Article on Power of Attorney
Power of Attorney – Key Issues
Contrary to Germany or Austria, principals in the UAE who wish to appoint an agent to act on their behalf must issue a notarized power of attorney (PoA). There are many pitfalls which could lead to the rejection of a PoA by the notaries or delays in obtaining a duly notarized PoA because the UAE notaries often act quite formalistically when authenticating local PoAs or when reviewing foreign PoAs for use in the UAE.
This article aims to shed light on this essential but often-neglected field of law and to inform about the main points to be considered for different types of PoA most frequently used in the UAE. It further provides an overview of common mistakes related to PoAs that could make a PoA inacceptable for a UAE notary or make signed agreements or contract clauses voidable.
General Formal Requirements
A PoA issued abroad is subject to different requirements than the ones of a UAE notary public. In order to use a PoA issued abroad in the UAE it needs to undergo the full legalization process up to the UAE Embassy in the country of origin. Once the PoA is in the UAE it needs to be further attested by the UAE Ministry of Foreign Affairs and then translated by a UAE certified translator. This translation must then be stamped by the Ministry of Justice to confirm that a duly certified legal translator has translated the PoA. Although the foreign PoA does not have to meet the formalities of a UAE notary public, it should nevertheless include all the powers required here in the UAE (as described below). Given this, it is strongly recommended to have the draft foreign PoA reviewed by a UAE lawyer prior to its notarization and legalization to avoid problems when using such PoAs in the UAE.
Within the UAE, there are differences in the formalities between Dubai and Abu Dhabi notaries. For example, in Abu Dhabi a PoA may have a maximum validity of three years, whereas in Dubai and the other emirates the PoA can be issued for a longer period or even for an unlimited time. PoAs, as other documents to be notarized, need to be uploaded on the system of the Justice Department in Abu Dhabi and can only be signed upon pre-approval and online payment, whereas Dubai notaries accept walk-in clients and have not implemented an online system yet.
A PoA must be issued either only in Arabic or bilingually, usually English and Arabic, but also other common languages, for which a duly UAE-certified legal translator is available, can be combined with the Arabic. Bilingual PoAs must be stamped by the certified legal translator before notarization. It is essential to spell the Arabic name of a non-Arab signatory or agent exactly as spelt in any available official documents (e.g. in the Emirates ID or the residence visa of the concerned persons) to avoid a rejection of the PoA by the notary or the authorities at which it is to be used. Also, the correct translation of legal terms into Arabic is essential as the Arabic version will prevail.
The PoA must also include the address and the Emirates ID number of the principal (in case of a UAE resident) and the passport number (in case of a non-resident). The PoA will quite likely be rejected by the notary public should these details be missing.
In case a PoA is signed for an agent of a company, a valid commercial license of the involved entity must be submitted to the notary public. If a PoA is issued for a real estate purchase or sale, it is mandatory to present the ownership documents of the relevant property to the notary public.
A common mistake that might have effects later on is the wrong naming of governmental authorities, e.g. the old “Labour Ministry” instead of the new name of the same ministry, namely “Ministry of Human Resources and Emiratisation”. In case the authority is not named correctly, this might result in rejection of the agent by the authority.
Important Points for Corporate PoAs
Even though a director/general manager of a limited liability company is theoretically authorized to fully represent the company as per Article 83 of the Commercial Companies Law (Federal Law No. 2 of 2015), in practice many authorities and other third parties require a notarized PoA enumerating a general manager’s powers. For this type of PoA it is usually recommendable to give broad powers (such as entering into agreements, signing cheques or other day-to-day documents etc.) and to include certain rights mentioned in Article 58 (2) of the Civil Procedures Law (CPL, Federal Law No. 11 of 1992), like the right:
- to settle disputes;
- to sign an arbitration clause;
- to waive a right (e.g. a settlement agreement with a certain reduction of the purchase price);
- to abandon court proceedings.
