In the application of the provisions of the present Law, the following terms and expressions shall have the meanings assigned thereto, unless the context requires otherwise:

State: United Arab Emirates.

Ministry: Ministry of Finance.

Minister: Minister of Finance.

Central Bank: Central Bank of United Arab Emirates.

Finance Lease: A relationship whereby the Lessor owns the Leased Property for rental purposes and leases it to the lessee for a specified period under a separate contract in accordance with the provisions of the present Law, while granting the latter the right of choosing to own the Leased Property in accordance with the provisions hereof.

Contract: Finance Lease Contract concluded in accordance with the provisions of the present Law.

Register: Register created in accordance with the provisions of the present Law.

Leased Property: Any movable property or Real Estate over which usufruct applies by use while leaving said property in the same condition existing at the time it was delivered to the Lessee, under a Finance Lease Contract, including off-plan real estate units which may be subject to legal acts in accordance with the provisions of the legislation in force.

Lessee: Natural or legal person who benefits from the Leased Property in accordance with the provisions of the contract.

Lessor: The legal person licensed to engage in Finance Lease Activity in accordance with the provisions of the present Law and the legislation in force.

Rent: The value agreed upon in the contract, that the Lessee undertakes to pay to the Lessor in exchange for the right to use the Leased Property.

Supplier: Natural or legal person who transfers the ownership of the leased property to the lessor, including the contractor who manufactures or builds the leased property.

Supply Contract: The contract whereby the Lessor owns the Leased Property from the Supplier for the purpose of leasing it to the Lessee under the contract.

Owning the Leased Property: The right to own or use the Leased Property or the right to long-term lease covered by the real estate legislations applicable in any of the Emirates.

Special Movable: The movable required, as per the legislation in force, to be registered in the registers designated for this purpose by the competent government entities, such as vehicles, aircrafts and maritime means.

Special Accounting Standards: Applicable accounting rules and standards related to the Finance Lease system, which shall be determined by a decision of the Minister.

1- The Finance Lease activity in the State may only be exercised after a license is obtained from the Central Bank.

2- Any Finance Lease contract concluded with a person not licensed by the Central Bank shall be deemed null and void.

3- Any person not licensed by the Central Bank to exercise Finance Lease activity shall be prohibited from using the term "Finance Lease" or any synonym for it in their business name.

4- The Central Bank shall set the regulations related to licensing the lessor and carrying out the Finance Lease activity in the State, including the licensing of branches of foreign Finance Lease companies.

The contract shall be written, registered or mentioned in the register designated for it in accordance with the provisions of this law, otherwise it shall be deemed null and void.

The contract shall contain the following data:

1- Name of the Lessor and the Lessee and the data related to each of them.

2- Clear description of the Leased Property.

3- Duration of the contract.

4- Purpose and limits of use of the Leased Property.

5- Rent amount, number of instalments and dates of payment thereof.

6- Conditions and provisions of delivery of the Leased Property to the Lessee.

7- Right of ownership of the Leased Property by the Lessee.

8- Data related to the Supplier, while specifying the party having chosen said Supplier.

9- Rights and obligations of the parties to the contract.

10- Substantial obligations whose breach results in the possibility of requesting rescission of the contract.

11- Any data, conditions or other provisions agreed upon by the Lessor and the Lessee, without prejudice to the provisions of the present Law.

1- A register shall be established for the registration of the contract concluded with respect to any movable property. It shall be regulated by a decision issued by the Cabinet based on the recommendation of the Minister, provided that such decision specifies the person who shall be in charge of managing said register, the data to be listed therein and the fees due for registration.

2- The contract concluded with respect to a real estate property shall be mentioned in the sheet of said property in the real estate register of each Emirate.

3- The registration of the contract, concluded with respect to a special movable, shall be mentioned in the register designated for that purpose by the competent authority in each Emirate.

4- The registration or mention of a contract in the registers referred to in this Article shall be considered as evidence against third parties.

5- The Lessor shall be responsible to register or mention the contract and any amendment thereto in the registers referred to in this Article.

6- The entry of a contract shall be removed from the register at the end of the contract’s term or at the request of its parties in the case of expiry of the Finance Lease contract or if a final cancelation decision is issued.

