While there are many advantages in moving a business to Dubai or opening a business either as a 100% owner in a free trade zone or with a sponsor from the UAE outside of the free zones, there are also some important differences in the doing business in the country.
One of the biggest issues that many business owners from the USA or other Western countries will find is the challenges that can occur with debt collection from a business or an individual.
In the Emirate, as well as throughout the UAE, there are limited options for bankruptcy. While there are laws now in place, they are relatively new, and there are no specialized courts to hear these cases. This often results in challenges with debt collection through the courts. For this reason, as well as traditional methods of resolving these issues, often this is done through direct negotiation.
Ideally, any offshore company or a company owned by a foreign individual and operated in the free-trade zones needs to work directly with an attorney in Dubai when attempting to collect from a business or individual.
The opposite is also true. If an onshore company is owed by a foreign business, either in the free trade zone or in a sponsorship arrangement with a UAE national, it is still important to have experienced, knowledgeable legal representation.
In most cases, the two businesses will try direct negotiation to resolve the debt collection problem. If the non-payment is due to an unfulfilled contract or a disagreement about product or services supplied, this can often be resolved without having to involve the courts.
There is also the option for mediation to attempt to resolve debt collection issues. This can be a longer process, but it is often shorter than going through the legal system and litigating the debt.
At STA, we can provide legal representation for onshore and offshore business owners for debt collection services. STA Law Firm for more information.
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