United Arab Emirates: Legal Inheritance For Non-Muslim Expatriates

Last Updated: 4 August 2017
Article by Bertrand Dumon and Edouard Salwan

The question of inheritance in the event of death is the ultimate apprehension of European expatriates residing in the UAE, especially considering the uncertainty and complexity of the rules that governs inheritance matters in the UAE.

Whilst the UAE law expressly disposes that inheritance shall be governed by the law of the deceased at the time of his death and that wills are governed by the law of the national that expired, practice shows that UAE courts seem to privilege the application of Shari'a Law over non-Muslim expats despite a will that provides otherwise. Following numerous questions raised by our foreign clients, whom own assets in the UAE, we elected to give you a spotlight of the local practice regarding inheritance in order to anticipate a potential death and to avoid bad surprises thereafter.

1- The Will, a necessary precautionary measure

1-1 Practically speaking, it is very important to understand that following an expatriate's death, access to the assets of the deceased, in whatsoever form, whether monetary movable assets (shares, cash ect...) or immovable assets shall be restricted. A surviving spouse for instance will not be able to dispose of the restricted assets in any manner whatsoever without instructions given by the UAE Court, having jurisdiction on matters relating to distribution of assets in the event of death. In this respect, it is recommended to hire a local lawyer at the time of death in order to carry out and follow up such procedure.

1-2 Theoretically speaking, article 17 of the Federal Law no (5) of 1985 and its amendments promulgating the UAE Civil Transactions Law (the "Emirati Civil Code") has, in theory, provided a secure legal framework for non-Muslim expatriates by granting an express right to apply the law of the deceased with regard to the distribution of assets, and rules of guardianship of minors in the United Arab Emirates. Indeed, if we follow the letter of article 17 of the Emirati Civil Code, non-Muslim expatriates should take precautionary measures, such as registering a will which states the modalities by which assets are meant to be distributed to the heirs and which member of the family will act as guardian of the minors.

1-3 The question of guardianship is almost always neglected by expatriates whom automatically falsely assume that the surviving mother would systematically receive guardianship of the under aged children.

1-4 In light of the above, having a duly notarized and attested will in place would act as a tool to attempt to derogate from the principle of Shari'a Law should it be drafted and attested under the following manner:

1-5 Unfortunately, we will demonstrate that the UAE judge does not systematically comply with this principle, which is clearly stated in the Emirati Civil Code

2- Effectiveness of a will in the UAE

2-1 In theory, there is a possibility to apply the notion of renvoi (reference to a foreign law) to the deceased's foreign law before the UAE judge if we consider that article 17 of the Emirati Civil Code is deemed as an express recognition of the principles of international private law generally accepted by UAE laws. However, as for the notion of renvoi and all conflict of laws situations, the same is tainted by a double major limitation: UAE public order regarding assets located in the UAE and European public order for assets located in Europe.

2-2 UAE Public Order: The application of the deceased's national law, however codified in UAE law is often countered by the necessity of the succession judge to be bound by UAE's public order and moral values which is exclusively guided by Shari'a Law. In short, for the judge to accept that the inheritance be based on the deceased's will, he shall not only identify and verify the dispositions of the deceased's national law, but also make sure that the stipulations of the foreign law that governs the will is not in express contradiction with the social and ethical values of the UAE. Bearing in mind that notions of public order, social and moral values give rise to a broad and non-exhaustive interpretation, the judge has basically complete discretion to either accept a will based suit or squash it to apply exclusively Shari'a law which conforms to UAE public order and moral values.

2-3 Obviously, a decision of the local judge could not be executed in Europe if it violates the European public order

2-4 European Public Order: It is worthwhile to recall to your attention that the European standard in regards of inheritance has been codified by EU regulation No 650/2012 with a view to ending the fragmentation of the inheritance of EU nationals. Recital 58 of the EU Regulation states that " exceptional circumstances relating to public interest considerations should give the courts and other competent authorities of the Member States responsible for the settlement of inheritances the possibility of excluding certain provisions of a foreign law, where, in a specific case, the application of those provisions is manifestly incompatible with the public policy of the Member State concerned. [...] ". The tone is self-explanatory: Any form of discrimination should render void the decision of a foreign court within an EU member country. In doing so, it is obvious that a UAE ruling based on sharia, which is by definition discriminatory on issues relating men and women's equal succession and careless of the statutory inheritance would be inapplicable under the terms of European public order.

