UAE Law and Practice Contributed by: Ildar Yuvakaev, Ruslan Akhmetov, Olga Serova and Daiana Ubushaeva, Consigliere Group
Durability The DIFC and ADGM courts are therefore developing a growing contentious trusts and foundations practice. The durability of UAE wealth structures will ultimately depend not only on statutory protection, but also on robust governance, genuine separation of control and properly documented succession arrangements. 5.2 Mechanism for Compensation Differences in Approach and Law Between the Free Zone and Mainland Courts Free zone courts The DIFC and ADGM courts (common law) apply a broad equitable toolkit aimed at enforcing fiduciary loyalty and preventing misuse of position. Remedies include equitable compensation to restore the trust, foundation or estate to the position it would have occupied had there not been a breach; account of profits/disgorgement, requiring fiduciaries to surren - der unauthorised gains even without proven loss; and proprietary remedies, including tracing and construc - tive trusts, which may allow recovery of assets and pri - ority over unsecured creditors. Courts may also grant protective relief, including injunctions, freezing orders, disclosure orders, receivership, rescission of tainted transactions and removal of fiduciaries. Punitive dam - ages are not part of the DIFC/ADGM approach; deter - rence is achieved through disgorgement, proprietary remedies and costs consequences. Mainland courts UAE mainland courts (civil law) follow a compensatory model. Damages cover actual loss and lost profit that are the direct and natural consequence of the wrong, with moral damages available in recognised cases. Punitive damages are not available, as compensation is intended to restore rather than punish. Restitution - ary claims for unjust enrichment may recover benefits obtained without legal basis, but remain harm-based rather than loyalty-driven. The practical distinction is that free zone remedies protect fiduciary fidelity, while mainland remedies focus on reparation of proven harm. This remedial gap makes governing law and forum selection a central consideration in fiduciary structuring and disputes.
than a partial entity interest, and no discounting prac - tice applies. Under corporate tax transfer pricing rules, related-party transactions must reflect arm’s length market value. Minority and marketability discounts may also arise in shareholder exits, buy-outs, con - tractual valuation mechanisms or court-ordered valu - ations in inheritance or divorce proceedings, depend - ing on the applicable valuation standard, governing documents or expert methodology. For cross-border families, discount planning remains primarily relevant under foreign gift, estate or succession tax regimes.
5. Wealth Disputes 5.1 Trends Driving Disputes Rapid Growth
The rapid growth of DIFC foundations and family enti - ties has created a significant future disputes pipeline. Structures established quickly, often with limited gov - ernance and substantial founder control, are increas - ingly vulnerable to sham, alter-ego and claw-back challenges. Transition of Wealth The current generational transition of Gulf and expa - triate family wealth is a further driver. Informal gov - ernance arrangements, undocumented family under - standings and founder-centric control frequently conflict with succession expectations, resulting in disputes over founder intent and asset ownership. A key issue is the challenge by heirs to lifetime transfers into foundations and trusts, including allegations of incapacity, ineffective transfer or attempts to circum - vent forced heirship principles. Multiple Jurisdictions The evolving jurisdictional landscape adds further complexity. DIFC/ADGM versus onshore forum dis - putes are increasingly central, given the different legal frameworks and remedies available. Typical claims include challenges to wealth structures, fiduciary breach and removal proceedings, shareholder dead - lock, matrimonial tracing, estate disputes and parallel criminal complaints for breach of trust. Multi-jurisdic - tional structures also create enforcement challenges across multiple legal systems.
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