Hotel Chain Aims to expand into the UAE’s Developing Tourist Industry

Charlene Williams Rizwan Khan MBA 5002 Managing

9/6/20
Maya Ghazi Waqar Anjum Administration and Controls
 
 
.

Table of Contents
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Introduction

Australia and the UAE are both prime

locations for developers, investors and
companies looking to expand their brands
into these markets. This a prime time for
Brunei’s Investment Agency (BIA) [1]to
expand its Hotel brand ‘’The Beverly Hills
Hotel’’ into the UAE or Australia. They
currently operate (9) luxury hotels in some
of the most attractive citifies around the
world.

Knowing that the Revenue in the Hotel market is estimated to recover in UAE by 2024 with
an annual growth of 8.9% mainly in Dubai [2] while in Australia its estimated to grow by
14.7% by 2025. [3]

Purpose

This is a Legal Collaborative Research Project which compares Australia and the UAE’s court
structure and laws to provide detailed information for BIA to make an informed decision on
expanding its Hotel Brand, “The Beverly Hills Hotel” into one of these growing tourist markets.
The research will aim to answer which country provides the best choice in terms of legal
jurisdiction laws in the establishment of an agreement for future developments. We will also
identify whether turnkey or unit contracts is a better matched for the prime country.

Law Analysis

Based on the four categories of law analysis in the following sections. We aim to show which
country’s law is best fit for Beverly Hills Hotel’s next Capital purchase.
 AGENCY LAW:

  UAE [1] AUSTRALIA
COMMERCIAL Is an agent who represents a principal for a Is a legitimate relationship
AGENT certain service in exchange for an agreed between anybody acting as an agent,
DEFINITION charge, and these services can only be authorized by another party or entity
done By UAE nationals’ weather they own acting as a principal to
a company or not. perform assignments on its behalf.
The contract should specify which emirate [2]
will be covered.
[1]
FORM OF A written legalized contract must be a written contract in terms of
AGREEMENT [1] ‘’POWER OF ATTORNEY’’, where the
agent must legally declare the
services that will do as requested by
the principle
[2]
REGISTRATION The agency should be enlisted in the The parties of this contract should be
commercial agencies presented by the legally competent for the agreement
Ministry of Economy either for the selected to be legal and official.[2]
emirate in UAE or the ministry in the
federal capital if the agreement involves all
UAE.
The contract should be signed in UAE,
otherwise it should be validated by the
Ministry of Economy in UAE.[1]
 
AGENT The agent should do exactly what is The agent should act honest for the
OBLIGATIONS  mentioned in the contract best interest of the entity by fulfilling
    the following duties:
The agent can accept a commission for all  
the arrangements which are done for a  Act in person 
specific service.[1]  Act efficiently and effectively
   Do what is best for the principal's
interests 
 Respect confidentiality 
 Work with integrity and not
accepting bribes [2]
Authorities IMPORTATION OF PRODUCTS: can be either:
given by Only the authorized agency can import the 1.Actual (the agent has actual
principle to the products for the principle if the contract is authority given orally or written by
agent valid, and the principle cannot agree with the principle Infront of the third
another agency unless the first contract is party) [4]
terminated. 2.Expressed (when the agent is
[6] representing his agency and at the
same time his principle, he is showing
expressed authority) [4]
3. Implied (signing a binder with the
client, gives the sense of implied
authority) [4]
4. Apparent (in front of the third
party the agent appears to have
authority, in contrast to the actual
truth) [5]
 
TERMINATION The termination is not given unless there is The termination of a contract can be
a valid reason presented to the agency obtained:
committee in the ministry of economy  Mutual Agreement between
   the parties
The possible ‘valid reason’ may be:  If it is not originally present in
 Agent failed to do the task the contract, either party can
 Agent damaged the reputation of the ask for termination with a
service or entity notice period.
 The agent plays a double role with the  Death of either agent or
competitors principle
 The agent did not respect the agency  Breach in the contract by the
law agent [3]
 Death of one the parties should be
notified to the ministry of the economy
within one week [1]
 
