Tim Elliot: Welcome to Lawgical, the U.A.E.’s first, still the only legal podcast. I’m Tim Elliot. I’m here once again at Reef Tower in JLT with Ludmila Yamalova. Ludmila is the Managing Partner and all-around legal eagle at the Dubai-based law firm, HPL Yamalova & Plewka here in Dubai. It is always good to be able to say, good to see you.
Ludmila Yamalova: Good to see you too, Tim. I’m glad we’re still able to see each other in person.
Tim Elliot: The story, Ludmila, that is dominating news cycles around the world is our topic of conversation today: Things to keep in mind in light of the coronavirus, the strain of coronavirus that we all now know as COVID-19, things from a U.A.E. perspective, a uniquely U.A.E. perspective that we should all be aware of in light of this strain. First of all, it’s good to see you’re well here. As the mother of two young children, I’m sure you’re taking all the necessary precautions and taking them seriously. What I wanted to do today was start with the latest U.A.E. government advice, really the sensible stuff that we should all be doing, or not doing, I mean things as simply as hygiene, hand washing, number one, making sure you cough or sneeze into a tissue or your elbow if you don’t have a tissue, and avoiding touching your face if you can. Those are the things that we really need to be starting with.
Ludmila Yamalova: Absolutely, and they are in a way basic, but at the same time, also fundamental. They are basic in the sense of we are talking about just basic hygiene, and that is just keeping proper hygiene, cleaning our hands, and sneezing into our elbows, and otherwise just being more mindful about any potential sneezing or ailments that perhaps in other times we would be less concerned or aware about. That’s fairly basic, but what’s interesting and in a way fundamental is the extent to which the U.A.E. government and the many authorities and parties in the industry, including schools, how quickly they’ve taken this and how serious they have considered this and the measures that they’ve put into place quite fairly on, starting from schools.
As you mentioned, I do have two small children. In my son’s school, they have been taught for the last several weeks about hygiene. They have had courses. They have had lessons. They’ve had instructions. They’ve had visitors from medical facilities teaching them these rather basic, but yet important aspects of just keeping good hygiene. It sounds very simple but to me it’s quite amazing and impressive because here it is, my child, who is four, he comes home and is teaching me and telling me, “Mama, this is how we sneeze. This is how we wash our hands. Now we need to wash our hands and move our hands X number of times with soap before we rinse them off” and so on and so forth. To me, that’s a huge example of (a) how serious the government here takes the precaution and then (b) the resources that they put forward to teach kids. Kids are the foundation of our society, so if our kids are doing this and kids are communicating this message to the rest of us, then the chain effect follows and the rest of us become a lot more aware. I have to tell you that certainly was the case with me because no one came to our office and reminded us as to how to wash our hands, but here is my child showing it to me at home, so all of a sudden all of us became a lot more aware.
The U.A.E. has taken these precautions quite early on. Schools are just one example. The other example is so many circulars that have been circulated from the U.A.E. Ministry of Health and the Dubai Health Authority and other emirates have done the same. In terms of communicating, perhaps, basic, but very clear guidelines in terms of let us remind you of some of the basic things, how to wash your hands, how to sneeze, how to take precaution if you have a fever, if you have a headache, or if you cough. These circulars that have been visually represented actually have been quite helpful and they have been circulating starting from the Ministry of Health and the Dubai Health Authority, also to the real estate communities, not just the schools, but everywhere else you go you see more and more of these instructions of how to take precautions. Our office building, as an example, one day we came and there were the sanitizer dispensers attached the walls in the lobby and in every elevator. Again, this is somewhat unprecedented, but to me very impressive in terms of how serious and how efficient we have been in terms of raising awareness and doing something about it. The U.A.E. has really embraced the challenge quite quickly and has demonstrated its willingness and preparedness to do something about it.
Tim Elliot: Here at Reef Tower, for example, one of the things from having the hand sanitizer in the lift, and it’s the first thing you notice. Because I come here regularly, I didn’t expect to see that in there. It served as a reminder that it’s really important. That hygiene aspect is really important.
