Energy regulations in the UAE are spread across different Emirates, with Emirates like Abu Dhabi and Dubai having their own laws and regulations.

Background

The United Arab Emirates is a federation made up of seven Emirates – Abu Dhabi, Dubai, Sharjah, Ras Al-Khaimah, Ajman, Fujairah and Umm Al-Quwain. Each Emirates has the right to regulate its own matters through legislations and/or judicial system, except in matters where the Federal Government has exclusive jurisdiction.

For instance, under Articles 120 and 121 of the Constitution, the UAE has exclusive jurisdiction in matters related to foreign affairs, defense and federal armed forces, electricity services, labour relations and social security, etc.

Energy Sector Regulators

At the federal level, the Ministry of Energy and Infrastructure is the regulatory authority governing the energy sector. The Ministry is tasked with the goal to organize, develop and enhance the competitiveness of the country in the energy sector, keeping in mind the goals of sustainability and reducing greenhouse gas emissions. While the Ministry prepares and issues the federal energy laws and regulations, such laws and regulations are limited.

At the local level, the Department of Energy is the concerned authority in Abu Dhabi, Dubai Electricity and Water Authority in Dubai, Sharjah Electricity, Water and Gas Authority in Sharjah and Etihad Water & Electricity for the Emirates of Ajman, Umm Al Quwain, Ras Al Khaimah and Fujairah. These authorities govern and regulate the energy sector in the relevant Emirate.

Meaning of Energy

At the local level, the Emirates of Abu Dhabi issued the Abu Dhabi Law No. 11 of 2018 on Establishing a Department of Energy (Abu Dhabi Energy Law). According to Article 1 of Abu Dhabi Energy Law, energy sector means the following:

“It covers all activities, works and services related to:

1. The Production, treatment, storage, transportation, distribution, supply, sale and purchase of gas, oil and derivatives thereof.

2. The generation, storage, transportation, distribution, supply, sale and purchase of electricity of all kinds (clean, renewable, traditional).

3. The production, treatment, desalination, storage, transportation, distribution, supply, sale and purchase of water.

4. The collection, treatment and disposal of sewage and wastewater and the recycling of treated wastewater.

5. The production, storage, distribution and supply of refrigerated liquid for central refrigeration applications.

Affiliates: The entities operating in the Energy Sector, which are affiliated to the Department under its control and supervision, and which are specified by a decision of the Executive Council.”

The definition is quite broad and covers all functions which relate to oil and gas and its derivatives, water, wastewater, and refrigerated liquid, etc. The application of this definition is limited to Abu Dhabi but this definition is itself universal.

Disputes in the Energy Sector

Commercial energy disputes may be resolved through arbitration. Under the Federal Law No 6 of 2018 on Arbitration, the UAE law of Arbitration will apply to an: (a) arbitration which is carried out in the UAE, unless the parties agree that a different arbitration law will apply (provided that law is not contrary public order and morality of UAE); and (b) international commercial arbitration carried out outside the country, but is subject to the UAE arbitration law, based on the agreement of the parties.

Since many energy contracts are executed with governmental energy entities, it is likely that the law of UAE would be the governing law and if arbitration is agreed upon, the UAE arbitration law may apply. For example, under Dubai Law No. 12 of 2020 on Contracts and Warehouses Management in the Government of Dubai, which applies to all contracts concluded by government entities of Dubai (subject to certain exceptions), Article 120 states that courts of Dubai (including DIFC) will be competent to hear disputes arising from contract. However, the parties may choose arbitration, in which case, conducting arbitration outside Dubai or submitting any disputes regarding arbitration to any legislation other than the UAE arbitration law would be restricted.

Conclusion

The UAE has made noticeable efforts towards energy efficiency and sustainability and aims to increase its contribution of clean energy in the total energy mix and reduce carbon footprint. With that in mind, the UAE and the Emirates have issued various regulations and policies to achieve this goal.