Unless otherwise agreed in the contract, the Lessee shall abide by the following:

1- Receiving the Leased Property from the Lessor or the Supplier as long as it is in the condition as agreed upon in the contract.

2- Paying the rent according to the instalments and dates prescribed in the contract, even if he has not used of the Leased Property, unless such failure to use is due to a reason caused by the Lessor.

3- Using the Leased Property in accordance with the purpose designated to it in the contract and within the limits of appropriate use, taking into account any conditions having been stipulated or mentioned in the Contract or the supply contract.

4- Keeping the Leased Property in the condition as it was when received, and not making any change thereto unless with the consent of the Lessor, while taking into account any change that may occur to the leased property as a result of regular use.

5- Carrying out regular maintenance work required by the Leased Property in accordance with the technical principles recognised or agreed upon in the contract.

6- Notifying the Lessor of the occurrence of any incident would fully or partially prevent the use of the property, in accordance with the procedures stipulated in the contract.

7- Paying the financial costs set for the Leased Property on behalf of the government entities from the date of receipt.

8- Obtaining and renewing the annual license of the Leased Property requiring same.

Unless otherwise agreed in the contract, the Lessor shall undertake to carry out the following:

1- Deliver the Leased Property to the Lessee in the agreed condition, and enable him to possess and use said Property.

2- Notify the supplier in writing, upon the conclusion of the Supply Contract, of his intention to lease the property to be supplied under the contract, and specify the Lessee’s name in the notification.

3- Insure the Leased Property.

4- Carry out necessary maintenance required by the Leased Property, in accordance with the technical rules recognized or agreed in the contract.

5- Assign the ownership of the Leased Property to the Lessee in case should he opt for ownership.

6- Provide the Lessee with all the documents and information available to him regarding the Leased Property.

7- Take any measures that enable the Lessee to have recourse against the Supplier in accordance with the provisions of the present law.

Unless otherwise agreed in the contract, the Lessee shall enjoy the following rights:

1- Choosing the Supplier, and determining the terms of the contract concluded with him.

2- Choosing the Leased Property, determining the method of manufacture or construction thereof and the specifications to be met thereby, and negotiating with the Supplier on such specifications either directly or through the Lessor under a written authorisation issued to this effect by the Lessee.

3- Possessing and using the Leased Property in accordance with the provisions of the Contract.

4- Directly having recourse against the Supplier for any claims, lawsuits or arbitration proceedings arising to the Lessor out of the Supply Contract concluded between him and the Supplier, except in the case of a contract termination lawsuit, without prejudice to the right of the Lessor to have recourse against the Supplier for such claims and lawsuits.

Unless otherwise agreed in the contract, the Lessor shall enjoy the following rights:

1- Inspecting the Leased Property, provided that such action does not cause any harm to the Lessee, and the Lessor may delegate in writing any person to perform such task.

2- Restituting the possession of the Leased Property from the Lessee in the circumstances stipulated in the contract or in the present Law.

3- Transferring his rights that are prescribed under the contract to third parties, provided that the Lessee is notified of such transfer in writing, and taking into account that such transfer shall not result in any derogation from the rights of the Lessee, as mentioned in the contract, or the imposition of any new obligations on the latter.

1- Before the conclusion of the contract, the Lessee may, upon the prior written consent of the Lessor, negotiate with the Supplier about the specifications of the Leased Property and the method of manufacture or construction thereof, provided that such consent covers the matters already negotiated between the Lessee and the Supplier.

2- A Supply Contract shall be concluded at the end of the negotiation between the Lessor and the Supplier, specifying the Leased Property and its specifications as requested by the Lessee, and any other conditions agreed upon by the parties to be prescribed in the Supply Contract.

3- The Leased Property may be owned by the Lessee before the conclusion of the contract.

1- The Lessee may assign his rights and obligations that are prescribed to him under the contract to another Lessee replacing him, subject to the following:

a- Prior written consent of the Lessor shall be obtained.

b- The assignment made in accordance with the provisions of the present Law shall be mentioned in the register of the Leased Property.

c- Such assignment shall not contradict any of the legislation in force in the State.

2- The new Lessee to whom the contract is assigned shall replace the original Lessee in terms of all the rights and obligations arising from this contract, from the date of mentioning the assignment in the register.

