The UAE Legislature recently enacted Federal Law No. 12 of 2023, a ground-breaking legislation aimed at regulating the partnership between the public and private sectors. This law holds immense importance as it seeks to promote collaboration and cooperation between these sectors, laying the foundation for economic growth, innovation, and development in the country.
What makes this Law Significant?
This law plays a vital role in facilitating the implementation of strategic projects by encouraging increased private-sector involvement. The UAE focuses on executing its objectives of economic growth by bringing in more investment that would reshape social, economic, and service value. Leveraging the strengths, resources, and expertise of both sectors, this collaborative approach ensures improved access to services and cost-effective outcomes. Moreover, this partnership enhances productivity and elevates the quality of public services by transferring knowledge and expertise from the private sector to federal entities.
Scope and Exclusions
This new proposed law excludes companies owned by the government, and brings in commercial enterprises. It also covers partnership projects within the private sector, whether fully or partially funded, as long as they are proposed by a federal entity and falls under the UAE Partnership Law.
Certain exemptions are in place, including pre-existing partnership contracts and specific service delegation contracts mentioned in the partnership projects guide. Projects below the financial threshold specified in the guide, as well as asset and public service privatization projects, and supply and procurement contracts related to national security mentioned in the guide, are also exempted.
Moreover, federal entities, sectors, and projects exempted by a Cabinet decision are not bound by this law.
Types of Partnership Projects:
The Partnership Projects Guide outlines various types of partnership projects, including:
1. Build, Operate, Transfer (BOT) model.
2. Build, Own, Operate, Transfer (BOOT) model.
3. Build, Own, Operate (BOO) model.
4. Build, Own, Lease, Transfer (BOLT) model.
5. Financial benefit from assets.
6. Management contracts.
Supervision and Implementation
The federal entity responsible for initiating a project is entrusted with supervising its implementation and managing the execution phase, following the provisions of the project agreement, guidelines, and templates issued by the ministry. The ministry’s role primarily focuses on supervision and providing assistance as necessary.
Resolving Company Disputes
In the event of any disputes arising from the project agreement, state courts can adjudicate the matter. Additionally, alternative dispute resolution methods such as mediation, arbitration, or seeking the opinion of an expert can also be considered and agreed upon.
Advantages of Collaborative Partnership
The collaboration between the public and private sectors yields numerous benefits, including:
- Mitigating financial and operational risks for the government in project execution.
- Implementing projects that add value to public funds.
- Enhancing project competitiveness in local, regional, and global markets.
- Providing training and skill development opportunities for federal entity employees, enabling effective project management and operation.
- Elevating the efficiency and quality of public services.
The UAE’s Partnership Law is set to revolutionize the relationship between the public and private sectors and unlock tremendous potential for economic growth and development.
What aspects do you find most impactful?
Share your thoughts about this newly enacted federal law in the comments below.