UK: Libya: A New Frontier

Clyde & Co Partner Adrian Creed discusses the challenges and opportunities for the first international law firm to enter Libya since Gadafi's fall from power.

One of deposed Libyan dictator Muammar Gadafi's sons once audaciously said of Libya's oil and economic activities that "what is below the ground belongs to my father; what is on the ground belongs to us." This may be an exaggeration, but it is not far from the truth. Consequently, Libya is now emerging 40 years later with very limited experience of how things work in the international marketplace.

Indeed, outsiders may find it difficult to grasp how little the average Libyan understands about the world of commerce. During the Gadafi years, the private sector was practically nonexistent and many of the business laws that prevailed were designed to crush the private sector rather than to encourage it. Those who worked in the private sector were generally distrusted; most Libyans aspired to cushy jobs in the country's vastly overstaffed government agencies.

For international businesses entering Libya, it's important to understand its challenges. Libya may one day become the next United Arab Emirates (UAE), but its starting point is very different to that of the merchants and traders who built their businesses in Dubai and other Arab nations in the 1970s.

Reporter Howard Stock spoke with spoke with Adrian Creed, a partner at Clyde & Co, the first international law firm to establish offices in capital city Tripoli since the revolution that ended the Gadafi family's stranglehold on Libya. Creed has extensive experience in I(W)PP transactions, oil and gas, petrochemicals, renewables, ports, airports and social infrastructure projects and has undertaken a number of public private partnership advisory roles for host governments around the Middle East and North Africa (MENA).

Which companies are interested in Libya?

Since Libya is a frontier market, incoming companies tend to be ones that are well versed in making the first move into such markets. This includes oil and gas and power and utility companies, telecoms, I.T. companies and international hotel groups.

Libya is attracting a lot of interest from MENA region businesses, particularly the large family businesses and sovereign wealth funds based in the Gulf. They speak the same language, share the same beliefs and also see more clearly than most the same kind of opportunities that existed a few decades ago in their home jurisdictions.

Turkey and Korea are also likely to be key players in the country's development over the coming years, and we are advising an increasing number of U.S. and European companies.

What kinds of security considerations are there when setting up a practice in Libya?

Sensible security measures must be taken in terms of office, accommodation and day-to-day transport, and we retain external security consultants, but it's all very manageable. Outside Tripoli, security is more of an issue and most international companies, including ours, plan these business activities with their security advisors. But while the security situation in the country remains unstable, it is misleading to portray Libya as teetering on the brink of chaos. The security situation in Tripoli is not nearly as bad as the international press would have us believe. The prevailing feeling is of a calm and tranquil city trying to get back on its feet.

What is the business culture like in Libya?

There are strong similarities with the Gulf States and the wider MENA region. However, Libya's close proximity to Europe, its location in Africa and its historically close ties with the Soviet Union during the Gadafi era means its culture cannot easily be pigeonholed.

Libya's legal system is primarily civil law, deriving its origins from the French Napoleonic Code. In recent times, as a result of Gadafi's close ties with the Soviet Union, many laws, regulations and practices drew heavily upon those in the Soviet Union. The former Soviet Union's influence is weaker now, but the state remains the dominant player. At one time, almost 70% of the population worked for the Libyan state and while there is now a move shift from the public to the private sector, many Libyans remain wary.

One of the biggest challenges facing the new government is changing that mindset. Having lived all their lives in an isolated command economy where creativity and self-sufficiency were largely absent, it's going to take time for attitudes to evolve. Most Libyans claim to want change but the truth is that they're afraid of it.

What kinds of businesses are flourishing in the post-revolution enviroment?

Businesses that provide goods and services to the man on the street are now doing well, as are import/export firms, retailers, supermarkets and restaurants. Generally, these businesses are owned and run by entrepreneurial Libyans.

On the international side, while Libya is keen to encourage foreign direct investment, it is also wary of squashing nascent Libyan businesses that cannot yet compete with multinational groups. But international businesses that provide training, education and healthcare are in great demand, as are those that provide essential technical services, such as oilfield and I.T. services.

Libya is less keen on big international corporations that provide the services that many Libyans believe they're able to provide for themselves, including construction, real-estate investment and development projects, manpower services, and so on.

What role does Libya play in larger operations in MENA and Globally?

Clyde & Co is known for its work in frontier markets, and is a longtime top-tier legal player in the Middle East, so the Libya opening is a natural extension of that brand. Clyde & Co is the largest international law firm in the MENA region, with around 160 legal staff and 140 support staff across offices in Dubai and Abu Dhabi in the UAE, Riyadh in Saudi Arabia, Doha in Qatar, and Tripoli in Libya. Operationally our Libyan office is managed from the UAE but also works closely with our London office—we have a Libyan desk in Abu Dhabi and one in London that supports our team on the ground in Tripoli. Our full-time team on the ground in Libya currently consists of three U.K.-qualified solicitors and five Libyan lawyers. I also spend a lot of my time in Libya.

Libya is also part of our African offering. Currently, we have an East Africa team based in Dar es Salaam in Tanzania and a North Africa team based in Tripoli. The firm does not yet have teams in South or West Africa, but our ultimate aim is to have key regional hubs in the North, South, East and West Africa.

What advantages does Clyde & Co have as a first international law firm to establish an office in post-revolution Libya?

As it is in a great deal of the Middle East, business in Libya is relationship based. Being on the ground early is important as it shows a commitment to the new country, which facilitates building these relationships and gives us a strong platform to develop and grow the practice as the market evolves and key governmental structures come online. We expect other law firms to look at market entry in due course and we welcome it as the market needs a number of international firms in order to help build legal expertise, train Libyan nationals and help the country build capacity. A strong legal service sector is vital in helping Libya move forward.