UAE Law and Practice Contributed by: Duncan Pickering, Nicola de Sylva, Sean Cope and Marta Almeida, DLA Piper Middle East LLP
of creation (it should be noted, however, that the laws relating to priority are largely untested in the UAE). If two or more applications to register a mortgage against the same property are made at the same time, the mortgages are registered together and rank equally in the distribution of auction proceeds. A lender may assign the ranking of its mortgage to another creditor that has a security interest in the same property. 3.8 Lenders’ Liability Under Environmental Laws Environmental laws in the UAE are not particu - larly detailed, but the relevant authorities are likely to pursue the party responsible for caus - ing the environmental harm, which may or may not be the mortgagor. If there are any remedial costs associated with rectifying the damage, the law provides that the lender may “take whatever legal action is necessary to protect its rights and recover the costs from the mortgagor” . In addi - tion, the mortgage will typically contain indemni - ties in favour of the lender in the case of pollution or other acts caused by the mortgagor that are harmful to the environment. 3.9 Effects of a Borrower Becoming Insolvent On 31 October 2023, the UAE published Federal Decree-Law No (51) of 2023 concerning Finan - cial Restructuring and Bankruptcy (the “New UAE Bankruptcy Law” ), which became effective from 1 May 2024. The New UAE Bankruptcy Law repeals the previous bankruptcy law of 2016. There is a degree of uncertainty as to the cor - rect application of the New UAE Bankruptcy Law. A declaration of insolvency will not result in the dissolution of contracts that are binding on
both parties unless the services are “personal” in nature. If a borrower declares insolvency, the lender’s security interests will not be extinguished to the extent that such security is not challengeable on an antecedent transaction. The obligations of a UAE company are subject to limitations arising from bankruptcy, liquidation, composition, and all other laws and general principles affecting the rights of creditors generally. 3.10 Taxes on Loans No federal taxes are directly applicable. If the recipient of a loan is a taxpayer for CIT pur - poses, interest expenditure derived from such loan will be deductible (as long as it is related to the person’s business activity). Deductibility of net interest expenditure (excess of interest expenditure over interest income) is limited in a tax period to (i) 30% of the taxpayer’s EBITDA or (ii) AED12 million, whichever is the higher. 4. Planning and Zoning 4.1 Legislative and Governmental Controls Applicable to Strategic Planning and Zoning Abu Dhabi Planning powers are vested in the DMT. Major developments are subject to a review process, in line with the long-term strategic plans for Abu Dhabi’s urban development. The review process
includes four key steps, as follows. Step 1: the information meeting
This is held by the DMT with the owner/devel - oper on the acquisition of a development site, to enable the DMT to provide the applicant with
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