New law provides protection for whistleblowers in Dubai

Author: Rebecca Ford and Nicholas Braganza | Date: 3 Aug 2016

Legal experts from Clyde and Co explain why HR departments should take note of the changes

A new law designed to prevent financial crime may also have a welcome effect in protecting employees from certain forms of whistleblowing. HR departments will want to take this into account when drafting whistleblowing policies.
 
Unlike in many other jurisdictions, there has until recently been no statutory protection for whistleblowers in the UAE or Dubai International Financial Centre (DIFC) law.
 
This appears to have changed, in part, in Dubai with the passing of the Dubai Law No. 4 of 2016 on Financial Crimes (the Financial Crime Law), which for the first time includes protection for those that report crimes to the newly established Dubai Centre for Economic Security.
 
The general advice usually given to those that intend to whistleblow in the UAE is they should act with caution – whistleblowing is fraught with risks, primarily because there are no explicit protections under the law.
 
In contrast, by way of example, in the UK, under the Public Interest Disclosure Act 1998, employees who make a disclosure about unlawful activity are protected from prosecution and from termination of their employment by reason of that disclosure. This is not so in the UAE.
 
While there is an obligation to report criminal activity, as set out at Article 274 of the UAE Penal Code, in practice whistleblowing is rare. In the event a whistleblower discloses confidential information about his employer to any regulatory authorities or even to the police, not only may he be in breach of his employment contract but he may also be in breach of the law.
 
However, the new Financial Crime Law appears to open the door for changes to this state of affairs.
 
The principal purpose of the law is to establish the Dubai Centre of Economic Security. The Centre has been set up to combat financial crimes including "corruption, fraud, bribery, embezzlement, destruction of public property, forgery, counterfeiting, money laundering, terrorism or illegal organisations financing or other crimes that may be committed in the entities" within the Emirate of Dubai.
 
It appears legislators have now begun to realise that an important way to target and stamp out the crimes is to facilitate their disclosure by employees (and others).
 
Under Article 19, the Financial Crime Law provides for "protection for the reporter". The law stipulates that the reporter's freedom, security and protection shall be guaranteed, and that no legal or disciplinary action may be taken against the reporter unless the report is false.
 
Questions may arise as to whether whistleblowing is only protected if it is made to the Centre or to other bodies. Under the UAE Penal Code, crimes should also be reported to the Police and the Public Prosecutor. If a crime is reported to the Police, do the protections apply? On a strict interpretation of the law, we say arguably not. What about crimes that are perpetrated outside Dubai but within the UAE?
 
Notwithstanding these questions, the new law and these provisions are a welcome development. However, until we are able to see its application by the authorities, we would still advise whistleblowers to act with caution in Dubai and in the UAE.
 
Rebecca Ford is a partner and Nicholas Braganza is a senior associate at Clyde and Co.