COMPENSATIO Due to sudden termination or non-renewal There is no legal right to
N of contract a compensation must be paid compensation. [7]
by the principles, these compensations are
calculated based on the following:
 
 The duration of the contract
 The quality of agents in
promoting the service
 The net profit produced by the
agent. [1]
COMPETENCE The UAE courts are banned from discussing Jurisdiction is the law of choice in
AND cases for any agencies that are not Australian law and should be
JURISDICTION registered in the Ministry of Economy. [1] mentioned in the contract. 
OF THE UAE   however, sometimes the law in
COURTS Australia is enforced regardless of the
chosen law in contract especially
 when:
• the validity of the contract is
questioned.

• the chosen law is used to avoid a

mandatory Australian law [2]

Comparative Analysis

The biggest drawback for UAE’s law is that it tends to stand by the local agent which is usually a
UAE citizen. Unlike the Australian law is unbiased and protects the rights of all parties.
For instance, there is no clear liability law in the UAE for the principle and agent. The UAE does
not clearly state the responsibilities of each party which may jeopardize the partnership. And
the termination law favors the agent as well, where the principle must pay compensation to the
agent and cannot sign or import anything unless all these payments are settled.
Consequently, this vagueness in the UAE law can result in a lot of disagreements and future
conflicts. Therefore, the Australian agency law shows a more secure contract for both parties as
compared to the UAE.

Contract Laws:

Country Specific Legal Structure & local/International Contracts

 
In this section we provide a comparison of contract law in Australia and the UAE, to give the
Board Members useful information regarding the contracts and their validity. When countries
seek opportunities to enter Joint- ventures or partnerships with other countries, they must first
understand the laws governor both at home and abroad.

Globalization has opened a vast array of opportunities for companies to expand their brands
into emerging markets. For Beverly Hills Hotel Chain to develop in either Australia or the UAE, a
clear understanding of contract law in both countries would serve in making the best decision.
In the table below, we did a quick comparison of both Court structure in Australia and the UAE
in which both countries have comparable in structure. We decided to add the legal framework
to aid in the
decision making of which country to propose the development plan to build a new hotel in the
region.
Australia [1] [2] UAE [3]
Court Structure
-
- High Court with other Federal courts created - Federal Court Structure with a Court of Appeal
by Parliament in Abu Dhabi. (Dubai and Ras Al Khaimah both
maintain independent Federal court systems)

Branches within the Courts

Federal Courts Civil law

State Courts Criminal Law
Islamic/Sharia law

Civil Court

- Federal Courts In Australia (FCA) Handles - Court of First instance and hears claims
Civil matters which stem from Federal Law related to commercial matters to maritime
and some Criminal offenses. Some matters disputes.
handled- bankruptcy, corporation, consumer
law, taxation.
- Family Court of Australia which handles
disputes against family members and Family
 law matters from the court above.
- Federal Circuit Court hears matters of less
complicated than (FCA) such as lesser
bankruptcy, administrative, copyrights,
privacy, admiralty and more.

Criminal Actions

- Hierarchy of State Court in each state or - Criminal Court - Handles complaints and
jurisdiction hears matters of a criminal offenses where police investigations occur.
nature including murder. These offenses are criminal in nature theft,
robbery, laws punishable by the government,
crimes against the public and more.

Sharia Courts

- Australia does not have Sharia/Islamic laws - UAE courts has Sharia law which is the Islamic
Court which holds sessions to dispute matters
between Muslims and other civil matters. [3]

 Comparing UAE Contracts to Australian Contracts

Prior to entering a contract, the business developers must be clear on the contract’s laws for each
country. According to law-teachers an on-line law studies resource [4], they define “Contract law

provides a legal framework for two parties entering a contract or agreement to resolve their
disagreements and to regulate contractual provide an effective legal framework for contracting

parties to resolve their disputes and regulate their contractual commitments.”

