This article has been written by Mridul Tripathi who is currently pursuing BBA LLB from Vivekananda Institute of Professional Studies. This article is an exhaustive study of the judicial systems of India and UAE and their differences.
Table of Contents
Introduction
India and UAE are different in terms of the judicial systems, therefore it becomes important as well as a cumbersome task to study the differences between these systems to facilitate better dealings between the two countries. India follows the common law system whereas UAE follows the civil law system. The common-law system has been developed in the English Empire and thus India bears resemblance to the same.
The UAE judicial system is reflective of a mixture of systems, predominantly civil law systems (Egyptian, French and Islamic laws). Capital punishment though legal in both of the countries, in India it is only exercised through hanging while UAE is famous for resorting to barbaric techniques such as stoning, flogging (beating with lashes) and firing squad.
With the increase in diversity in the global environment, cities such as Dubai which are comparatively traditional in their approach towards global markets are opening their gates and coming up with lenient laws to stay ahead in the competition. Let’s start with understanding the two systems of law that are followed in India and UAE.
Civil law system
This term for a particular legal system should not be confused with the term “civil law” that is used to describe the laws and procedures governing a suit between private litigants. The civil law system doesn’t follow the rule of stare decisis i.e. to apply the rule laid down in the previous judgements, in the subsequent cases with similar facts.
The term civil law system refers to a legal system that emerged from the European continent and owes its origin to the Roman empire. It spread in the continent by the end of the 19th century. The codification of the laws was primarily done by France and Germany
The Origin: Corpus Juris Civilis(6th Century): Justinian, a Roman emperor started assembling, gathering and organising legal commentaries as well as legislations of the land. The Corpus Juris Civilis, a comprehensive written compilation of the Roman laws was a result of Justinian’s venture. It was divided into the following basic sections: Of Persons (Family Law), Of Things (Property Law), and Of Obligations (Contracts and Torts). The next centuries witnessed comprehensive text spreading throughout Europe. The Roman law was revived by the scholars of Italy by the end of the 15th century resulting in the incorporation of some customary laws.
The courts in a civil law system are bifurcated into two, first ordinary courts that handle private and basic criminal laws and second special administrative courts that deal with other facets of the public law.
Common law system
Common law system puts leverage on the precedents while deciding a case rather than completely depending upon the laws made by the legislature. Also termed as Anglo-American Law, common law derives its origin from the common-law courts of England.
It originated in the King’s court(Curia Regis) during the middle ages and consists of legal customs and traditions. With time, the laws evolved and so did the grounds deciding the validity of customs and other laws.
In India, while deciding a case though the statutes and laws are referred to, yet, the precedents are placed either at higher or equal footing with the laws of the land. The judiciary of the nations plays an active part in coming up with the laws and interpreting the meaning. The precedents ensure that consistency is maintained while giving judgements. The Supreme Court acts as the ‘court of record’, and its judgements are binding on the lower courts.
A line has been drawn between the legislature and the judiciary of the country and it is the duty of both these pillars to strike a balance and to not encroach upon each other’s territory. Whenever the legislature has exceeded its powers, as bestowed upon it by the constitution, the Indian judiciary has proved to be an efficient check. Similarly, when the judiciary exceeds its powers, the State ensures and balances the same with its administrative and legislative powers.
System of law in U.A.E
In the UAE, there are two judicial systems i.e. Federal and State. Each of the seven Emirates is given an option to either follow the federal system of justice or to follow their own framework. Both the federal and the state judicial systems comprise of a trial court( first instance court), a Court of Appeal and the Court of Cassation (Supreme Court). Dubai, Abu Dhabi and Ras-Al-Khaimah have their own Court of Cassation. As the laws in UAE are influenced by the Shariah law, there are harsh punishments for offences such as adultery, murder, drinking alcohol etc.
Major differences
As the basis of the legal system is different i.e. common law and civil law, there are many differences between the judiciary of the two countries. The major differences between the laws and the legal trends have been mentioned below
Language
In India, the official language of the Supreme Court and the High Court is English, as mentioned under Article 348 of the Indian Constitution until the Parliament, through a law, provides otherwise. Article 348(2) states that the Governor after obtaining consent from the President as to the use of Hindi language can allow the usage of Hindi in a High Court though the judgement and decrees are still to be delivered in English.
Arabic is the primary language of the UAE, whereas English is secondary. Recently, Abu Dhabi Judicial Department has declared Hindi to be the third official language of the Emirate. Indians form almost 30% of the UAE’s population and it is alleged to be the largest immigrant population residing in the UAE.