Ludmila Yamalova: That’s right. As a law firm, we obviously represent a lot of clients, for example, who have real estate investments here. It is vis a vis, through their cases, we see how many other real estate communities here have followed suit and how many of them have sent out instructions to all of their residents about what to do, how to behave, and have done very similar things and employed very similar tactics all throughout the communities, at least as far as Dubai is concerned.
Tim Elliot: You mentioned the steps that the government has taken, the Ministry of Health circulars, for example. One of the steps that the government has taken is moving school holidays forward and enforcing a two-week home study, so effectively schools are closed. What that does is avoids close contact or negates close contact as much as possible. One of the things that many of the experts have noted in Italy is the simple fact that Italians greet one another with a kiss, and that is, of course, close contact. It’s a standard greeting. It happens in lots of other countries. It’s not just Italy. It’s one of the reasons why perhaps the virus has been able to spread a little faster in that country. But in reinforces the point that close contact is so important, the standing of 2 meters away from somebody is a very hard thing to do. It’s a very hard ting to enforce. But you can see the logic, can’t you?
Ludmila Yamalova: For sure. Also, there’s a chain affect, and that is, for example, for those parents or for those who have children, when you take children to school in the morning, the usual routine is that after you drop off your children, you go to the grocery store and you stack up on grocery items for the upcoming day, the upcoming week, and so obviously as a result of that, you go and get in the car, you go pick up the kids, and then after that you pick up the kids and you take to the various social activities. Once again, you go back into all these public places in much bigger numbers. Now, you don’t need to get in the car and drive to school. It’s the chain effect of reducing these kinds of public gatherings from other public spaces, not just schools, is not to be underestimated.
Tim Elliot: There’s also the advice of not shaking hands. I was thinking about this when I walked in this morning, the natural reaction is “Ludmilla, hi.” You put your hand out. You put your and out. You shake hands. You sit down. You talk a little bit. Then we start recording. But one of the things that’s really tough and very hard to predict about COVID-19 is the effect on business. We will try to touch on this a little bit later on in this podcast. But immediately when you meet somebody in a business environment, the handshake is a standard. I was wondering if it makes it a little bit difficult, more stilted, if you’re unable to shake somebody’s hand. But I did think there was perhaps, not a silver lining, but it is something that you could use to your advantage, the fact that bopping elbows or touching shoes, for example, may lead to a different way of approaching somebody, a different way of initiating a conversation, the common ground of using the virus as a way to open a business meeting. I wonder if that’s one way of looking at mitigating effects on business and business environments.
Ludmila Yamalova: Absolutely. This is somewhat of an unprecedented, at least in recent history, development that is very much global, and therefore it is on everyone’s mind. Whether you are a medical professional or a big news follower, you know about it. It is truly on everyone’s mind and so therefore whenever you do meet someone or greet someone, that’s a conversation starter, irrespective of where you come from, even, for example, obviously in law we see a lot more contentious matters, and so even when you’re talking about or trying to mitigate a dispute and such, there is this sort of conversation started that acts in a way as a buffer because in the eyes of a crisis we are all basically on the same footing. This in a way melts the ice a little whenever you’re dealing with a contentious situation when you can establish a different common denominator which in a way with COVID-19 you can in this day and age because it’s a topic that unites us all. It unites and distances all at the same time. Yes, it has certainly been that. Every conversation these days starts with that. But the flip side of it obviously is that there are fewer business meetings that perhaps do happen, and people are a little more reluctant to perhaps have that kind of physical contact because of the current issues. That is a bit of the flip side. But then, the flip side to that is the technology that’s available to us today. In fact, those who follow the stock market – that’s not me. My husband, he was just noting that the stock prices that are going up are those that have to do with technology that allow businesses to continue to operate, a type of telecommuting if you will. Anything to do with telecommuting or assisting businesses in continuing to do their business without necessarily physical contact or a physical presence are now shooting through the roof. There is always an upside to everything, or as the saying goes, there’s a silver lining to every cloud.
Tim Elliot: Let’s stay with the practical side of things for a moment because it’s very important to get across the idea of keeping practicalities at the forefront. Let’s discuss bulk buying, online buying, which is something that you can do here in the Emirates very easily. Lots and lots of people do it, and of course that mitigates the need for that close contact to some extent.
