Advisor Dr. Hisham Fawzi’s notes on a federal law project regarding deposit insurance at banks in the UAE

Notes of Advisor Dr. Hisham Fawzi on a Federal Law Project Regarding Deposit Guarantee at Banks in the UAE

Advisor Dr. Hisham Mohamed Fawzi (Legal Advisor to the Council): In truth, I am in agreement with the government on the provision stated in Article (2) because it establishes the principle: “The ministry assumes the position of the guarantor in bearing the obligations of the bank covered by the guarantee….” This is the principle. Subsequently, the details of these obligations are specified in Article (3): “The obligations covered by the guarantee are the deposits held by it in the country….” We have also added a provision regarding deposits received at any time for further clarification. In Article (2) which has become (3), the principle is established, and in Article (3) which has become (4), these obligations are detailed. Thank you.

His Excellency Obaid Humaid Al Tayer (Minister of State for Financial Affairs): Mr. President, first of all, regarding the first paragraph, it states “No interested party may claim….” I do not see a reason for deleting the phrase “any interested party” because according to the committee’s formulation, it states “No claim may be made based on any right claimed under a guarantee….” How can one base a claim on a guarantee? Firstly, who is the interested party? Let’s not forget that we are talking here between banks, meaning between one bank and another. The reason for deletion was not mentioned at all, not for the sake of good formulation, but rather “any interested party.” I hope you can clarify to us the reason why it was deleted. Thank you.

Advisor Dr. Hisham Mohamed Fawzi (Legal Advisor to the Council): Mr. President, the issue with the existing formulation is that even if you say “do not file the lawsuit within five days,” it means that the party concerned has five days to appeal to the ministry and to the court within the same five days, as if it encourages people to litigate, which is legally incorrect. However, the essence is to resort to the administrative authority of the ministry to request funds, and the ministry reviews the request within ten working days, and this text exists. Thus, if the ministry responds saying you have no right with us and notifies him of that, then he files the lawsuit within five days from the date of notification by the ministry’s decision, so the new proposed formulation is as follows: “The judicial appeal period before the courts of the state … – to confirm that the dispute will be before the courts of the state because guarantees may be contracted between an institution abroad and a bank domestically and the ministry – “The judicial appeal period before the courts of the state is seven days starting from the date of notifying the party concerned of the ministry’s decision regarding the claim,” meaning the plaintiff resorts to the ministry first and asks for it, then if the ministry refuses, he has seven days – after that – to appeal before the courts of the state.

Advisor Dr. Hisham Mohamed Fawzi (Legal Advisor to the Council): “The judicial appeal period before the courts of the state is seven days starting from the date of notifying the party concerned of the ministry’s decision regarding the claim,” so if the claim is accepted, there will be no dispute, but if the claim is rejected or he is given part of the amount or any dispute arises after the ministry’s response, then in this case, the appeal will be made.

President of the Session: Can the article be read slowly, Mr. Advisor?

Advisor Dr. Hisham Mohamed Fawzi (Legal Advisor to the Council): “The judicial appeal period before the courts of the state is seven days starting from the date of notifying the party concerned of the ministry’s decision regarding the claim,” so the plaintiff will request in the first period from the ministry, and the ministry will review and respond to him, and the plaintiff has seven days – after that – to file the lawsuit from the date of notification of the response before the courts of the state.

President of the Session: Please, Your Excellency Minister, we want your opinion and participation.

His Excellency Obaid Humaid Al Tayer (Minister of State for Financial Affairs): Mr. President, firstly for the first paragraph, it states “No interested party may claim….” I don’t see any reason for deleting the phrase “any interested party,” because when we speak according to the committee’s formulation “No claim may be made based on any right claimed under a guarantee….” How can one base a claim on a guarantee? Firstly, who is the interested party? Let’s not forget that we are talking here between banks, meaning between one bank and another. The reason for deletion was not mentioned at all, not for the sake of good formulation, but rather “any interested party.” I hope you can clarify to us the reason why it was deleted. Thank you.

His Excellency Obaid Humaid Al Tayer (Minister of State for Financial Affairs): We, when we proposed five working days, are actually seven days. Do you mean seven working days or five working days in this law? We are talking in this law about working days.

President of the Session: This is a proposal, and if the five-day period suits you, it is up to you …..

His Excellency Obaid Humaid Al Tayer (Minister of State for Financial Affairs): This is what we mean, we always prefer to talk about five working days because it gives you enough time, thank you.

President of the Session: It is left to you, Your Excellency Minister, how many do you want?