Of Law and the Desert: The Legal System of the United Arab Emirates

By Glênio Sabbad Guedes, lawyer in Brazil

1. Between the Desert and the Law

Few nations illustrate the creative marriage between political vision and legal engineering as vividly as the United Arab Emirates. In scarcely half a century, the federation transformed itself from a collection of oil-dependent sheikhdoms into a modern polity governed by law—an institutional experiment that blends stability, openness, and reasoned normativity.

What makes the UAE remarkable is not merely its economic success but the deliberate architecture of its legal ecosystem. It has built, in the midst of the desert, a normative order capable of guaranteeing property, fostering trust, and reconciling plural legal traditions within a single sovereign framework.

The Emirati system is, in Dworkinian terms, a community of principle: a political structure that interprets its own laws as expressions of integrity rather than expedience. Law here is not simply a mechanism of control but a practice of justification.

2. A Hybrid Legal Order: Where Systems Converge

The UAE combines the Islamic civil tradition (sharia)—applied to family and moral matters—with a secular codified system for commerce and investment. Yet its most distinctive innovation lies in having institutionalized, within specific territories, the common law tradition of England.

The Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) are micro-jurisdictions governed by English precedent, operating in English and adjudicated by international judges. They coexist harmoniously with the civil and sharia courts of the federation, linked through recognition agreements and arbitration conventions.

This pluralism is not disorder; it is interpretive coherence—a structure in which each branch of law finds its legitimacy within the overarching idea of justice as fairness to foreign and local investors alike.

3. Corporate Forms and Legal Freedom

Federal Decree-Law No. 32 of 2021 abolished the old requirement that a UAE national hold a majority stake (51%) in mainland companies. The reform, radical yet rational, restored the moral independence of the market: foreigners may now own 100% of most business entities.

The available structures—LLC, Free Zone Company (FZCO/FZ-LLC), branch, representative office, or joint venture—reflect differing conceptions of autonomy and accountability. The choice among them is not merely bureaucratic but philosophical: it defines the balance between freedom and regulation, between risk and responsibility.

4. Free Zones: Laboratories of Legal Modernity

The over forty free zones across the federation are more than fiscal enclaves; they are constitutional experiments. Within them, investors enjoy tax exemptions, free repatriation of profits, and full ownership, while operating under simplified regulatory frameworks.

Each free zone—DIFC, ADGM, DMCC, JAFZA—represents a deliberate act of juridical imagination: the state creates spaces of contractual liberty without abdicating its sovereign authority. In 2025, Dubai went further, allowing free zone companies to conduct business on the mainland through special permits—proof that the Emirati legal order evolves not through revolution but through interpretation.

5. Taxation and the Ethic of Neutrality

The fiscal system of the UAE is built upon the principle of neutrality:

• Personal income tax: 0%.

• Corporate tax: 9% on profits above AED 375,000.

• VAT: 5%.

• Withholding tax: 0%.

More than 135 double-tax treaties and 100 bilateral investment agreements reinforce the state’s commitment to transparency and fairness. The recent adoption of the OECD global minimum tax (15%) for multinationals is a further gesture toward international integrity—an acknowledgment that fiscal responsibility and competitiveness need not be adversaries.

6. Guarantees and Institutional Trust

Under Federal Decree-Law No. 19 of 2018 on Foreign Direct Investment, the UAE guarantees protection against expropriation without compensation, free transfer of profits, and access to arbitration under the New York Convention. Over a hundred Bilateral Investment Treaties provide a second layer of legal security, ensuring that law remains the common currency of commerce.

The Emirati courts—particularly those of the DIFC and ADGM—have achieved global recognition for their independence and procedural efficiency. In the Dworkinian sense, they function as forums of principle, applying the law not as a collection of discrete rules but as a coherent narrative of rights.

7. The Law as an Engine of Development

In the United Arab Emirates, law is not an obstacle to prosperity but its foundation. Each statute, decree, and procedural innovation reflects a moral choice: to build a market governed by reason, a polity grounded in legitimacy, and a society that treats stability as a form of justice.

What emerges is not merely an investment-friendly jurisdiction, but a new chapter in the global history of legal philosophy: a federation that, through law, has reconciled the desert’s austerity with the demands of modern commerce.

In this sense, the Emirati project fulfills Dworkin’s ideal of law as integrity—a system that aspires not to the perfection of rules, but to the unity of principle.

Keywords: legal philosophy, foreign investment, common law, civil law, free zones, UAE, law and development.