Ludmila Yamalova: For sure. There is, as you said, two sides to that question: (1) the bulk buying and the necessity, the reasons for it, and (2) the availability of options here that avoid that physical contact. With regards to bulk buying, why does bulk buying happen? Perhaps for at least two reasons. One is that the populace or the community believes that certain items will run out and so that kind of leads to this panic and therefore bulk buying. That could be one reason. The other reason, especially in the context of this particular outbreak, is the physical contact. Some are doing bulk buying because they don’t want to go back to the store and rub shoulders and share fluids with the greater population, obviously in the wake of the health warnings. There could be the other reason for bulk buying. Well, if that’s the case in the U.A.E., and it is one of the society’s or community’s that I would say is on the forefront of retail shopping experience is that most of retail these days is available online in the U.A.E. We are not talking beauty products and clothing. We are talking about groceries. I will tell you, compared to the U.S., the U.A.E. is much, much, much ahead of the availability and the options available to residents here to buy everything online, from milk to water to sugar to home supplies. It’s all available, and it’s not just available from one or two retailers, for example. In the U.S., it’s obviously, Amazon is the number one retailer. Here, almost every shop offers delivery and ordering through online, be it, let’s say, a car, or organic café, or any other bigger grocery stores. Almost all of them have either an app or offer home delivery. Therefore, you don’t really need to go to the store to buy a bottle of milk. Even more importantly is that there is not, for a lot of people it is a consideration, there isn’t really a delivery charge if you buy above something fairly nominal, like 50 dirhams or 100 dirhams there is no delivery charge. This is huge as well because in other countries, and the U.S. being one, there is a fairly significant delivery charge which often dissuades people or discourages people from buying online. That is one.
The other one is the timing of it. In other countries, it takes a while before your delivery comes. In the U.A.E., the delivery is available on the same day basis. Because of that, because there are so many options for online ordering and home delivery with basically nominal to zero costs on the immediate basis, there is really no reason for people to have to bulk up or stock up on items as they perhaps would do in other countries.
Another example that we’ve always had here and I, as a mother of young children, have certainly availed myself of many times is pharmacy. In the U.S., if my child is sick, I have to go and get in the car and drive to the pharmacy to pick up the particular medicine. In Dubai at least, there are a number of pharmacies who deliver 24/7 basically within an hour, either 5 dirhams delivery or free.
Tim Elliot: Pharmacies here, Ludmila, are almost surprised when you turn up with a prescription to collect it yourself.
Ludmila Yamalova: Indeed. Exactly. What you do with a pharmacist here, you just send them a WhatsApp, for example, the prescription. They will say, “Okay, we’ll bring it to you in the next half an hour.” What a great benefit! At times like this, these are the services and conveniences which we’ve had and enjoyed for a number of years, but at times like this it really highlights and brings it forward how sophisticated the technologies in the U.A.E. are and how much they’ve been embraced by the communities here and how much we rely on them. At times like this they’re an example of how our lives can continue more or less normally in the ordinary course of business because of these conveniences that a society like this has offered to us.
Tim Elliot: I want to talk to you about social media in a moment when it comes to COVID-19. There is so much information. This is all anybody is talking about at the moment. Not all of that information is helpful. Whatever anybody says, garlic does not get rid of COVID-19, as much as the internet tells you that. But we can all, I guess, very easily contribute to helping to calm the situation because this is a situation that needs a calm approach rather than inciting panic, and it is a situation that is frightening for lots of people. That’s really what we should all be doing. That’s what the government, wherever you are in the world, whatever country you’re in, really wants its citizens to be doing.
