Within the United Arab Emirates, compensation laws have been adopted and are in effect in the Dubai International Financial Centre (IFLD) and Abu Dhabi Global Market (ADGM) free zones. However, outside these financial free zones, the legal basis for compensation in the United Arab Emirates was based on less precise legal bases. For example, in an insolvency scenario, parties based in the United Arab Emirates could invoke the provisions of Federal Insolvency Act 2016 2016, but only for those who crystallized before the insolvency proceedings began. Currency clearing allows companies or banks to enter the number of foreign exchange and foreign exchange transactions into large transactions and enjoy the benefits of better pricing. If companies have more time and predictability organized in the accounts, they can more accurately predict their cash flow. According to 12 USCS S. 4402 (14) (A), in general, the term “compensation contract” — a master`s compensation agreement — is an agreement between two parties — known as counterparties — that governs the processing of certain compensatory transactions or contracts. Two transactions reward each other if a profit in one transaction results in a loss in the other. In other words, transactions protect each other. A master compensation agreement requires a practice called “net settlement” when one of the counterparties acidizes or terminates late a contract included in the master compensation agreement. Compensation is widespread in swap markets. Suppose, for example, that two parties enter into a swap agreement on a certain guarantee and that they owe each other money. At the end of the swap period, closing compensation is made after a default, i.e.
when a party does not make capital and interest payments. Transactions between the two parties are billed in order to obtain a single amount so that a party pays the partisan figure. Under the “close-out netting” existing contracts are terminated and an aggregate value of the terminal is calculated and paid as a lump sum. The compensation law makes compensation agreements final and enforceable against an insolvent party or a person who provides security to support the insolvent party. A party`s obligations to pay under a clearing contract are not cancelled or suspended due to bankruptcy or insolvency proceedings or the appointment of a liquidator in respect of that party, and any compensation agreement enters into force in accordance with its terms. Under the new Bank Act, obligations arising from bankruptcy or liquidation proceedings will not be taken into account and netting transactions or any financial transfer already paid is not be cancelled.