Ownership of the company
Ownership of a company in UAE was a major reason that had dissuaded foreign nationals from investing as the Commercial Company law allowed only a maximum of 49% foreign ownership in the country. In a very recent decision, the United Arab Emirates Cabinet relaxed the foreign ownership restrictions for 122 business activities. The ownership laws in the country have been too stringent and in an attempt to incentivise companies to invest in non-oil sectors as well, this positive step was taken. The sectors majorly open are agriculture, services and manufacturing.
Though the UAE Cabinet allowed 100% foreign ownership for specific businesses, the Department of Economic Development (DED) of each of the respective Emirates will have discretion as to what percentage of ownership should be allowed in local businesses. There are additional conditions imposed as to the maintenance of minimum share capital by a licensed company, to adhere to the compliances put up by MOHRE ( Ministry of Human Resources and Emiratisation) etc. The guidelines are still unclear on whether the existing companies will be able to benefit from the same, they sure won’t be prevented from applying to the DED of the respective Emirate.
Whereas, India through its FDI policy has paved ways for 100% investment (through an automatic route without prior approval of RBI) in majority of the sectors, by a foreign company. India has been continuously revising its FDI policy to incentivise as well to ensure the growth of the domestic growth as well through projects like ‘Make in India.’ India recorded its highest ever FDI with USD 64.37 billion in the financial year 2018-19.
Recognition of the principle of good faith
Good faith, though recognised in India, yet it isn’t applied as rigorously as it is applied in UAE. The principle of good faith broadly implies that when the parties are contracting with each other, they will do that honestly, fairly and not with an agenda to destroy the rights of the other. No unjust enrichment should be sought. In the UAE, the principle of good faith is recognised as a key obligation and is to be followed by the parties entering into a contract governed under the UAE law. An express mention can be found under Article 246 of the UAE Civil Transaction Code that makes it a positive duty for a party to perform its obligations in a manner that it confirms with the principle of good faith. The burden of proof is on the party who claims that the principle hasn’t been followed.
In India, the doctrine of good faith acts as essential in some agreements such as insurance (Ubbereima Fidei i.e. utmost good faith), whereas in other forms of contracts the person breaching the obligation to act in good faith indemnifies the party who has suffered the loss. In criminal law, good faith is mentioned under Section 52 of the IPC that states that an act committed without due care and diligence is not done in good faith and there are provisions related to this in rest of the Code that lays out punishment for criminal negligence.
There is one thing in common that the term ‘good faith’ is not expressly defined in the laws of both India and UAE.
No clear laws regarding corporate governance and liability
Most of the businesses in the UAE were family run and therefore the country is weak in terms of laws dealing with corporate governance. With an increase in globalisation in the rest of the world, the businesses in the UAE faces a threat of being thrown out of the competition as to the competency and productivity of their businesses suffer a disadvantage due to weak corporate governance laws. In the past decade to cope up with the changes, the UAE has been working towards building a robust corporate governance mechanism to lure into more foreign investment and safeguard the interest of the varied diaspora.
Recent changes
In the last decade, the Securities and Commodities Authority, which regulates the Abu Dhabi Securities Exchange(ADX) and the Dubai Financial Market (DFM), came up with a new regulation that applied to all the listed joint-stock companies. The Code ensures more transparency as to the working of the company with provisions such as at least one-third directors should be independent directors and a timely meeting of the board. Later in 2010, the Central Bank came up with a draft governance law, which was never officially turned into law but was noticed as implemented and ensuring a minimum standard of transparency.
The Common Reporting Standard that has been implemented by the OECD to ensure a global standard is set for an exchange of financial account information for an increase in tax compliance, was acceded to by the UAE and it established MAC (The Multilateral Convention on Mutual Administrative Assistance in Tax Matters) and MCAA (The Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information) in compliance to it. UAE has since 2017 taken part in the annual reporting. The CSR requires the companies to procure information on their non-resident clients and to exchange specified reportable information.
Whereas in India, there is already a robust corporate governance structure which is regulated by the MCA (Ministry of Corporate Affairs) and SEBI (Securities Exchange Board of India). A formal structure has been put forward in The Companies Act, 2013. Many other laws such as FEMA, 1999 and the Competition Act, 2002 also have provisions to ensure corporate governance. Non-regulatory bodies such as CII (Confederation of Indian Industry) have also come up with the Corporate Governance Codes. There is also Clause 49 in the Listing Agreement of SEBI that includes various requirements such as independent directors, audit reports, financial disclosures and risk management etc as mandatory.
Conclusion
With the maximum number of the Indian population staying as immigrants in the UAE, it is wise to know about various laws and differences between the countries. A better and in-depth understanding will only enable the population to take a better recourse and safeguard themselves from being exploited. Though there are certainly major differences and roadblocks pertaining to the stringent laws in the UAE, yet the relationship between UAE and India show positive trends.
References
- https://www.mondaq.com/india/contracts-and-commercial-law/668930/doctrine-of-good-faith-in-contracts
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