Ludmila Yamalova: For sure. Panic is a very scary thing because it leads to mob mentality. I’ll tell you, I’ll just give you one example. Last week here in our building, in Reef Tower, there was an ambulance that came to the building and the word on the street, however it traveled to us, we don’t know, so perhaps it is a bit of a rumor because we didn’t hear it from the horse’s mouth, so to speak, but the ambulance came to someone in the building because they were having a hard time breathing. That in and of itself, just right away you see this sort of panic in everybody’s eyes. We are a high-rise building so you could see how that, something as small as that, and this could be a person with asthma, this could be not even a breathing problem, and this could be somebody cut a finger and it is bleeding, we don’t know, but in the wake of what’s going on when you hear something like this, you can see how the panic can ensue and what it would lead to. You can see the mass exodus from the building, i.e., the mob mentality, and these things happen. This is human nature. This is why it’s so paramount that people do stay calm, pragmatic, and realistic, but calm, and that is exactly what the governments everywhere in the world are encouraging people to remember, but in particular in a country like the U.A.E. because we are a small country, but quite heavily populated in certain areas. It’s really, really important to stay calm and to be well informed, and that’s another warning that the government has made very clear, for people to just bear in mind, and that is not to spread panic and not to spread rumors. In fact, in the U.A.E. rumors can lead to criminal sanctions, so it’s that much more important that whatever it is that we may be experiencing, we don’t just rush to social media and start posting all sorts of statements on social media that can ultimately lead to either panic or false rumors. Apart from the practical reason to avoid doing that, there is also a legal reason and that is just these kinds of statements and these kinds of actions can lead to fairly severe criminal sanctions in the U.A.E., so make sure not to go on social media and spread rumors or unsubstantiated information because it’s important in particular times like this to let the experts, so to speak, to communicate with the public.
Tim Elliot: That’s what’s important. That’s really why I wanted to ask you, when it came to social media, if you’re in conversation with friends, it’s good to be calm, to be pragmatic. It’s also good policy to be that way on social media. Your advice would be, I guess, don’t share anything you know isn’t true. Clearly, don’t put lies up there, and share only sensible advice. What would your advice be?
Ludmila Yamalova: I would say only re-share information that’s already available there, that comes from legitimate sources. For example, if we’re talking about the number of cases or the specific situation that might be talked about, don’t start creating your own content. If there’s an article that’s written, for example, from a reputable agency, then you can rely on that. Then you can talk on the basis of that particular information or perhaps share that particular article, but I would not in this day and age create any new content allegedly communicating or conveying one event or another. I just wouldn’t because it’s so easy to re-share that content and then the Chinese whispers effect happens all too quickly. I’d say just stick with what’s available there on the mainstream media and let in particular in the U.A.E. the government communicate what it believes is important to communicate. The government here is very active in communicating with the public on a regular basis through their own channels, their own websites, Twitter, Facebook, articles written on the Ministry of Health website. We have quite a communicative government here in that sense, so therefore I would just rely on those sources of information and only, for now.
Tim Elliot: And be aware that sharing isn’t necessarily caring on social media, is it? There are fines potentially, perhaps even imprisonment, in certain social media cases. Think before you post.
Ludmila Yamalova: For sure. I mean, there are fines that can go up to 3 million dirhams and imprisonment that can go up to 3 years of a jail sentence. Better not to have to deal with those issues.
Tim Elliot: Let’s stay with sensitive topics. The current, whether this is an epidemic or pandemic is arguable at the moment, but things like this COVID-19 do help people to focus on the most serious aspects of life. I guess COVID-19 really sharpens the focus, for example, on something like registering a will for some people. It’s also a time when people might be considering life insurance more seriously, and these are all things that, particularly if you have a family, you have dependents, these are things you should be thinking about, but perhaps at the moment, thinking about them more carefully then perhaps you would have done a week or two ago.
