Dubai forms committee to settle family business disputes

A special committee has been established in Dubai to ensure the continuity of family businesses and prevent any harm to their reputation or financial position while a dispute is being considered.

His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, First Deputy Ruler of Dubai, Deputy Prime Minister, Minister of Finance and Chairman of the Dubai Judicial Council, has issued a resolution for the formation of a 'Family Business and Family Ownership Disputes Settlement Committee'.

The decision is in line with fast-paced measures taken in Dubai to maintain the role of family businesses as partners in the emirate’s economy.

The new committee will have financial experts who will work alongside judges to provide specialised judicial expertise.

It aims to speed up the settlement of disputes and find a balance between prompt justice and the preservation of the economic interests of these companies.

"We continue to work to create a business environment that supports the sustainability of family businesses, ensures ownership continuity and helps improve their governance and contribution to Dubai’s economy as key partners in development and a leading destination for promising investment opportunities," said Sheikh Maktoum.

The decision to form ‘Family Business and Family Ownership Disputes Settlement Committee’ in Dubai is in line with fast-paced measures taken in Dubai to boost family business and ownership sustainability. pic.twitter.com/qktFKI6afV

— Dubai Media Office (@DXBMediaOffice) October 24, 2023

Formation of the committee

A judge with a rank that is not lower than an appeal judge will be appointed as its chairman.

The committee will also include two members with experience and competence in the legal, financial and family business management fields, who will be appointed as per the recommendation of the Director General of Dubai Chambers.

The resolution also stipulates the formation of the committee within Dubai Courts to ensure that the technical, administrative and legislative infrastructure of the courts can be leveraged to carry out the tasks assigned to them.

Committee's responsibilities

The Committee will consider and settle all disputes arising from the implementation of the family ownership contract, or between partners in the family business or between these partners and family members.

Its functions also include considering and adjudicating matters related to the expiry of the family ownership contract, the termination of the family business status, or its removal from the family business register established in accordance with the Family Companies Law, as well as determining the price of the partners' shares in the family business, settling disputes related to the right to redeem them, as well as considering and deciding on matters related to the cancellation of the change in the categories of shares in family businesses.

For the purpose of preserving ties between family members, the resolution stipulates that if the family ownership contract or the memorandum of association or charter of the family business includes a provision that disputes shall be settled amicably through the Family Members Council, the Committee shall, before considering such disputes, refer them to that Council to propose reconciliation between the parties.

The resolution also stipulates activating the role of the Centre for the Amicable Settlement of Disputes attached to Dubai Courts in resolving corporate and family ownership disputes amicably through conciliation and reconciliation.

Powers of the Committee

In order for the Committee to carry out its functions optimally, the resolution stipulates that it is granted the authority to take the necessary preventive and urgent measures it deems appropriate to preserve the continuity of family ownership or the family business, and to prevent the interruption of its work or any harm to its reputation or financial position throughout the period of consideration of the dispute.

Appealing the decisions and rulings of the committee

For the purposes of ensuring the achievement of timely justice and maintaining the degrees of litigation in a way that achieves the interests of the parties and the justice system in the emirate, the resolution stipulates the possibility of appealing the decisions and rulings of the committee before the competent court in Dubai Courts, in accordance with the cases and procedures stipulated in the Civil Procedure Law.

The decision also obliges the committee to submit periodic reports on its work to the Ministry of Economy in order to achieve periodic review of these works and ensure that measures and steps are taken that would increase their effectiveness.