On 1 June 2020, Federal Law No. 4 of 2020 on Securing Rights over Moveable Assets (the “New Law”) of the United Arab Emirates (the “UAE”) came into effect, repealing the previous Federal Law No. 20 of 2016 on Mortgaging Movable Assets as Security for Debts (the “Old Law”). Whilst the New Law retains certain pertinent features of the Old Law (which itself was relatively recently introduced and had substantially overhauled the previous regime for taking, perfecting and enforcing security interests over movable assets), there are also notable differences (outlined further below). Within six months of the effective date of the New Law, new implementing regulations are due to be issued by the Ministry of Finance to regulate the creation of a new security register, replacing the existing Emirates Movable Collateral Registry (“EMCR”); the implementing regulations are, in the New Law, expressed to provide further detail as to certain procedural matters, such as public access rights to the register and the requirements for registering a security interest in the new register. We outline below the implications of the New Law for those with existing security interests currently registered on the EMCR, and those seeking to create new security interests, together with the key changes under the New Law.

I. Implications for Existing Security Interests in the UAE -

The New Law does not address the implications for, or legal status of, security interests currently registered on the EMCR. Instead, the New Law provides that until the new implementing regulations are issued, regulations, decisions and circulars relating to the Old Law shall remain applicable to the extent that they do not conflict with the provisions of the New Law (Article 49 of the New Law). As the Old Law has itself been repealed in its entirety, this gives rise to ambiguity for those holding a registered security interest on the EMCR. As a result, counterparties with security interests currently registered on the EMCR should further continue to monitor developments surrounding the New Law, especially the implementing regulations due later this year.