Until recently, banks and other firms in the United Arab Emirates and surrounding regions making deals with one another, would include dispute resolution clauses in their contracts that would be resolved in London’s court system.  But in recent years, the Dubai International Financial Centre (DIFC) court system has become the forum for much dispute resolution amongst firms in the UAE region.  The DIFC courts were established in 2004, and initiated hearings in 2007.  In 2011, the DIFC said that parties located anywhere in the world could choose the DIFC as their jurisdiction.  While this may not make sense for parties located far from the United Arab Emirates, it certainly makes sense when one or more parties are located in the region, have property there, or have an office of an MNC there.  Many contract disputes involving Middle Eastern countries were heard in London, and much of that business will surely move to the DIFC courts.  Lawyers say it will be much easier for judgments to be enforced in the region, whereas before, the London courts would have to enforce agreements where the property was in the Middle East, a time consuming process.  Graham Lovett, a lawyer at global law firm Clifford Chance’s office in Dubai, said that “We’ve put it in lots of contracts,” he said. “It’s pointless going to England if you want to enforce in Dubai.”

Additionally, the DIFC uses English Common Law, and lawyers for MNC’s and many other firms would much prefer to resolve their disputes involving subject matter in the region in English, rather than in local court systems that use civil law.  The DIFC is a fast growing financial hub, and the certain increase of action in the court system is likely to bolster the hub’s growth.  Are there any negatives to this shift in dispute resolution jurisdiction? How beneficial are the positives?

SOURCE: The Wall Street Journal

PHOTOGRAPH: The National