The UAE consists of 7 emirates or states, the most renowned of
which is the oil rich state of Abu Dhabi – rated as the
world's richest city by Fortune in 2007 – and Dubai
– the commercial hub of the Middle East. The country is
home to many massive projects with international flavor including
the world's tallest tower, biggest airport, seaport and indoor
theme park. The country's astute administrators realized the
significance of foreign investment some time ago and have sought to
meet the competing demands of the world's largest building
programme whilst providing an investment climate that meets those
demands. It has not all been smooth sailing. Nevertheless, in
parallel has developed a robust legal system in the region.
The UAE follows the civil law system, inspired by the Roman and
French legal systems and the Egyptian civil codes of law. The
primary source of law is legislation. The court system is usually
inquisitorial, unbound by precedent and comprised of specially
trained judicial officers. Albeit a federation of emirates, the
judicial system is not all-inclusive, as some of the emirates have
their own independent judicial systems. Despite being an Islamic
country, the application of Shari'ah law is restricted and
commercial/contractual transactions are regulated by written
commercial codes and laws that are consistent with western business
needs. The right of audience in a court is generally restricted to
UAE nationals, licensed by the Ministry of Justice.
In litigation matters, the pleadings submitted by the parties -
plaints or written statements - play a determining role as the
courts generally decide cases based upon them. However, the courts
are entitled, either on their own determination or at a party's
request, to call for expert opinion on financial or technical
matters, or for example the assessment of losses. The courts
maintain a panel of experts specialized in various branches to
assist the court, on a full-time basis. The decisiveness of the
pleadings requires the lawyers to be extremely meticulous, highly
competent and experienced in their respective specializations.
The region attracts substantial foreign investment in a variety
of areas, including defence, infrastructure, real estate,
transportation, oil & gas and social services (health and
education). The need for investors to understand or at least be
receptive to the region's language, culture and legal system;
and the particular style that needs to be followed in commercial
agreements and negotiations, means that it is presently a very busy
time for lawyers in the Middle East.
The region is currently witnessesing numerous incorporations,
joint ventures, mergers & acquisitions and cross-border
transactions. A lawyer's day-to-day professional life
encompasses a variety of issues including - advising on the most
suitable investment structures; ensuring legal and regulatory
compliance; drafting and vetting of complex agreements and
documents; due diligences and negotiations with counterparties.
Also, in recent years we have witnessed a phenomenal growth in
dispute resolution through arbitration. The presence of world class
arbitration centres like the Dubai International Arbitration
Centre, the Abu Dhabi Commercial Conciliation and Arbitration
Centre and the London Court of International Arbitration [at DIFC]
are each providing valuable dispute resolution services. It is
widely believed that the influx of foreign investors has also
contributed to the growth of arbitration.
The country is just a few decades old in terms of real
commercial business and the indigenous population accounts only for
about 20%. The economy was oil -based in the past and still is to a
large extent. All these developments have tested the country's
ability to provide a legal system that keeps pace with its economy.
However, breaking all these shackles, the UAE is now steadily
heading towards a mature legal system. Perhaps, that is the reason
why many have commenced calling the region "the Hong Kong of
the Middle East".
Keeping aside the transitory financial recession and the rumors
about Dubai's debts, the region offers good prospects for
lawyers. Excellent exposure, challenging opportunities and a tax
free environment are only a few among the myriad of attractions
that entice lawyers to relocate to this region.
While arbitration is a frequently used and popular dispute resolution mechanism in the United Arab Emirates, there is a perception that the law in the UAE can be exploited by an unsuccessful party to an arbitration to frustrate the recognition and enforcement of the arbitral award.
For the reasons set out in this article, it is even more important in the Kingdom of Saudi Arabia ("KSA"), than in most other jurisdictions, to carefully consider the wording of governing law and dispute resolution provisions in commercial documentation involving foreign parties.
When considering the resolution of a dispute through arbitration or litigation, one of the most fundamental issues to consider is the ultimate enforceability of any judgment or arbitral award that may be obtained.