Ludmila Yamalova: For sure. One other issue in addition to life insurance is health insurance. The U.A.E. business sector at least has had a system almost throughout the entire country for a few years now that ultimately requires most residents who live here to actually have health insurance. The majority of people living in the U.A.E. have health insurance, and that’s usually done through their employers and many emirates now have this as a mandatory requirement that companies provide healt insurance to their employees. Therefore, most of us here have health insurance to begin with, which is huge. In fact, this is a far cry from what’s happening in the U.S. where only about 30% of the population I think has insurance. (1) Most of us have health insurance, but obviously this is the time also when you think about the specific health insurance policy that you’re considering or that you have considered. You may want to upgrade it or you may at least for the future consider upgrading your health insurance to be able to avail yourself of perhaps more options. But more or less, these options have already been in existence for a long time in terms of health coverage. Most of the health plans here will give you the necessary care that you need it cases like this. That’s one aspect. This is certainly the time for people to perhaps reconsider and upgrade insurance if they, in the past, have tried to minimize that cost. That would include, I will tell you, insurance, for example, for domestic staff. Because it’s one thing when your company’s paying your health insurance and perhaps your family, but it’s another thing because your domestic staff is ultimately sponsored by you and then it’s your obligation as the employer in that case to provide health insurance. In many cases, health insurance that is available to domestic staff is fairly minimal and basic in its coverage or at least a lot of people choose to opt for that option, so that is perhaps the time when you think, well, these are my nannies, these are my drivers, these are my cooks and chefs and people I heavily rely on for the benefit of my family, so perhaps I want to make sure that should anything happen they are well covered. That’s one example.
(1) Now as we’re talking about health insurance, another important aspect to highlight is that the U.A.E. in the last week has announced that any kind of coronavirus treatment will be covered by any insurance in the U.A.E., that is if you have health insurance, it will be covered. This is important because there have been some discussions about whether something like this would actually be covered by health insurance and especially if the virus spreads to the level where it becomes a pandemic, because I think it’s still quite subjective in terms of whether it is a pandemic now or not quite yet. It depends on which source you rely on. But there have been discussions that apparently a lot of the insurance policies exclude coverage of anything that is pandemic related. Since then, the U.A.E. Ministry of Health has come out and clearly said that all insurance policies in the U.A.E. will cover treatment of coronavirus. Think about it. That’s huge because you can see how cases like this in particular where there is a pandemic issue that health insurance policies or insurance companies will just use that as an excuse not to cover. But here, irrespective of how your particular insurance policy is drafted, the U.A.E. government has come out and said all insurance policies will include coverage of coronavirus.
(2) The government has also said for those who do not have health insurance coverage, the treatment will still be provided because it will be treated as part of an emergency, and the same treatment will be provided even to those who do not have health insurance coverage in the U.A.E. Again, that is an unprecedented and a very impressive decision by the authorities and certainly one that should give a lot of people comfort and once again sort of dampen perhaps the panic that might otherwise arise amongst those who worry about the extent of their health insurance.
Tim Elliot: So much at the moment is unknown. Very little is known about COVID-19. It will be some time before there is a vaccine. What we do know is that most people recover. It seems to be general medical opinion that the mortality rate is something like 2%, but it is an unknown. One of the other unknowns everywhere in the world, here in the U.A.E. it’s no different, is the effects that this may have on daily life, but in particular on business life. That’s something I’ve wanted to ask you about because we all have our own personal obligations, our own financial obligations. Business has an obligation to pay its staff, to make its investments, a million and one other things. It’s an impossible question to answer, but just your thoughts, Ludmila. Let’s look at company obligations and personal obligations here. If things do become more difficult, what is the government likely or potentially what could the government put in place to try to once again mitigate the situation?
Ludmila Yamalova: The business world is one that certainly requires a very detailed and intense discussion. But before I go to that, just one observation to make is what we have seen act an individual level, at a personal level is perhaps the awareness of mortality. We should always be aware of it and some of us are perhaps more aware of it then others. But we have always promoted or advocated for people here to really consider having their own wills registered. Again, it’s that much more important in a country like the U.A.E. where there is such a huge percentage of the population that are expats, which means the people who have more than one home. It’s so important to just remember, and many of us have come here also to earn, to work, and build up a little bit of a legacy or an estate for perhaps our children, for our families, so it’s so important to be aware and to be cognizant of the laws of tis country in terms of what would happen to the estate, what will happen to the family in the event something were to happen to me. Surprisingly still, a lot of people don’t really think about having a will, perhaps because it’s an effort, perhaps because of the cost, and in many cultures actually it’s also the superstition. They worry about doing a will because somehow evil will come their way. Believe it or not, we have a lot of clients, in particular from Eastern Europe, I will tell you, the Russians, for example, this is a superstition for them. They are not comfortable with the idea of doing a will because of this. The reasons are there, but at the end because it’s not really our country, so to speak, and many people don’t even understand the laws of this country, and furthermore there are so many different laws that are in play depending on the nationality and residence of the people in question. From a legal standpoint, the whole idea of estate inheritance is quite complicated, and yet people don’t want to make the investment to have a clear mandate or clear outline or roadmap of how their estate should be dealt with or managed, and in particular, their children in the event of death. That being said, with the coronavirus spreading, people are becoming a little more aware of the reality of life, and therefore, their mortality. We have seen an increased interest in going ahead with wills. Perhaps some of these clients for whom it’s been on the backburner, they’re now more actively interested in finalizing this. Some perhaps who are starting to set superstition aside and looking at this more seriously, and others are just starting to finally think for the first time. This in particular applies to a lot of younger families who just don’t really think about it because why would they think about it because they’re so young. But this is becoming an issue that seems to be a lot more of interest in this day and age. That’s at a personal level or an individual level.
