x Abu Dhabi, UAESunday 23 July 2017

DIFC Courts now can be a part of the solution

Comment The Dubai International Financial Centre courts, independent, run by international standards, but simultaneously part of the Dubai set-up, could be expected to deliver fair and impartial decisions, with substantially fewer enforcement difficulties

Member firms of the DIFC can choose to have their cases heard by the courts.
Member firms of the DIFC can choose to have their cases heard by the courts.

It seems like a thousand years ago now, but the day before the Dubai World crisis broke I had a very agreeable lunch in the Dubai International Financial Centre (DIFC) with two gentlemen of whom we may be hearing quite a bit more as the fall-out from Dubai World and Nakheel rumbles on. Mark Beer and Michael Hwang are respectively registrar and deputy chief justice of the DIFC Courts, and they both believe passionately in the potential for the Courts to be a force for good in the confusing and sometimes confused arena of Dubai legal practice. "We can show everybody that it is possible to get world-class legal justice in Dubai," says Beer, who is also well-known in expatriate circles as the head of the British Business Group.

Any day now - although the ongoing Dubai World imbroglio might affect the timing - the Courts plan to co-sign with Dubai authorities a "protocol for jurisdiction" that will further extend their influence in the emirate's legal system. Step back just a little. The Courts were established along with the DIFC in 2004 to provide an independent judicial service for members of the DIFC. It was one of those elements - like independent regulation and a stock market - deemed essential to attract financial institutions into the fledgling centre. The Courts became fully operational, with its team of six international and two Emirati judges (including Dubai's first female justice) in place, last summer.

The Courts have already been pretty busy, with 150 cases filed, of which the majority have been small-claims procedures involving less than Dh100,000 (US$27,200). Some 33 more serious cases have been filed in the higher Court of First Instance. The protocol with Dubai aims to clear up some of the grey areas of jurisdiction. Any two member firms of DIFC who find themselves in dispute can elect to have their case heard by the Courts, but there is some clarification needed over what Beer refers to as the "coffee shop clause". If two parties to a contract sign that agreement at Caribou Coffee in the DIFC's central precinct, for example, do they then fall under the Courts' jurisdiction in the event that they have a falling-out? It is a crucial point.

The Courts might expand in other areas, too. Many of the businesses that have set up in Dubai's free zones - Media City, Internet City, the Jebel Ali Free Zone - have expressed a desire to come under DIFC jurisdiction rather than that of the ordinary Dubai system. Whether the authorities will agree to that extension of DIFC power remains to be seen. But the problems at Dubai World have thrown up another urgent issue for the Courts. International lawyers are having a field day with potential litigation from the affair, as creditors, investors and bondholders all consider what legal remedies they might have against Nakheel and Dubai World.

Experts say the Nakheel sukuk - scheduled for redemption in just nine days - is governed by English law, so litigants have the option of getting their case heard in London, if it comes to that. But they believe Dubai authorities would be reluctant to enforce decisions by foreign courts, especially if it involved the handing-over of substantial assets in the emirate. What better compromise than the DIFC Courts? Independent, run by international standards, but simultaneously part of the Dubai set-up and operating with the blessing of the Dubai authorities, they could be expected - by both parties - to deliver fair and impartial decisions, with substantially fewer enforcement difficulties.

Dubai World could be a crucial test case for the emirate's legal system, as well as its ambitions to be a world-class financial centre. @Body-SubheadNew:Down and out in Paris Again in those halcyon pre-standstill days, I made a quick trip from Dubai to Paris, followed by a visit to London, before heading back to the UAE via Heathrow. All very easy and convenient it was, too - Emirates Airline was very happy to agree the flexibility of departure airports the trip required, for a relatively small supplement. Eurostar, the train between the French and British capitals, is now just a regular commuter service, rather than the exciting adventure it was when it first started 15 years ago.

But I noticed a distinct, and unexpected shift in the balance of affluence between Paris and London. Gare du Nord now seems dowdy and dingy, whereas London's St Pancras is a glittering cathedral of an arrivals hall, even if most of it is shopping mall. My last visit to Paris was a few years ago, and the City of Light, too, seemed generally a little down-at-heel. Though still beautiful and atmospheric, there seemed to be more graffiti, litter and beggars in the boulevards than I remember.

Within sight of the Hotel de Ville, the elegantly baroque 16th-century home to the Mayor of Paris, three African vagrants had set up what seemed to me to be a semi-permanent lean-to against the street railings. Passing gendarmes ignored the cosy domestic scene of sleeping bags, a small stove and essential provisions. One of the vagrants was just prising the cork from a bottle of bubbly as I passed. In Paris, even the tramps still have certain standards.