You may have read my previous articles highlighting the uncertainties surrounding inheritance laws in the UAE. Unfortunately, those shades of grey continue. The confusion stems from two issues: the apparent contradiction between some sections of the Civil Code and the Personal Affairs Law, and the way in which the local courts have exercised their discretion in succession cases.
Let’s look at each of these underlying issues, before talking about the best course of action you and I can adopt to protect ourselves.
The Civil Code came into force in 1985 and it states that “inheritance shall be governed by the law of the deceased”. All good so far. However, it goes on to state that UAE law “shall apply to wills made by aliens disposing of their real property located in the state”. Not so clear now, as this latter provision appears to be making an exception in the case of Dubai real estate, which should be governed by UAE law. The Personal Affairs Law was issued later in 2005, and was an opportunity for much needed clarity to be introduced. It states that expatriates can choose, in their wills, for the laws of their home country to apply to their UAE assets. Clear enough, you would have thought. However, the Personal Affairs Law doesn’t make any mention of real estate. And so some have concluded that in relation to real estate, the earlier Civil Code applies (UAE law), and others that the later Personal Affairs Law applies, extended by implication to apply to the real estate law of your citizenship.
Now is not the time to embark on a legal thesis on the relative merits of statutory interpretation. Suffice it to say that there is sufficient space between the two provisions to enable weeds of uncertainty to flourish, watered by the discretion of the local courts, which have decided either way on various occasions.
So what’s the best course of action?
Go offshore: One sure way of avoiding the debate is to take your inheritance out of the hands of the local courts completely, by buying the property under an offshore structure. As long as the ultimate offshore entity in the structure is outside the UAE (and by that I also mean outside the Jebel Ali Free Zone Authority), then your death will not affect the registration of the property, only the registration of the shares in the offshore entity. The local courts will not need to be troubled and the debate outlined above will become academic. But this does of course involve an element of cost, depending on how complex you want your offshore arrangements to be, and some understandably feel that their portfolio doesn’t warrant that expense.
Submit to Sharia: Another approach if the property is held in your personal name is to submit to the local courts and decline to argue the point. Accept the application of UAE law and Sharia principles and calculate who would inherit what. If it transpires that those folk aren’t exactly who you had in mind, call a family meeting. Tell some of the relatives who will inherit the property that it’s not how you want it to be. Tell them that in the event of your death, they should transfer their shares to those individuals you really want to inherit your estate. A great idea if everyone in the family gets on like a house on fire, and continues to do so until the time of redistribution of your wealth, after facing the indignation of being cut out of their legal entitlements. But how likely is that? West Ham winning the Premiership springs to mind.
Home will: Another option would be to rely on the Personal Affairs Law and hope that your case is heard by a judge who shares my view that the 2005 legislation should trump that of 1985. Provided you have a will that’s valid under the laws of your home country, then with a following wind and a good advocate, that position should serve you well, although the outcome is by no means guaranteed. In practice it seems that such cases are being automatically rejected by the First Instance Courts, but entertained by the Appeal Courts. If this continues, as a colleague in the profession reminded me last month, one result you can be sure of is that the proceedings will take a long time (a year at best) and be fairly costly (get a small change from Dh50,000).
Local will: A few years ago the Notary Public in Dubai announced that it would notarise local wills for non-Muslims over 21 years old. It went on to confirm that these wills could deal with UAE and overseas assets, including property. Many people have taken advantage of this relatively new option and have signed Arabic/home language wills in the presence of the notary. But it must be pointed out that notwithstanding the enthusiasm of the notaries to notarise such documents, they themselves warn that the notarisation of a local will is no guarantee it will subsequently be recognised by the local courts.
Conclusion
The inheritance scene in Dubai is indeed a changing landscape, and none of us knows what’s up the next hill or down the next dale. In these circumstances, we recommend a belt and braces approach. We suggest clients have a home will to cover all their assets, wherever they are located. We also agree that it would be prudent to have a local will to cover your assets in Dubai, which should be consistent with the terms of your home will. Who knows how the local courts will regard these wills in the future, but it is perhaps better to have one than not — that way you are at least giving your successors an opportunity to short-circuit what is currently a difficult procedure.
Grieving relatives need all the help they can get, so it’s best to give them this chance while you can.
