The Sports Law Review: United Arab Emirates
Organisation of sports clubs and sports governing bodies
i Organisational form
The United Arab Emirates (UAE) law requires that sporting activities 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 events,5 and carries out any required government procedures in relation to a given sport. Applicant bodies should consult with the GAS to determine eligibility to seek official membership through an existing federation or association.
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, 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.
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. 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. 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,6 which was last amended in 2018,7 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.8 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.9 Managers authorised to manage the company must exercise power accordingly.
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.10 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.11 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.12
The dispute resolution system
i Access to courts
The default forum for resolving disputes arising out of contracts in the UAE is a local court. This is derived from the general principle of the right of access to justice as regulated under both the UAE Constitution13 and the UAE Civil Procedural Code14 (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,15 the right to seek justice through the ordinary judicial system can be neither fettered nor restricted.16 While this is the general principle, sports federations often 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.
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 National Sports Arbitration Centre (NSAC)) or internationally (e.g., the Court of Arbitration for 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 201817 (the UAE Arbitration Law) will apply.18 The arbitration law is modelled on the UNCITRAL Model Law.
As regards the validity of an arbitration agreement, the UAE Arbitration Law requires that at a minimum the arbitration agreement be in writing19 and be entered into by a person with proper capacity and authority. As to arbitrability, namely the issue of what disputes may and may not be subject to arbitration, the federal laws of the UAE apply. The UAE Arbitration Law provides for the tribunal or the appropriate courts, or both, to order interim measures in support of arbitrations.20
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 law21 allowing for the creation of the NSAC has been promulgated; however, the centre has not yet become operational.22 This 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.
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. 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, a Cabinet Decision23, 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 Awards24 (the New York Convention).
Organisation of sports events
i Relationship between organiser and spectator
The UAE is primarily a civil law jurisdiction, and the UAE Civil Code25 and the Commercial Transactions Law26 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. Additionally, any attempt to contractually limit liability for personal injury will be void by operation of the Civil Code and 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).27
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 events28 (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.29
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 contractual. 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.30 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.31
The organiser may also have a vicarious liability for employees or officials under his or her supervision. 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 substantial fines for non-compliance.
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 Code32 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.33
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 significant fine.
vi Riot prevention
The Resolution clarifies the Sports Facilities and Events Security Law,34 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.
Commercialisation of sports events
i Types of and ownership in rights
The UAE is a sophisticated transactional market and 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.35 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 below, 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,36 copyright37 and related rights, industrial property,38 and press and publishing law.39 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.
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.
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,40 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,41 tobacco, etc.). Likewise, while it is true that sponsors are sensitive to negative impacts on brand management and in the wake of scandals concerning doping and personal conduct, these issues are potentially more injurious in the UAE, so robust morality clauses are commonplace inclusions in sponsorship contracts.
Sports and antitrust 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 such as price-fixing, collusion on tenders, etc.
Sports and taxation
There is presently very light taxation in the UAE, including that which may affect sports events. 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. 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.
Outlook and conclusions
Interest in sport is not a new phenomenon in the UAE. Its sporting calendar has, over recent years, become increasingly packed with globally recognisable events. While there have been exciting green shoots in areas such as e-sports, it is clear that all eyes will remain fixed on recovery and the re-emergence of sports in a post-pandemic world.
Sport has been identified as a key lifestyle factor capable of improving the health of the UAE's citizens. Subject to post-pandemic recovery and adaptation on restrictions, we anticipate the ongoing concerted efforts to increase community participation and health through sports to continue. These goals have been matched by ambitious growth in hosting and delivering world class events and promoting the synergies between sports and tourism. 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, Xavier Solanes is an associate and Ujjwal Ashok is a paralegal 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.4 of 2002 as amended.
7 Federal Law No. 20 of 2018.
8 Exempted industries include oil as well as power generation; there is no express exemption for companies that operate in the sports industry.
9 Article 9(2) of Federal Law No. 2 of 2015.
10 Article 24 of Federal Law No. 2 of 2015.
11 Article 51 of Federal Law No. 2 of 2015.
12 Article 84 of Federal Law No. 2 of 2015.
13 The UAE Federal Constitution No. 999 of 1971.
14 UAE Federal Law No. 11 of 1992 promulgating the CPC.
15 Federal Supreme Court Decision of 22 April 2013.
16 See the Dubai Court of Cassation Decision in Appeal No. 156/2010, dated 9 January 2011.
17 Federal Law No. 6 of 2018.
18 In the Dubai International Financial Centre, DIFC Law No. 1 of 2008 (the DIFC Arbitration Law) will apply and in the Abu Dhabi Global Market (ADGM), the ADGM's Arbitration Regulations 2015 will apply.
19 UAE Arbitration Law, Article 7(1), DIFC Arbitration Law 12(2), ADGM Arbitration Law, Section 13(2).
20 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.
21 Federal Law No. 16 of 2016, establishing the UAE Sports Arbitration Centre-
22 Emirates News Agency article dated June 14,2020 authored by Rasha Abubaker.
23 Cabinet Decision No. 57 of 2018.
24 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.
25 Federal Law No. 5 of 1985.
26 Federal Law No. 18 of 1993.
27 Law Update June 2014, 'Health and Safety at Sports and Major Events', Andrea Tithecott, Al Tamimi & Company.
28 Cabinet Resolution No. 31 of 2015 on the Executive Regulations of Federal Law No. 8 of 2014 concerning sports facilities and events security.
30 James Whelan, UAE Civil Code and Ministry of Justice Commentary, 2010, published by Thomson Reuters.
31 Article 315 of Federal Law No. 5 of 1985.
32 Federal Law No. 3 of 1987 (the Penal Code).
34 Federal Law No. 8 of 2014 concerning sports facilities and events security.
36 Federal Law No. 37 of 1992 on trademarks amended by Law No. 19 of 2000 and Law No. 8 of 2002.
37 Federal Law No. 7 of 2002 concerning copyrights and neighbouring rights.
38 Federal Law No. 31 of 2006 pertaining to the industrial regulation and protection of patents, industrial drawings and designs.
39 Federal Law No. 15 of 1980 concerning publications and publishing.
40 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.
41 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.
42 UAE Federal Law No. 8 of 1980, as amended.
43 UAE Federal Law No. 4 of 2012 on the regulation of competition.
44 Cabinet Resolution No. 37 of 2014 Concerning the Executive Regulations of Federal Law No. 4 of 2012 Concerning the Regulation of Competition.
45 UNESCO 2005.
46 Federal Law No. 7 of 2015.
47 Federal Law No. 3 of 1987 as amended by Law No. 5 of 2012 concerning combating information technology crimes.
48 Federal Law No. 8 of 2014 concerning sports facilities and events security at Article 21.
52 GCA Safety Decision Dated 5 April 2020 and GCA Safety Decision, dated 7 May 2020.
53 Federal Cabinet Resolution No. 17 of 2020 read with Federal Attorney General Resolution No. 38 of 2020.
54 Ministry of Human Resources and Emiratization Resolution No. 279 of 2020 read with its Resolution No. 281 of 2020.
55 Ministry of Human Resources and Emiratization Resolution No. 281 of 2020.
56 DCT Circular No. 12 of 2020 dated 13 March 2020.
57 DCT Circular No. 21 of 2020 dated 25 March 2020.