A General Power of Attorney (GPOA) is an essential legal instrument that enables a person to authorize another to manage affairs and carry out tasks on their behalf. However, due to the broad scope of authority it grants, it may open the door to misuse and legal violations. Therefore, UAE law restricts its use in certain situations and regulates cases where it may be invalidated or refused.
It is crucial to clearly define your objectives before issuing a general power of attorney and avoid granting unrestricted authority that may lead to legal complications and significant losses.
Concept of a General Power of Attorney and Its Legal Limits
Legal Definition
A General Power of Attorney is a contract whereby the principal appoints another person (the agent) to act on their behalf in permissible legal matters, covering all acts that can legally be delegated without the need to itemize each one individually.
Scope of Authority
It may grant the agent wide powers, including:
- Managing commercial activities
- Signing contracts
- Incorporating companies
- Purchasing assets
- Conducting financial transactions
- Representing the principal before government entities and courts
Legal Limits of a General POA in the UAE
Exceptions:
A general POA does not include the authority to make donations or carry out acts requiring explicit authorization unless clearly stated.
Real Estate:
A general mandate may not be sufficient for selling property; a specific power of attorney is usually required.
Trust Requirement:
Given the broad authority involved, it must only be granted to a fully trusted individual.
Time Limitation:
It is advisable to limit the POA to a reasonable duration (commonly not exceeding three continuous years) and renew it if needed. The agent must be formally notified of any revocation to prevent subsequent unauthorized acts.
Situations Where the Use of a General POA Is Restricted
1. Cases Where Revocation Is Not Permitted Unilaterally
These situations require the consent of both parties:
- Conflict of Interest: If the POA allows the agent to sell to themselves or to a third party where the agent has a direct interest.
- Third-Party Rights: If the POA creates a direct and stable benefit for the agent or a third party.
- Explicit Clause: If the document expressly states that revocation is not permitted except in the presence of both parties or under specific circumstances (e.g., death of a party).
2. Cases Where the POA Becomes Void or Ineffective
- Expiry of Term: When the stated duration ends.
- Death or Loss of Capacity: Death or legal incapacity of either party (unless third-party rights exist).
- Revocation by the Principal: If legally revocable.
- Completion of Purpose: Once the assigned task is accomplished.
- Abuse of Authority: Misuse, fraud, embezzlement, or actions harming the principal’s interests.
- Legal Restrictions: Such as statutory time limits (e.g., real estate sale POAs in Dubai being limited in duration).
Transactions Where a General POA Is Not Accepted
Certain transactions require a Specific Power of Attorney (SPOA), including:
- Real Estate Transactions: Buying or selling property requires a specific POA clearly identifying the property and title deed details.
- Sensitive Banking Transactions: Opening/closing accounts or major financial operations require detailed authorization.
- Access to Sensitive Personal Data: Medical records or identity data require explicit consent and specific authorization.
- Personal Judicial Settlements: Certain civil or criminal matters require personal attendance or narrowly defined authority.
- Guardianship Matters: Custody or management of minors’ assets requires court-supervised specific authority.
When a Specific POA Is the Appropriate Alternative
A Specific POA is more suitable when:
- Defining a Limited Task: Such as selling a particular property, registering a vehicle, or representing someone in a specific court case.
- Personal Procedures: Marriage, divorce, residency applications, etc.
- Reducing Risk: It limits the agent’s powers strictly to defined actions, minimizing misuse.
Position of UAE Courts on General POAs
UAE courts recognize general POAs but impose strict judicial oversight:
- Broad authority requires careful scrutiny.
- The principal may file a lawsuit to revoke the POA in cases of abuse and claim damages.
- Certain POAs (especially those including “self-dealing” clauses or irrevocability terms) may be difficult to revoke without mutual consent.
- Criminal defendants may request court-appointed legal representation if unable to afford one.
- Revocation before the Notary Public is a swift and effective measure.
- Revocation is not legally effective unless formally notified to the agent.
- Relevant institutions (courts, banks, authorities) must also be informed to avoid future liability.
Risks of Misusing a General POA
For the Agent:
- Criminal penalties (imprisonment and fines)
- Civil liability for damages
- Charges of fraud, breach of trust, or forgery
- Removal and full revocation of authority
For the Principal:
- Invalid transactions requiring legal annulment
- Financial losses (e.g., undervalued property sales)
- Time-consuming disputes
- Potential legal accountability in cases of collusion or negligence
Legal Advice Before Issuing a General POA
- Consult a specialized lawyer
- Clearly limit and define powers
- Avoid “self-dealing” clauses unless absolutely necessary
- Prefer a specific POA when possible
- Properly notarize the document
- Set a validity period
- Immediately revoke when no longer needed
- Request periodic reports from the agent
- Inform trusted individuals of its existence
- Avoid vague expressions such as “all necessary actions”
- Take immediate legal action in case of misuse
Frequently Asked Questions (FAQs)
What is the difference between a general and specific POA in the UAE?
A general POA grants broad and comprehensive powers, while a specific POA limits authority to defined tasks.
Why do some authorities reject general POAs?
Due to the high risk of misuse, especially when including self-dealing clauses or lacking clarity.
Is a general POA accepted in real estate matters?
Generally, no. Real estate transactions typically require a specific POA.
Can a general POA be used for banking transactions?
Yes, but careful drafting is essential to avoid overly broad authority.
Conclusion
You may require a Power of Attorney due to travel, illness, or inability to personally manage your affairs. While a General POA offers flexibility, it should be carefully drafted and limited to avoid significant legal risks.
For tailored legal drafting, you may contact the team at Private Notary in Dubai via email at info@privatenotarydubai.ae, WhatsApp at +971 56 232 7778, or visit their office at Office 805, Opal Tower, Business Bay, Dubai, United Arab Emirates.