2-5 Having said that, it is crucial for non-Muslim expatriates to understand what exactly happens in the event of the application of Shari'a Law to the deceased's estate, at least in regards of their UAE based assets minding the possibility to rebalance such situation before the European judge at the time of execution of the UAE judgment that ruled upon the inheritance

2-6 Principles of Shari'a Law : In the event the deceased's will is considered as void and the foreign law inapplicable, the following substantial principle of Shari'a Law shall therefore apply to inheritance:

(a) The surviving spouse and the children won't be the sole legal heirs as the deceased parents' will be included and shall receive a portion of inheritance. Furthermore, a daughter receives only half of what a son is entitled for.

(b) Assets will be distributed in virtue of Shari'a Law, according to a specific distribution quota (not necessary based on gender equality)

(c) The mother won't automatically assume guardianship of the children; such right being systematically vested to the father's side of the family. Indeed, in accordance of the disposition of Federal Law No. 28 of 2005 promulgating the UAE Personal Status Law and its amendments (the "Emirati Personal Status Law"), in the event of death of a minor's father whom is a resident in the UAE, the closest male relative on the father's side of the family is usually appointed as guardian of any minor. The mother of the children would retain custody, subject to specific conditions such as her not remarrying. On the other hand, if a wife was to die in the UAE, then the husband would remain the guardian and custodian of any minor children subject to specific conditions under the Emirati Personal Status Law.

2-7 In terms of the Sharia' Laws, all of the deceased's bank accounts are frozen, whether in personal name or in joint names. Access to these accounts are not permitted until a ruling is passed by the inheritance judge having jurisdiction on the estate. Thereafter, the court initiates an estate audit with banks, the Dubai Department of Economic Development and all other free zones to determine the inheritance entitlements in relation to shares held by the deceased in UAE based companies. It is also important to bear in mind that in determining the inheritance shares and issuance of the inheritance certificate, deemed as token to unblock the estate, the courts ensure that the debts of deceased are settled from his estate before distributing to his successors in right.

3- DIFC Wills – a step towards legal security

3-1 Recently, and in an endeavor to eliminate ambiguity and uncertainty, the DIFC Wills and Probate Registry introduced a new framework for inheritance matters in regards of non-Muslims owning assets in Dubai, backed by memorandums executed with other public authorities in order to expand the scope of applicability of DIFC Wills. The DIFC Wills and Probate Registry reflects the innovative spirit of Dubai and is based on common-law inheritance rules.

3-2 To register a Will at the registry, the requirements are that:

(a) Not being Muslim and have never been a Muslim

(b) Being over 21 years of age

(c) Owning assets in Dubai and/or Ras Al Khaimah and/or have minor children residing with you in Dubai and/or Ras Al Khaimah

3-3 There are four types of Will that you can register at the registry:

(a) Full Will – covers the distribution of your assets in Dubai and/or Ras Al Khaimah and the appointment of guardians of minor children (if applicable)

(b) Guardianship Will – covers the appointment of guardians of minor children only

(c) Property Will – covers up to five real estate properties only (online Will service)

(d) Free Zone Company Will – covers up to five shareholdings in free zone or RAKICC companies only (online Will service)

4- In the light of the above, the following elements are to be noted:

4-1 In theory, UAE law offers the possibility of organizing its succession under the law of the nationality of the deceased

4-2 However, since the rules of the Shari'a are rigorous and of public order, the application of the foreign law relating to a UAE based assets is not guaranteed. On the other hand, a UAE ruling could not be executed in regards of assets located in the UAE in the event such judgment is violating the European Public Order.

4-3 The will remains a necessary precautionary measure and is deemed more efficient when registered with the DIFC. It should be noted that the DIFC Wills and Probate Registry is a recent initiative and practice shall demonstrate the effectiveness or otherwise of the latter.

To be continued...

Originally published by the French Business Council for Dubai and The Northern Emirates

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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