Enhanced Protection for Trusts and Funds in the UAE

In the United Arab Emirates, new measures (UAE) have been introduced to protect trusts and funds, making them the most secure in the world. Amendments to the DIFC Law, adopted on March 14, establish a clear preference for DIFC legislation, meaning that foreign court decisions will not be enforced if they contradict this legislation.

These changes, known as a “firewall” for trusts and funds, ensure that foreign courts or parties unwilling to recognize the jurisdiction of DIFC courts cannot bypass the DIFC trusts and funds law. It is now required that fund managers or trust settlers cease operations if a foreign court decision has been rendered against them, thereby depriving them of the ability to manage assets based on that decision.

The amendments also provide additional safeguards for the preliminary transfer of trust or fund assets. Creditors must now prove that the settlor intended to defraud them in transferring assets and that this led to insolvency. Otherwise, the trust or fund will only be required to settle claims within the share previously owned by the settlor.

Another new measure is the establishment of a three-year statute of limitations for cases related to the transfer of assets into a fund.

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