction with the GAS and would likely require one or more no-objection certificates.
6 Federal Law No. 12 of 1972 concerning the organisation of clubs and societies in the field of youth care and development.
8 Federal Law No.4 of 2002 as amended.
9 Federal Law No. 20 of 2018.
10 Exempted industries include oil as well as power generation; there is no express exemption for companies that operate in the sports industry.
11 Article 8(1) of Federal Law No. 2 of 2015.
12 Article 9(2) of Federal Law No. 2 of 2015.
13 Article 24 of Federal Law No. 2 of 2015.
14 Article 51 of Federal Law No. 2 of 2015.
15 Article 84 of Federal Law No. 2 of 2015.
16 The UAE Federal Constitution No. 999 of 1971.
17 UAE Federal Law No. 11 of 1992 promulgating the CPC.
18 Federal Supreme Court Decision of 22 April 2013.
19 See the Dubai Court of Cassation Decision in Appeal No. 156/2010, dated 9 January 2011.
20 Pursuant to Article 46 of the UAE FA Arbitration Committee Regulations.
21 Federal Law No. 6 of 2018.
22 UAE Arbitration Law, Article 7(1), DIFC Arbitration Law 12(2), ADGM Arbitration Law, Section 13(2).
23 UAE Arbitration Law, Article 4(2).
24 e.g., Federal Law No. 18 of 1981, as amended.
25 e.g., Federal Law No. 8 of 1980.
26 DIFC Arbitration Law, Article 12(2).
27 e.g., in the UAE Arbitration Law, Articles 18(2) and 21, the DIFC Arbitration Law, Article 24, and the ADGM Arbitration Law, Articles 27 to 29.
28 For further discussion of this issue, see Law Update, September 2018, 'Is the Introduction of Interim Relief: A relief?', Al Tamimi & Company.
29 The 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, acceded to by the UAE pursuant to Federal Decree No. 43 of 2006.
30 Federal Law No. 5 of 1985.
31 Federal Law No. 18 of 1993.
32 Law Update June 2014, 'Health and Safety at Sports and Major Events', Andrea Tithecott, Al Tamimi & Company.
33 Cabinet Resolution No. 31 of 2015 on the Executive Regulations of Federal Law No. 8 of 2014 concerning sports facilities and events security.
35 Cabinet Resolution No. 31 of 2015 on the Executive Regulations of Law No. 8 of 2014 concerning sports facilities and events security at Chapter 2, Article 5, to be reviewed and approved in conjunction with the designated police command.
36 Such as the International Building Code (edition 2009) and International Fire Code (edition 2009).
37 Including the Code of Practice relating to Fire Prevention, Planning and Control (AD EHS RI. Code of Practice 7.0 Version 2) and the UAE Fire Code.
38 James Whelan, UAE Civil Code and Ministry of Justice Commentary, 2010, published by Thomson Reuters.
39 Article 315 of Federal Law No. 5 of 1985.
40 Article 313 of Federal Law No. 5 of 1985.
41 e.g., in respect of the Publications Law, event organisers appreciate that signage and advertising must be compliant with UAE law, and where there is prohibited advertising (e.g., for alcohol branding), organisers will actively make participants aware of restrictions and potential penalties.
42 Federal Law No. 3 of 1987 (the Penal Code).
43 See Article 22 of Federal Law No. 8 of 2014; see also, Haneen Dajani, 'UAE Sports Law against racism will see offenders fined up to DH1m', The National, http://thenational.ae (online) 27 December 2015.
44 Federal Law No. 8 of 2014 concerning sports facilities and events security.
46 Federal Law No. 37 of 1992 on trademarks amended by Law No. 19 of 2000 and Law No. 8 of 2002.
47 Federal Law No. 7 of 2002 concerning copyrights and neighbouring rights.
48 Federal Law No. 31 of 2006 pertaining to the industrial regulation and protection of patents, industrial drawings and designs.
49 Federal Law No. 15 of 1980 concerning publications and publishing.
50 Haneen Dajani, 'CID raids Abu Dhabi shop selling illegal television services', The National, 8 June 2015, http://www.thenational.ae/uae/cid-raids-abu-dhabi-shop-selling-illegal-television-services.
51 National staff, 'OSN's anti-piracy efforts gain momentum in UAE', The National, 10 August 2015, http://www.thenational.ae/uae/technology/osns-anti-piracy-efforts-gain-momentum-in-uae.
52 At the federal level, advertising is largely regulated by Federal Law No. 15 of 1980 concerning publications and publishing; Federal National Media Council Resolution No. 35 of 2012 concerning the standards of advertisement content in mass media; and Federal Decree No. 5 of 2012 on combating cybercrimes.
53 In each of the two largest emirates, there are additional (albeit consistent) applicable statutes: the Abu Dhabi Liquor Law (Law No. 8 of 1976) and the Dubai Liquor Control Law (of 1972) expressly prohibiting the advertising of alcohol.
54 Federal Law No. 18 of 1981 on commercial agencies.
55 UNESCO 2005.
56 Federal Law No. 7 of 2015.
57 Federal Law No. 3 of 1987 as amended by Law No. 5 of 2012 concerning combating information technology crimes.
58 Federal Law No. 8 of 2014 concerning sports facilities and events security at Article 21.
59 Cabinet Resolution No. 24 of 2013 on the Federal Anti-Tobacco Law.