Differences in Contract law

Australia [1] [5] UAE [6]
 Formation- Intent to enter into a  Contract Formation- Civil Code applies which
 Differences in Contract law
Australia UAE
Australian contract law is based not on a In the United African Emirates the courts
civil code, but on legislative
legal relationship amendments
with the following are islegally competent
based on and they
Islamic principles are
of civil rights
to theelements
English common law.consideration,
agreement, [6] regulated by localobligations.
and contract UAE legislation like the Codes
Commercial
intent, capacity, and formalities. Civil also
Transaction Act dealing
apply when or the with
Coderelationships
of Civil
Procedure.
formedThey operate based
on a commercial basison civil
 scope and content- offer of law.
 [7]
Verbal Contracts- are prima facie which
The English common
acceptance, law terms,
privity, does not assume The UAE contract
depends on thelaw includes
intent a duty
of both to at the
parties
goodclassifications,
faith on the etc.
grounds of the long- act intime
good
offaith. This is reinforced
the agreement by the
and is enforceable in
established concept of the right of justice
thestandards
UAE of the Sharia law.
contract in transactions
 Avoidance- between two  Good Faith- As mentioned on the website,
unethical, misleading,
tradeunfair
parties.
terms. The UAE Civil Code states that: Article 246:
“Good Faith applies to all contracts in the
- Undue influence, etc. UAE, no exceptions”.
"A contract must be carried out true to
- performance and termination-  Termination- As per the UAE Civil Code,
the contents and in compliance with the
- Both parties meet their obligations there are only three ways to end a contract
conditions of good faith." [8]
- parties mutually agree to discharge - Both parties’ consent
Forms of Contracts
the contract - through the courts system / legal action
 Verbal Verbal
-Breach of Contract - is according to the law
 Dispute Resolution- UAE courts can be
  Written Written
Remedies- In case of a breach of difficult to settle disputes since most of the
Classification
contract,of contracts
the non-breaching party is legal system still functions under Arabic
entitled to receive remedies for language and requires translation. Global
Validity Performance Formation
incurred damages and loss. arbitration is a better course providing
According to the mode of According to the extent of
jurisdiction of the contract.
formation of contracts, performance of contracts,
contracts may be classified contracts may be classified
 
into three namely, as Unilateral Contract, and
 
Express Contract, Bilateral Contract. [12]
Implied Contract, and
Quasi – Contract. [12]
1. Express Contract It is also known as a 1. Illegal contract
An express contract shall unilateral contract. In a The court finds an
be known as an express contractual contract, by arrangement that causes
arrangement, whether at the time it is formed only one or all parties to breach
the time the contract is one party must meet its or not comply with
International law and Contracts

Another form of contract that must be considered prior to deciding to develop in another
country are international contracts which cover a variety of agreements in forming legal
relationships or joint ventures. According to Up counsel [7], international contracts are
additional legal tools put in place to help companies limit their risk when expanding globally.
Things that should be considered when planning an international contract are [7]:

 Governing law and its process

 Legal expenses
 Include an Arbitration clause.
 Include a force majeure- which excuses a party from its obligations in case things beyond
their control such as a natural disaster.
 Include a section which requires the parties to comply with the governing contract laws.

There are several types of contract agreements which are covered under international laws but
the ones specific to endeavor include:
 Intellectual Property (IP) Agreements which covers the licensing, sublicensing,
trademark, assigning copyright and any other matters related to IP
 Franchise agreements
 Joint venture agreements
 Development agreements 
Comparative Analysis of Country Specific and International Contracts
In comparing Australia and the UAE legal systems, there are similarities with both frameworks. However,
the UAE is also governed by Sharia law which runs parallel with the civil law courts and can be quite
difficult due to the language and translation process. Companies planning to do business in the UAE must
be aware of the legalities of sharia law prior to conducting business in this country.

Australia’s Civil Court structure is more detailed and structured than the UAE’s system which
provides clearly defined functions for each type of matter, dispute, or instance. Whereas the
UAE provides a court of First instance which covers all civil cases.

In looking into the contract laws, there are subtle differences that should be carefully reviewed,
for instance, Good Faith applies to all contracts in the UAE whereas in Australia law does not
mention Good Faith as an element which binds an agreement.

Another consideration when planning to develop in one of these countries is international law
of contracts which requires very specific content especially in the jurisdiction and laws which
will decide all legal matters with the contract.