According to Article 58 of the CPL, the above-mentioned representation rights must be specifically authorized to be valid, which is usually done in a notarized PoA 1. If these items are not included in the PoA but the manager nevertheless signs e.g. a settlement agreement, this settlement agreement is usually voidable. Thus, parties should carefully review the PoAs of a counterparty´s signatory before entering into a settlement agreement or before signing a contract which includes an arbitration clause so to confirm that the other signatory holds the necessary powers and that all delegations of powers are valid. Disregarding this advice might have significant negative consequences, as this could lead to lengthy and costly litigation just over the question whether a contract was duly entered into. In the worst case, it could result in the rejection of an arbitration claim or the post-award nullification of an arbitration award by the courts.
Important Points for a PoA to a Court Lawyer
While the general manager is also authorized to represent the company before court in accordance with Article 83 of the Commercial Companies Law mentioned above, for most companies it is nevertheless highly recommendable to appoint an Emirati duly licensed local advocate to represent the company in case of a court dispute to ensure proper legal representation.
The local advocate should be authorized to carry out all actions necessary in relation to court proceedings. These powers usually include, among others, the right to abandon and defend court proceedings, to submit legal statements and memoranda, to request interim applications, to apply for execution of judgments, to negotiate and carry out settlements, to make applications and to initiate insolvency proceedings. Article 58 (2) of the CPL also applies here, and the powers mentioned in it should be specifically mentioned in the PoA to the court lawyer.
A proper legal review of the PoA and its supporting documents is necessary to ensure that the Court of Cassation will not dismiss the case because of an invalid authority or lack of proof confirming such authority.
They could also be enumerated in the notarized articles of association of the company.
Important Points for Private Matters
A personal PoA is given by an individual to another individual or trusted person (spouse, friend) to carry out transactions on behalf of the principal.
Just as the company PoA, the powers granted to an agent can be phrased in more general terms or narrowed down to very specific situations. An extensive “General PoA” is often used to ensure that all relevant private affairs can be handled by the agent in case of illness, disability or where the principal may live abroad.
Usual contents of such type of PoA are the powers to:
- represent at telecom/ utility providers (Etisalat/DU; Abu Dhabi Distribution Company / DEWA);
- represent at the traffic authority (e.g. transfer, registration & deregistration of a vehicle);
- represent at school;
- represent before the landlord;
- representation at banks;
- representation at the police;
- representation for the appointment of a lawyer (e.g. in case of imprisonment of the principal);
- purchase and management of real estate and property;
- representation before ministries and government departments;
- representation in the incorporation of legal entities; and
- representation in the signing of contracts and other documents.
Sub-delegations are important for a business if the agent cannot act personally for whatever reason, e.g. due to the agent´s absence from the UAE, illness or not having enough knowledge in a particular field. In order to sub-delegate a PoA, however, a certain wording must be mentioned already in the original PoA permitting the agent´s right to delegate some or all of his/her powers to another agent. UAE notaries will not accept a sub-delegation to an agent if this wording is not contained in the original PoA. In addition, the powers mentioned in the sub-delegation must match with the original PoA in all material aspects. For sub- delegations it is also important to match the validity date of the sub-delegation with the original PoA because the sub-delegated PoA cannot be valid for a longer period than the original PoA.
Therefore, good preparation of the sub-delegation is required in order to avoid having the sub-delegation rejected by the notary.
Cancellation of a PoA
A PoA can be revoked at any time without stating any reason. The revocation must be made in writing again before the notary public by using a “Revocation of PoA Declaration”-form and referring explicitly to the PoA which is revoked.
In case the principal passes away, then the PoA will no longer be valid and is automatically cancelled. Other estate planning documents, such as a will and testament, take then precedence.
Notarized PoAs are essential documents for expats and companies in the UAE. If a PoA is incorrectly issued, this may result in a contract or act being declared void or may lead to the dismissal of a court case. A PoA should thus always be tailored to the specific needs and requirements. Any old PoA templates should not simply be “recycled” but instead thoroughly verified and revised to avoid misuse and bad surprises.
If you have any questions or require any advice or legal assistance regarding the above, please contact Dr. Clemens Daburon (firstname.lastname@example.org) or Ms. Sali Jumah (email@example.com).
Daburon & Partners Legal Consultants LLP
Phone: +971 2 6948655
Address: Office 2404, 24th Floor Al Sila Tower–Abu Dhabi Global Market Square–Abu Dhabi–UAE
This article is provided on a complimentary basis as general information. It does not constitute legal advice, and the authors do not assume any legal liability whatsoever.