1- The Lessee may carry out any legal act in favour of third parties for the purpose of utilising, exploiting or using the Leased Property, subject to the following:

a- Prior written consent of the Lessor shall be obtained.

b- The Lessee shall remain liable towards the Lessor for all the terms of the contract.

c- The period of the legal act carried out by the Lessee shall not exceed the duration of the contract.

2- The termination or nullification of the contract shall result in the termination or nullification of the legal act performed by the Lessee with third parties.

Unless otherwise agreed in the contract, if the Leased Property is returned to the Lessor, the following shall be observed:

1- All improvements that are separable from the Leased Property without causing any damage thereto and that are made by the Lessee at his own expense shall remain his own property.

2- The Lessee may claim from the Lessor to compensate for any improvements made to the Leased Property at its own expense with the written consent of the Lessor, if they cannot be separated from the Leased Property without causing damage thereto.

3- The Lessee shall not be entitled to any compensation for improvements made to the Leased Property at its own expense, if such improvements cannot be separated from the Property without causing any damage thereto, if such improvements been made without the written consent of the Lessor.

1- The Lessor may transfer the ownership of the Leased Property to another Financial Lessor, provided that the Lessee is notified of such transfer in writing, and taking into account that such transfer shall not result in any derogation from the rights of the Lessee or the imposition of any new obligations on the latter.

The new Lessor shall replace his predecessor in terms of all rights and obligations prescribed in accordance with the provisions of the contract and the present Law.

2- The Lessor shall give notice of the disposition of transfer of ownership of the Leased Property, as provided for in Article 5 of the present Law.

1- The Lessor shall receive the Leased Property from the Lessor or from the supplier directly by virtue of a written permission. The receipt shall take place under a record indicating the condition of the Leased Property and the extent of its conformity to the terms and specifications agreed upon in the contract. The record shall be signed by the Lessee, the Lessor and the Supplier as the case may be.

2- The Lessee may not abstain from receiving the Leased Property if meets the required specifications.

3- The Lessee may refuse to receive the Leased Property in the following two cases:

a- If he finds that the Leased Property does not conform to the specifications specified in the contract.

b- If the Lessor or the Supplier fails to draw up the record of receipt of the Leased Property or to sign same in accordance with the provisions of paragraph (1) of this Article.

4- The Lessee shall be liable towards the Lessor for any particulars of the Leased Property in the record of receipt.

1- The Supplier shall be liable for any defects in the Leased Property, and this provision shall apply if the Supplier is the Lessee himself.

2- The party to the contract who chooses the Leased Property and determines its descriptions shall bear the risks of its non-suitability to the purposes specified in the contract. Further, such party shall bear all expenses incurred consequently unless otherwise agreed.

Unless otherwise agreed, the Lessee shall at his own expense obtain a license for the Leased Property, renew the license or obtain from the competent authorities any necessary approvals enabling him to benefit from the Property, in accordance with the provisions of the contract. Upon the issuance of the license or the official approval, it shall be taken into consideration that the name of the Lessor is contained, and it shall be indicated that the Leased Property is under the possession of the Lessor under the Contract.

The Lessee shall bear the liability arising from any damage caused to the Lessor or to third parties as a result of the possession or use of the Lease Property.

1- Unless otherwise agreed in the contract, the Lessor shall not be liable towards the Lessee for the Supplier’s breach of the obligations arising to him under the provisions of the Supply Contract except in the following two cases:

a- If the Lessor has chosen the Supplier.

b- If the Supplier's breach of his obligation is due to a reason caused by the Lessor.

2- The Lessor shall be responsible for his actions should they lead to enable the supplier or third parties to prejudice the Lessee’s rights in any way that limits the use of the Leased Property.

The Leased Property may not be seized in execution of a debt owed by the Lessor to third parties.

1- The Lessor shall remain the owner of the Leased Property throughout the duration of the contract.

2- During the validity of the contract and with the consent of the Lessor, the Lessee may own the Leased Property, provided that he pays the agreed rent and any fees, allowances or other expenses agreed upon in the contract, without prejudice to the provisions of the legislations in force in the State.

