Other BriefingsUAE Issues New Law Governing Public-Private Partnerships
UAE has introduced a new law to regulate public-private partnerships in the country, setting the general framework for partnerships between federal government entities and the private sector. The new law aims to encourage the private sector to participate in developmental and strategic projects and enable the community to attain world-class services at the best value.
By Qian Zhou
On January 18, 2024, the Ministry of Finance (MOF) of the United Arab Emirates (UAE) announced the issuance of Federal Decree-Law No. 12 of 2023 Regarding Federal-Public and Private Sector Partnerships (“Federal Decree-Law No. 12 of 2023” or “the Law”), which entered into force on December 1, 2023.
In this article, we look into the objectives, the applicable scope, as well as exemptions under the new public-private partnership law.
What are the objectives of the Law?
According to the official announcement, the Federal Decree-Law No. 12 of 2023 aims to regulate public-private partnerships in the UAE. In addition, it also aims to:
- Encourage the private sector to participate in developmental and strategic projects;
- Increase investment in federal government projects of social and economic value;
- Empower the government to efficiently and effectively implement strategic projects;
- Benefit from the private sector’s financial, administrative, technical, and managerial expertise;
- Boost productivity and improve the quality of public services; and
- Minimize financial and operational risks on the government.
What is the applicable scope of the Law?
The Federal Decree-Law No. 12 of 2023 applies to any partnership proposed by a federal entity and wholly or partially funded by the private sector.
However, the Law also specifies few exceptions in Article (4), which include:
- Partnership contracts that were entered into before the law’s enforcement date, as long as they do not conflict with Article (32) of the Law;
- Outsourced services specified in the Partnership Projects Manual;
- Projects whose value is less than the limit specified in the Partnership Projects Manual;
- Public asset and service privatization projects;
- Supply and procurement contracts related to national security specified in the Partnership Projects Manual; and
- Federal entities, sectors, and projects that are exempt pursuant to UAE Cabinet Decisions.
In the interim, to safeguard flexibility and uphold business continuity, Federal Decree-Law No. 12 of 2023 explicitly affirms the ongoing enforcement of Cabinet Resolution No. (1/1) of 2017, delineating the procedural manual for partnerships between federal entities and the private sector, and Cabinet Resolution No. (4/8) of 2019, outlining the procedural manual for partnerships between the public and private sectors in the UAE. This continuity will persist until the issuance of the Partnership Projects Manual, provided that these measures remain in harmony with existing legal frameworks.
What is the expected impact of the Law?
Through these improved mechanisms, the new Law is expected to enable the community to attain world-class services at the best value, accelerate the implementation of projects that offer an added value for public funds, and enhance the competitiveness of projects in local, regional, and global markets.
Private sector businesses who want to engage in public-private partnership in the UAE and participate in various projects are advised to study the new Law closely, as well as the further developments.