In order for the Beverly Hills Hotel Franchise to expand its brand into either Australia or the
UAE, it would be best to approach international contract law which is a tool which will limit its
risk by combining several agreements to protect its brand into the global market.

Common Contract Types for Developing in Australia or the UAE

Contract Types offered

Turnkey Contracts Unit Contracts

 

Pros: it is advantageous to both owner Pros

and contractor 1. It reduces the incidence of
2. It saves the owner time corruption and
3. It gives the contractor a strong misappropriation of funds.
footing in the project.
Cons Cons: it puts the contractor on a
1. It may be less cost effective high-risk level
2. It puts the bulk of
responsibility on the
contractor
3. It can be prone to corrupt
practices if the contractor
company is not honest.

Comparative Analysis Turnkey vs Unit Contracts

In a Turnkey Contract or a Lump sum Contract, the whole responsibility of Architectural/
Engineering Design, Liasoning, Procurement and Construction is transferred to the contractor.
Often owners only offer turnkey building projects, where a different entity is engaged in
architectural / engineering design. The owners typically send the contractor a detailed criterion
before awarding a turnkey contract (including material requirements, external and internal
finishing, etc.). For a specified design, the contractor usually quotes a fixed price or quotes price
per square foot of built-up area. Usually this rate covers all the work before the handover. If the
contract is awarded the remaining work becomes the responsibility of the contractor. Both the
contractor and the owner agree on payment terms. Since most if not all the responsibility rests
with the contractor, a lot of time is saved for the owner.
An estimated amount of the bill of quantities is prepared under the unit price contract. An
architect / engineer is examining or checking estimated quantities. The estimated amounts are
then divided up for quotation with contractors. Unit rates against the expected quantity of
work are reached by contractors. For any of these items, the deal is based on the approximate
number of working goods and unit price. Payment is rendered based on job units currently
carried out and determined by unit rates.

The Turnkey contract is well suited for the Australian court system because it promulgates
being administered by a joint committee.

Employment Law:
Employment law is governed by Ministry of Human Resources and Emiratization (MoHRE) in UAE. It is
regulated by Federal Law No. 8 of 1980 which outlines the standards of employee’s benefits and their
rights.

In Australia, Fair Work Act (2009) governs the employment law for most of the employees in Australia.
Below information is presented for the full-time permanent employees.

Australia UAE
Form of Contract
Employment contract in Australia does not The contract in UAE must be in written form and a copy
have to be completely in written form. The of the contract has to be submitted to the ministry as
contracts are mostly in semi written and well as to be provided to Employee.
semi verbal form.
Working hours
8 hours per day or 38 hours per week. 8 hours per day or 48 hours per week. However, the
working hours may vary and increased based on the
approval from MoHRE for some businesses like cafes,
restaurants and hotels.
Annual Leaves
Full-time and part-time employees get 4 Employees who have completed at least one full year
weeks of annual leave, based on their receive 30 days of paid leave per year
ordinary hours of work.
Maternity and Paternity Leaves
18 weeks’ paid maternity leave at minimum Total of 45 calendar days of maternity leave fully paid.
national wages. UAE labour law is silent on paternity leave and it is up
Fathers are entitled to two weeks’ paid to the employers.
leave.
Sick Leaves
  Full pay for 10 days  Full pay for the first 15 days
 No pay for up to 3 months  Half pay for the next 30 days
 No pay for the remaining 60 days
Notice Period in case of Termination
 1 year or less | 1 week 30 days of minimum paid notice period
 1 year to 3 years | 2 weeks
 3 years to 5 years | 3 weeks
 More than 5 years | 4 weeks
Trade Union
Union membership is allowed and plays an Trade unions are not allowed as per UAE labor law
important role in settlement of workplace
dispute.
Restrictive Covenants Enforcement
Restrictive covenants are enforced when It is implied by default in UAE. If a non-competition
employer can show a cause of protecting clause is included in the contract, it will be recognized
legitimate interest. by the court of law.
Restrictive Covenants Period
Reasonable period Reasonable period considering the risk to the
employer.
Financial Compensation in Case of Covenants
It is decided by court in Australia. Employees do not have to be compensated in case of
covenants.

