Financial Leasing in the United Arab Emirates in its Latest Law Decree No. 32 of 2023
The UAE has a rich history of effective governance and strategic decision-making, bolstering its global standing. The government demonstrates a clear vision and comprehensive grasp of both national and international issues, swiftly adapting to global shifts while embracing innovation and advancement across various sectors. Decisions made by the UAE government mirror the ambitious vision of its leadership, underscoring its dedication to fostering growth and prosperity for its citizens and the global community alike.
Thanks to this insight, the UAE maintains its leadership position in numerous areas regionally and globally. Today, we're delving into a significant decree concerning financial leasing, also known as leasing financing. This financing method enables individuals and businesses to lease assets rather than buying them outright. In the United Arab Emirates, Decree Law No. 32 of 2023 was enacted to govern financial leasing.
This legislation aims to regulate lease financing activities and establish the terms and conditions that must be followed within the Emirates. Its goal is to bolster the financial system and create a conducive investment climate for investors and businesses.
This law outlines the regulations and procedures governing financial leasing transactions, encompassing contract terms, parties' rights, and dispute resolution mechanisms. Furthermore, it fosters trust between customers and leasing service providers, thereby bolstering the local economy and attracting increased investments to the UAE.
The Financial Leasing Law No. 32 of 2023 serves as a comprehensive legal framework for regulating this form of financing in the UAE, promoting financial stability, and bolstering the country's economic advancement. Upon closer examination of this federal decree law, it becomes evident that it comprises only thirty articles. These articles cover definitions, the law's scope of application, types of financial leasing, organisation and licensing of financial leasing activities, drafting financial leasing contracts, and mandatory contract data to ensure efficacy between parties and third parties.
Then, in its wisdom, the legislator outlined the role of the beneficiary in a three-party lease agreement, specifically excluding cases where the lessor is not responsible. The third chapter of the law addresses contract implementation, covering non-recourse to obligations, liability, asset depreciation, asset acceptance, condition correction, rights and obligations transfer, dispute prevention over asset possession, and other relevant matters.
In Chapter Four, the legislator addresses breach and termination, aiming to provide clarity on exiting contracts and dealing with breaching parties. This includes provisions on compensation, damages, bankruptcy, liquidation, asset return, possession rights, and disposal. The final chapter, Chapter Five, contains overall provisions governing the law, including penalties, judicial oversight, and the repeal of Financial Leasing Law No. 8 of 2018 as per Article No. 29 of Decree No. 32 of 2023.
Finally, this law is set to take effect in just a few days, as it was issued on September 25, 2023, and is slated for implementation six months after its publication date as stipulated in Article 30 of the decree.
For the Arabic version please click here.
