Company for frivolous lawsuit protection

[FreedomSearcher]

We run a certain online business from Dubai with a lot of freelance employees,
and a small percentage of them gets really angry when they get fired for not performing.

Some even go as far as threatening to sue the company for the most random reasons if we don't pay them $X,XXX within 24h for example.

Now my question is which jurisdiction would be best for protecting against these frivolous lawsuits?

Example: Maybe we could make a freelance contract between the freelancer and a company based in Saint Vincent and The Grenadines or Nevis, so that it would be extremely hard to perform frivolous lawsuits against the company.

Thanks in advance for the advice.

*Remote employees. Mostly based in Pakistan, India and Philippines.

Last edited: May 19, 2022

 

[aage]

Are the laws in Dubai really so week that you can feel threatened by some‌ angry Indies?

In most countries including offshore jurisdictions it would cost more than what they‍ earn in 3 years to sue a company! And you are afraid of their threats?⁠

 

[Golden Fleece]

As a first step, have a lawyer︂ review your freelance employee contracts and place as many poison pills as possible in those︃ contracts, e.g., an attorney fee-shifting provision (if you lose the court case, you pay the︄ company its legal fees) if the jurisdiction allows that. Depending on how many of these︅ poison pills you can place in those contracts, you may not need to do anything︆ else.

As a second step, hold all the assets in one company. Have a second︇ company, without any assets, hire the freelance employees. Then that second company is judgement proof.︈

As a third step, form the second company in a jurisdiction such as Nevis or︉ the Cook Islands, which has strong lawsuit protection laws.

 

[FreedomSearcher]

Thanks for your pretty in-detail answer. Appreciate it.︂

 

[aage]

why are‌ you afraid of them?

 

[FreedomSearcher]

I'm not. But I‌ like to protect every aspect of my financial assets.

 

[CoinMaster]

I would create a Holding company somewhere if not in Dubai @Fred may know more.‌ I would then move my assets from the operational company to the holding and now‍ you have a perfectly fine protection.

 

[FreedomSearcher]

How do you move‍ intangible assets like YouTube channels from owner?

 

[Fred]

You can put any imprint in the video description for copyrights and general contact‍ even when someone wanna sue you - they have to refer to the imprint.

In the backend again you can funnel the Adsense payouts to a Business.

It's all about⁠ IP and IP can be moved pretty easy to a Dubai Company.

Cyprus Company collects⁤ the Adsense without any Witholding Tax from US and pays for the IP which holds⁣ the Dubai Company - quite a lot clients running this actually and paying effective close⁢ to 0% tax.

All the advertisement partnerships again can be depending on the counterparty either︀ with the Cyprus Company or Dubai Company contracted and of course all non EU advertiser︁ are fine with paying the Dubai Company.

In this setup the Dubai Company can even︂ act as a Holding / Investment Vehicle as you have excellent access to IBKR/Swissquote/Saxo in︃ Dubai.

 

[freedom95]

But by creating a holding company in Dubai, it will︄ be a reportable entity for ESR right? Also, isn't it hard to open bank accounts︅ for IP companies established in let's say RAK?

 

[Fred]

You keep the company from the Cyprus⁠ company point of view like a holding company bit within Dubai you setup as an⁤ active trading Freezone Company.

No local UAE bank would otherwise anyway open the bank account⁣ - it would be too complex for there compliance.

 

[FreedomSearcher]

What's ESR if you could explain that⁠ in the most simple terms? Thanks.

 

[aage]

IP rights may be the solution. A Lawyer must draft something for you and‍ let it be notarized.