x Abu Dhabi, UAETuesday 23 January 2018

DIFC firms lured by the perfect blend of location and facilities

The DIFC offers a unique regulatory environment backed up by a court system experienced in handling business disputes.

The physical infrastructure of the Dubai International Financial Centre - the Gate building, its location at the centre of Dubai business district - may be the lure for many firms thinking of location options in the region.

But the DIFC's "soft" infrastructure is often the clincher. No other financial centre in the Middle East can offer its mix of regulatory, legal and arbitration facilities.

At the heart of this "soft" infrastructure are two organisations set up at the very beginning of the DIFC project: the DIFC court system, and the Dubai Financial Services Authority (DFSA).

Both were designed to give firms operating in the emirate access to standards of "international best practice" in regulatory supervision and dispute resolution.

The DFSA exists to ensure that DIFC member firms comply with recognised standards with regards to potential market manipulation, insider trading, money laundering and a host of other activities proscribed by its rule book.

Developing those principles was the job of the first two DFSA bosses, David Knott and Paul Koster.

Ian Johnston, the tough Scot who has been the DFSA chief executive since last summer, is putting more emphasis on action.

"I tend to put more emphasis on enforcement," he says. "I think it's in the interests of the financial services industry to have a regulator who's a strong enforcer."

The DFSA has been ready to "name and shame" organisations and individuals that have infringed its regulations, with big-name scalps such as Barclays, Damas and Shuaa Capital all receiving hefty fines.

It has also been in the front line against crimes such as money laundering and terrorism funding.

"The regulator's role here is to detect where possible breaches have taken place and report it to federal UAE authorities," adds Mr Johnston. "The same applies to sanctions against Iran, which we treat very seriously. But I'm convinced that any serious money launderer would not try to do it via the DIFC."

The DIFC Courts were set up to reassure firms and investors that disputes would be judged according to international standards.

They are led by the Singaporean chief justice Michael Wang, a leading light in international business arbitration, with a team of highly qualified and experienced judges, including the first female judge in the UAE and several Emirati judges.

The Courts were entrusted with resolving perhaps the most critical event in Dubai's business history: the resolution of disputes arising from the US$25bn restructuring of Dubai World in 2010. It has also judged hundreds of minor disputes via its small-claims procedures.