3- The ownership of the Leased Property shall be transferred to the Lessee at the end of the contract in accordance with the conditions stated therein.

4- Should the Lessee not exercise the option of owning the Leased Premises upon the expiry of the Contract, he shall return the Leased Property to the Lessor or renew the contract under the conditions agreed upon by the parties.

5- The ownership of the Leased Property shall be transferred to the Lessee under a separate contract, based on a condition that ownership shall depend on the payment of instalments as prescribed in the contract, or payment thereof in a fixed amount, a by a promise to sell at a nominal price or at a price agreed upon in the contract, or at the value of the Leased Property at the time of conclusion of the sale contract, or by donation.

Unless otherwise agreed in the contract, if the Lessee has fulfilled all his obligations under the contract and wishes to exercise the option of the right to own the Leased Property either during the validity of the contract or on the date of expiry thereof, the following provisions shall apply:

1- If the Leased Property is real estate, the Lessor shall undertake to transfer the ownership of the Leased Property to the Lessee at the competent government authority within 15 working days from the date of receiving written notification of the Lessee’s exercise of the option of his right to own the Leased Property.

2- If the Leased Property is a Special Movable, the Lessor shall undertake to assign it to the Lessee at the competent government authority within fifteen (15) working days from the date of receiving written notification of the Lessee’s exercise of the option of his right to own the Leased Property.

3- If the Leased Property is other than a real estate or Special Movable, the Lessee shall be inevitably deemed as its owner by the mere notification of the Lessor in writing of his exercise of the option of the right to Own the Leased Property.

1- In the event of liquidation or declaration of bankruptcy of the Lessor, the lessee shall have the right to exercise either one of the following two options:

a- Continuing the execution of the contract in accordance with its terms and conditions, provided that the liquidator or the trustee in bankruptcy is notified of the matter.

b- Delivering the Leased Property to the liquidator or the trustee in bankruptcy or engaging with other creditors in the collection of the amounts due to him, if any, according to the special accounting standards.

2- The new Lessor to whom the ownership of the Leased Property has been transferred as a result of liquidation or declaration of bankruptcy of his predecessor shall continue to execute the contract, should the Lessee express his desire to do so.

Without prejudice to any rules regulating liquidation and bankruptcy in the State, the following shall apply in the event of liquidation, declaration of bankruptcy or death of the Lessee:

1- The Leased Property shall not be included in the general guarantee of the Lessee’s creditors. The Leased Property shall not be considered a part of the assets of liquidation, bankruptcy or succession.

2- The liquidator, or the trustee in bankruptcy or the heirs of the lessee shall return the Leased Property to the Lessor within ninety (90) business days from the date of issuance of the, bankruptcy decision or death unless the liquidator or the trustee in bankruptcy or the heirs of the Lessee, as the case may be, declare their intent to continue the execution of the contract during this period; in which case the contract remain valid in accordance with its terms and conditions.

1- The contract shall be deemed automatically rescinded if the Leased Property destroyed completely or in a way preventing using it as intended.

2- The Lessor shall bear the liability for the loss of the Leased Property if such loss occurs due to a reason caused by him.

3- The Lessor may claim compensation from the Lessee in the event of a court order to confiscate the Leased Property or if it is damaged due to a reason caused by the Lessee, taking into account, upon determining the amount of the compensation, the value of the amounts paid by the Lessee as rent, and the value of the insurance received by the Lessor as a result of the damage caused to the Leased Property.

1- The Lessor may request terminating the contract based on any of the following reasons:

a- Should the Lessor breach any substantial obligation stipulated in Clauses 1, 2, 3, 4 and 5 of Article 6 of this Law.

b- Should the Lessor breach any substantial obligation stipulated in the Contract.

c- If the lessee has caused serious damage to the Leased Property.

d- Any other case prescribed in the contract.

2- The Lessor may not request terminating the contract for any of the reasons referred to in Clause (1) of this Article unless the Lessee was notified of the matter in writing and has failed to correct the breach committed thereby within sixty (60) working days from the date of receipt of the notification.

3- If the Lessor has exercised his right to terminate the contract in accordance with the provisions of this article, he may claim the amounts owed to him, if any, in accordance with the special accounting standards.