Now, for businesses, obviously an outbreak like this leads to all sorts of issues, many of which at least at the outset seem negative because whenever you have a crisis, obviously a crisis leads to challenges. It will be interesting to see, and some lessons can already be drawn from how other business communities are dealing with the aftermath, if you will, or the effects on the business community because of the virus. Obviously, as far as the U.A.E. is concerned, we are a hub for tourists, for events, and for trading, among other things. While events these days are being postponed for all good reasons, but whenever you have events, you have businesses that develop around those events, and that obviously leads to contracts being signed and such. Now when we start canceling events or postponing events, that’s obviously affecting businesses who have signed contracts, be it to perform services, to deliver supplies, or to receive supplies, and now when you all of a sudden are no longer able to receive your supplies because, for example, factories in China closed down. What do you do? Because perhaps you, as a service provider, you have penalties that you have to pay in the event that you cannot provide those supplies to your client. Or the same thing with the services, if you have signed up to provide certain services, be it advertising, legal services, accounting, professional services of any type, and you’ve hired a whole team to help you deliver those services to your client, now the client no longer needs those services because the events for which you were going to consult them have now been postponed, perhaps indefinitely.
What do you do with ultimately the change of the terms and conditions amongst businesses? There is a legal concept that exists called a force majeure. It’s an old legal principle that has existed in most of the world. In some jurisdictions, like a civil law jurisdiction, it is more recognized and is actually coded in the law itself. In other jurisdictions, like common law, it’s more contractually driven. But a force majeure refers to an event that ultimately makes performance of the obligations impossible. Now, that’s the simple definition of it and usually the performance of an event, the impossibility has to be the cause of an act that is usually referred to as the act of God. This concept exists in many contracts, or at least the clause, but in many countries and many businesses, especially when there is a downturn, it’s often abused and it’s used all too broadly, anything that basically somehow changes your performance or makes your performance inconvenient then can be qualified as an act of God. We’ve seen this a lot, for example, with developers. A lot of developers had it in their contracts provisions such as if the contractor or subcontractor defaults on their obligation in terms of delivering something, that’s considered an act of God. Well, it isn’t so. The U.A.E. courts in particular have over the last many years hashed out that principle further and it’s been pretty clear anyway, but they’ve hashed it out in terms of specific contracts where for force majeure to really be considered force majeure, it has to truly be an act of God that’s unforeseeable. In the event that you are doing the business that you’re doing, (1) you could not have possibly foreseen or predicted and (2) ultimately now because of this unforeseen, unpredictable event your performance is impossible, not just impractical or more expensive or more inconvenient, but is impossible. Again, (1) it has to be an unpredictable event, a type of act of God, (2) your performance has to be impossible, and then (3) and this is very important, is that it doesn’t give you the carte blanche to basically never act on your obligations or to just default altogether. For example, in the case of real estate developers, let’s say you gave me money and I was supposed to deliver property to you by 2020 and because of some sort of a force majeure I didn’t. That does not give me the right to not give you the money back or to not deliver altogether. If I’m not going to deliver altogether, I have to refund you the money, or I can use force majeure to give myself additional time to deliver my obligation, i.e., to build that particular, for example, property by a later date, and that date has to coordinate with the length of the force majeure. It has to comport with the term or the time that it takes for the force majeure event, for example, to end.
