UAE severance of diplomatic relations with Qatar – How does it affect you and your company?

The recent ending of diplomatic relations with Qatar by a number of its Middle Eastern neighbours, including fellow GCC member countries Saudi Arabia, Bahrain and the United Arab Emirates, has thrown a new element of uncertainty into business affairs in the region, and beyond. Here, Nichola Reece-Burton, Barrister-at-Law, Senior Legal Consultant and head of litigation and dispute resolution for James Berry & Associates Legal Consultants, addresses such concerns.

The UAE’s severing of its diplomatic relations with Qatar two weeks ago has already had a direct impact on a number of individuals and companies living, located or operating in the Emirates as well as in Qatar.

The UAE, of course, wasn’t alone in taking action against Qatar; others that did so at the same time, or soon afterwards, included Bahrain, Saudi Arabia, the Comoros, Djibouti, Egypt, Libya, Jordan, Maldives, Mauritius, Mauritania, Senegal and Yemen.

Below is a summary of some of the rules that have been imposed by the UAE and Qatar, as well as some of the knock-on effects:

• Qatari diplomats were given 48 hours, and Qatari citizens 14 days, in which to leave the UAE, from 5 June. Some exemptions have been introduced on humanitarian grounds, where Qatari citizens are married to UAE citizens.

• Expatriate residents of Qatar are no longer eligible for UAE visit visas for GCC residents, and are banned from international flights passing through the UAE.

•  The UAE has banned its citizens from travelling to, through or staying in Qatar, although again, recent exemptions have been introduced on humanitarian grounds, where Qatari citizens are married to UAE citizens.

• Qatar has also now banned citizens from these three countries from visiting or travelling through Qatar, although Qatar is not currently taking measures against residents of Qatar who are citizens of countries that have severed diplomatic ties with it.

• The airspaces above the UAE, Bahrain and Saudi Arabia are now closed to aircraft which began their journeys in Qatar.

• Six major Gulf airlines – Emirates, Etihad, Air Arabia, Flydubai, Gulf Air and Saudi Airlines – have suspended flights to and from Qatar. Qatar, in turn, has stopped flights to destinations in Saudi Arabia, the UAE and Bahrain.

• In line with the UAE Federal Transport Authority – Land & Maritime Circular No.2/2/1023, dated 11 June – all UAE ports must comply with the following regulations:

1. Not receive any vessels carrying the Qatari flag, or owned by Qatari companies, or Qatari individuals;

2. Not permit any cargo of Qatari origin in any port or water of the UAE to be unloaded, or conversely,

3. Not allow ships to load any cargo of UAE origin if it is destined for  delivery to the State of Qatar.

• Emirates postal services to Qatar have been suspended, along with some courier services. Other courier services are re-routing their carriers to avoid Qatar.

• Al Jazeera and beIN Sports have been banned in the UAE.

• Consular services in the UAE and Qatar have been affected for anyone who wants to use documents originating in the UAE in Qatar, and vice versa.

There is a diplomatic cooperation treaty between the UAE and Kuwait (subject to a special authorisation being issued), which authorises each to perform consular services for the other, potentially meaning that Qatar documents can be attested by the Kuwaiti Embassy in Qatar. However, it is considered unlikely that the Ministry of Foreign Affairs in the UAE will attest documents originating from Qatar.

• The UAE Central Bank has asked its banks to report to it their exposure to Qatari banks (including treasury investments, loans, letters of credit, trade finance facilities, equities, bonds, and interbank funds), and to undergo enhanced customer due diligence on any accounts they hold belonging to six Qatari banks: Qatar Islamic Bank, Qatar International Islamic Bank, Barwa Bank, Masraf Al Rayan, Qatar National Bank and Doha Bank.

• Qatar’s Central Bank has asked commercial banks to provide information on their foreign exchange trading on a daily basis. These banks have also been asked to provide a daily statement of withdrawals and transfers from deposits worth in excess of 10m Saudi riyals, and for information on cash withdrawals and deposits on a daily basis (previously this information was only required on a monthly basis).

• Parties to contracts governed by Qatari or UAE law may find that, due to the severing of diplomatic ties between the two states, one or both parties may give/receive notification of a “force majeure event”, under the terms of the contract or under the prevailing law. Anyone considering/receiving such notification is advised to seek professional legal advice as soon as possible.

• Both the UAE and Qatar are party to a number of treaties, including reciprocal recognition of court judgments. Anyone considering litigation, or attempting to enforce a judgement from the UAE in Qatar (and vice versa) may face difficulties in doing so now.

• The UAE attorney-general has announced that the UAE is taking a firm stance against what it considers to be Qatar’s hostile and irresponsible policies, saying: “Strict and firm action will be taken against anyone who shows sympathy or any form of bias towards Qatar, or against anyone who objects to the position of the United Arab Emirates, whether it be through the means of social media, or any type of written, visual or verbal form.”

The UAE Federal Public Prosecution office has also warned that, according to the UAE Federal Penal Code and Federal Law Decree on Combating Information Technology Crimes, anyone who threatens the interests, national unity and stability of the UAE will face a jail term of from 3 to 15 years, and a fine of not less than AED500,000 (approximately £106,800, US$136,100).

Although care has been taken to ensure that the above information is currently correct, the position is changing on a daily, if not hourly, basis. Therefore, we at James Berry & Associates Legal Consultants intend to issue regular updates of this information, which may be viewed on our website, where we endeavor to keep our clients as up to date as possible on this and other evolving situations. 

 

ABOUT THE AUTHOR
Helen Burggraf
Helen Burggraf is the editor of International Investment. A US-trained journalist, she has worked in Rome, New York City and London, covering everything from the fashion and retailing industries to the global drinking water and water-treatment sector, private equity, and most recently, the international cross-border financial services/advice industry.

Read more from Helen Burggraf

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