Comparative Analysis

Based on the above outlined comparison, basic rights of an employee are the same in Australia and in
UAE in terms of the work hours, leaves etc.

The important point to note is the laws in UAE are more protective to the employers as compare to the
Australian labor laws.

UAE does not allow to create trade unions; they are strict in covenants enforcement and are very clear
about them. In Australia however it is subjective and depends on case to case basis. The decision is
taken by the criminal court.

The employment laws and conditions in UAE might be favorable for Beverly Hills Hotel to build a hotel
here. However, the final decision requires further analysis of intellectual property law as well as agency -
laws.
2.2 Intellectual Property Law
Intellectual property is any product of the human intellect that the law protects from unauthorized use by
others. The ownership of intellectual property inherently creates a limited monopoly in the protected
property.
In Australian IP law, the registration of a trademark can be extended after 10 years. For five
years from the date of filing a patent, the patent registration will run. The patent owner under
Australian IP law will apply for an additional five years to renew their application.

Patent law in the UAE refers to new innovations arising from or involving an innovative phase
which can be used or used by industry. Patent protection in the UAE is valid for Twenty (20)
years from the date of filing (no time of grace or extension).

Patents for the purpose of avoiding any questions provide protection within the United Arab
Emirates only and only in the UAE and are not automatically safeguards under either the Gulf
Cooperation Council or GCC (the Emirates of Abu Dhabi , Dubai , Sharjah, Ras al Khaimah,
Fujairah, Umm Al Quwain or Ajman). A patent application may be submitted with the GCC
Patents Office in order to provide patent rights in the GCC.

Any patent cases can be referred to civil courts. Arabic is the only official language accepted
before the United Arabian courts and used throughout the proceedings. No other language is
accepted, and all the other relevant documents submitted to the Court must be duly translated.
Arabic is the primary language accepted by the UAE courts and must also, therefore, be used
during proceedings. [10]

An Intellectual Property breach is when another person uses the intellectual property without
the owner’s consent. In the event of an infringement, the owner may only take legal action
when the registered design is inspected, and a certificate of evaluation is given if they think
their IP rights have been infringed.

Although filing a complaint for a registered design would be halted or withdrawn if it is

reviewed and found to be invalid or expired.
You can use a hearing to challenge the right to build for an application. The application for a
concept right is the same as the trademark process.

The owner may even call for a hearing or argue a situation involving formalities or conclusions
of investigation based on an IP infringement. This choice is not widely used but can help protect
the design. Fees vary if an IP owner calls for a hearing. [11]

In Australian intellectual property regulation, trademarks and opposition can be broad, dynamic
and expensive. The services of an IP expert are required if an IP owner decides to be filing or
defend an infringement. [11]

Conclusion

After this collaborative law analysis, for Beverly hills to establish itself in UAE or Australia it
should focus on two vital segments in this analysis which are the contract law and agency law.
as mentioned above, the UAE agency law have a lot of gaps in the contract clauses, the court
authority inaddtion to the diversity and inclusion of other nationals.
Whereas the agency law in Australia is clearer about the responsibilities, terms and liabilities of
each parties with minimal bias regarding nationality of the agent. Such clear legal clauses in the
contract will minimize future conflicts.
Regarding the contract law, in Australia the law discusses in details the types of errors,
violations and other future glitches and how to manage them. Unlike the UAE contract law
which doesn’t give much attention to the possible breaches.
Moving forward to the employment law, in UAE its better in terms of indemnities and exist
benefits. Unlike in Australia where each case demands a specific action.
Consequently, the contract law, agency law and intellectual law are secured better in Australia
than in the UAE.
when it comes to the type of contract used, the turnkey contract shows a heavier weigh in
Australia than the unit contract, because The Turnkey contract is well suited for the Australian
court system as it publicized to be managed by a joint committee.
As a recommendation for Beverly hills hotels, it is advised for its next capital purchase to occur
in Australia under a Turnkey contract.

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