Let’s say in the case of an epidemic like the coronavirus, the excuse I could use is that I was not able to perform my services because of something I consider a force majeure, i.e., coronavirus, for example, and therefore now I can delay performance of my obligations until this crisis is no more. It’s very important to highlight those three aspects of force majeure. (1) It’s an act of God, unpredictable, unforeseeable, (2) performance of the obligation is now impossible, and (3) now I can use it as an excusable delay to perform my obligations. It depends though how other businesses will use it, but it certainly is not an excuse or a tactic for businesses to just delay performance or renegotiate contracts because of what’s going on.
Tim Elliot: Theoretically COVID-19 by your definition fits that bill almost perfectly, unfortunately.
Ludmila Yamalova: I say obviously it’s a subjective opinion. We will see how the courts ultimately decide this, but I would say, sitting here today, yes. I would say this is a fair time to evoke force majeure and I’d say it’s subjectively and objectively it’s fair to call this particular event as a form of an unpredictable act of God that should qualify as force majeure. In fact, for example, in China during the SARS days, the courts back then did rule that SARS at the time actually was that kind of an event that actually was a force majeure for purposes of contract obligations. Similarly, in China since the outbreak of coronavirus and COVID-19 the authorities and governments have come out and given to a lot of businesses what is called a force majeure certificate showing that this particular event does qualify as a force majeure. If we were to draw lessons from China as one example, then yes, I’d say it’s reasonable to expect that COVID-19 will be considered and qualified as force majeure.
Tim Elliot: Ludmila, the final question. On a day-to-day basis, a day-to-day business basis, what have we seen so far in the approach here in the United Arab Emirates?
Ludmila Yamalova: A lot of businesses have obviously taken serious note of what’s going on and are trying to cooperate and accommodate their partners, their clients, their customers in the best way they can at this point in time. For example, airlines, just in the last few days Emirates Airlines has announced that it will allow passengers to change their tickets up until at least March 31st free of charge. That’s huge and it’s obviously because a lot of passengers will not be able to travel as they originally planned, so the airlines in this case are offering free of charge changes to the tickets and sometimes even cancellations. That’s one example.
The other example is also hotels and other hotel-type providers, like Airbnb, for example, has announced that they too will allow a lot of the reservations to change free of charge on qualifying reservations. That’s another example. Then in some cases, companies are starting to send employees home perhaps either for half pay or no pay just because they’re not able to pay their salaries. We’re also seeing now businesses starting to renegotiate, for example, their lease agreements of their office space rent or perhaps any other kind of obligations they have with their suppliers. It’s happening and it’s necessary that these discussions do take place where they’re inevitable, and it’s necessary that businesses collectively understand the severity of the issues and then try to meet each other somehow halfway and offer some kinds of concessions and flexibility. Now, it will be interesting to see how banks react because a lot of businesses, particularly in the U.A.E. have fairly substantial bank loans which are based on monthly repayment obligations and so businesses are starting to see severe downturns in their monthly revenue streams because of the outbreak that’s obviously going to affect their ability to pay their loan obligations to the banks. It will be interesting to see how the banks react, whether they will allow for some sort of extensions and excusable delays, and whether they will waive penalties. I would say this is a space to watch but I would say it’s not unreasonable to expect that either at the business level or the government level there will be some mandates that will encourage businesses to provide further concessions and waive penalties to accommodate for the current challenges we’re facing.
Tim Elliot: For the record, this podcast is recorded on March 11, 2020. Ludmila Yamalova is the Managing Partner at the legal firm, Yamalova & Plewka here in Dubai. Thank you. Sound advice, as always.
Ludmila Yamalova: Always a pleasure. Thank you, Tim.
Tim Elliot: That’s another edition of Lawgical. Each week we cover legal issues, legal news, and much more. As always, you can go to LYLawyers.com. There is so much there on the website on a whole range of legal issues, loads of free legal advice. If you would like a legal consultation, simply click the Contact button or WhatsApp to 00971 52 525 1611. Until next time, stay well.