1- The Lessee may request terminating the contract based on any of the following reasons:

a- Should the Lessor breach any substantial obligation stipulated in Clauses 1, 3, 4 of Article 7 of this Law.

b- Should the Lessor breach any substantial obligation stipulated in the Contract.

c- Any other case prescribed in the contract.

2- The Lessee may not request terminating the contract for any of the reasons referred to in Clause (1) of this Article unless the Lessor was notified of the matter in writing and has failed to correct the breach committed thereby within sixty (60) working days from the date of receipt of the notification.

3- If the Lessee has exercised his right to terminate the contract in accordance with the provisions of this article, he may claim the amounts owed to him, if any, in accordance with the special accounting standards.

1- The nullification or termination of the Supply Contract shall have no effect on the Contract.

2- The Supplier may directly have recourse against the Lessee for the rights owed by the Supplier to the Lessor if they arise from the nullification or termination of the Supply Contract, so as not to exceed the Lessee's obligations towards the Lessor.

Unless otherwise agreed in the contract, the Lessee shall be obliged to return the Leased Property to the Lessor without delay, taking into account any change that would occur thereto as a result of appropriate use, in the event that he does not exercise the option of owning the Leased Property upon termination of the contract, while any expenses incurred as a result shall be borne.

Notwithstanding the provisions of Article 26 of Federal Law No. 11 of 1992 referred to above, and without prejudice to the provisions of Clause 4 of Article 8 of this Law, the competent courts of the State shall have the power to decide upon all applications, lawsuits and appeals arising from the contract.

1- In accordance with the decisions and regulations governing the licensing exercise of Finance Lease Activity in the State, that are issued in accordance with the provisions of the present Law, the Central Bank may cancel the license of the Lessor in any of the following cases:

a- If the Lessor has not actually commenced his activity within six (6) months from the date on which he has obtained his licence.

b- If the Lessor has ceases to practice his actual activity for more than six (6) months.

c- If the financial position of the Lessor becomes unbalanced and he does not regularize his status in accordance with the instructions of the Central Bank within six (6) months from the date of issuing such instructions.

d- If the Lessor is declared bankrupt or put under liquidation.

2- Without prejudice to the provisions of Article (23) of this Law, the existing contracts shall be dealt with, upon cancellation of the Lessor's licence in accordance with this Article, according to the rules prescribed by the Central Bank in this regard.

The application of the sanctions provided for in this Law shall not prejudice any harsher sanctions provided for in any other law.

Imprisonment and a fine of no less than AED (200,000) and no more than AED (10,000,000) or either one of those two sanctions shall be imposed on whoever has engaged in Finance Lease activity or used the term “Finance Lease” or any synonyms thereof in his business name without a license.

Imprisonment and a fine of no less than AED (100,000) and no more than AED (200,000) or either one of those two sanctions shall be imposed on whoever makes any erasure or change to any data written down in the Register.

Without prejudice to the sanctions provided for in this Law, a fine of no more than AED (500,000) shall be imposed on whoever violates any provision of the present Law or the decisions issued in implementation thereof.

The Cabinet shall issue a decision specifying the irregularities and the amount of the fine prescribed for each.

1- No criminal proceedings shall be initiated for the offenses provided set out in Article (35) of this Law, except by a written request from the Ministry.

2- Offenses provided for in Article (35) of this Law may be settled before the case is referred to the competent court in exchange for the payment of an amount equal to half of the fine prescribed therefor. Criminal proceedings shall end by the payment of the settlement amount.

3- Should the violator reject the settlement; the matter shall be referred to the Public Prosecution.

Employees who are designated by a decision of the Minister of Justice in agreement with the Minister shall be granted Law Enforcement Authority to establish any acts committed in violation of the provisions of the present Law within their respective jurisdictions.

1- Anyone who engages in Finance Lease activity before the issuance of this law shall regularise his status in accordance with its provisions within one year from its effective date.

2- The Lessor may register or mention the Contract in accordance with the provisions of Article (5) of this Law, if the Contract was concluded before the enforcement of the provisions hereof, within one year from its effective date.

Any provision that is contrary to or inconsistent with the provisions of this Law shall be abrogated.

This Law shall be published in the Official Gazette and shall come into force on the day following its publication.