Creating a legal and regulatory system from scratch is one of the greatest challenges a lawyer can face – and one that is essential in the process of creating a legal free zone that operates effectively.

The Dubai Logistics City (DLC) is a free zone which caters specifically to multi-modal cargo and logistics providers. It is designed as the world's first fully-integrated logistics platform by air, sea and road and will enable free movement of cargo within the sea to the air terminals within hours. In addition, the DLC will provide facilities and services to the logistics industry – from transit to packaging and labelling of goods – all of which will result in its investors being offered and provided with every possible service to enable delivery in the most cost and time-effective manner.

DLC was created by Dubai Decree No 9 of 2006, issued by the ruler of Dubai, Sheikh Rashid Al Maktoum. This decree provided the establishment of the DLC with financial and administrative independence and full legal capacity to enter into all contracts and transactions.

The DLC is exempt from the Company's Law of the United Arab Emirates (UAE). As such, all issues relating to the DLC's corporate structures, licences, registration and incorporation of entities are regulated by special rules and regulations. A team at Ince Al Jallaf & Co in Dubai is in the process of drafting the regulations that will lead to the effective operation of the DLC.

The inter-relationship between the regulatory regime in a free zone such as DLC and the regulatory system in Dubai or other emirates is not always clear, meaning there are special challenges in determining how to deal with it. Further, many free zones have essentially copied laws adopted by the earliest free zones some time ago. While Ince is seeking to make laws clearer in order to avoid problems we have encountered in earlier free zones, it can sometimes be a challenge to convince people to think differently.

The DLC is being created to accommodate the entities involved in multi-modal cargo and logistics services. Although the DLC is similar to other free zones it maintains some characteristics which differ from the others. There are two types of entities in the DLC: a limited liability company (DWCLLC) and a branch office.

A DWCLLC is a separate legal entity from its shareholders, which limits its shareholders' liability to their capital contribution. It permits 100% foreign ownership. A DWCLLC is established with an authorised capital of AED3m (£416,000) fully paid up with a UAE bank at the time of application. Unlike other free zones, which require separate entities to be incorporated on the basis of single and multiple shareholders, the DLC LLC provides for one entity with shareholding of one to 10 members. A DLC LLC must have minimum of two directors, a company secretary (who may also be a director) and a manager. Like other free zones, there are no taxes.

A DLC branch office is wholly owned by its parent company and has no separate legal identity. A branch cannot carry out any trade or business activity except as authorised by the DLC Registrar of Companies. The branch must appoint a representative to be the point of contact between the branch and the DLC.

The DLC provides different types of licenses based on the nature of activities required. These range from light manufacturing licences, trading licences and services licences to logistics licences. Unlike other free zones, the DLC allows logistics licence-holders to pick up and deliver product within the UAE.

The regulations providing for the creation of the DLC do not contradict or challenge any laws or public policies of the UAE. However, if there is a dispute between a DLC entity and a third party the dispute will be referred to the Dubai courts.

Moreover, other UAE federal laws and Dubai laws will apply to any circumstances that fall outside the regulations. For example, if there is an environmental issue, a criminal offence or a transactional dispute, the Dubai authorities and courts will have jurisdiction. Unlike the Dubai International Financial Centre, the DLC does not have its own courts.

The DLC is just one of six developments which Dubai World Central wish to incorporate in Dubai. The others are the Residential City, the Golf Resort, the Commercial City, the Enterprise Park and the Dubai World Central International Airport.

Rita al Semaani Jansen is a partner at Ince Al Jallaf & Co in Dubai.