DIFC Courts launches new technical and construction disputes court

DIFC Courts rolled out a specialised sub-division that will streamline the resolution of legal cases involving complex technology and construction disputes.

The Technology and Construction Division (TCD) draws on specialist judges and a newly-developed rulebook specific to both industries, the freezone courts said in an emailed statement on Sunday.

The new division will exclusively hear technically complex cases, dealing with matters like determining liability for cybercrime incidents, complicated engineering disputes, and claims arising out of fires.

“The TCD has been designed around the particular characteristics of highly complex technology and construction disputes, which can be resolved much more speedily and efficiently with the oversight of specialist judicial expertise,” said DIFC Courts Chief Justice Michael Hwang.

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The new division will be headed by Justice Sir Richard Field, who joined the DIFC Courts in 2015, following his tenure as Judge in Charge of the Commercial Court in London. Parties anywhere in the world will be able to make use of the division’s services if both parties to the dispute agree in writing.

The services provided by the TCD are similar to those offered by the Technology & Construction Courts of England & Wales, which have been used to hear complex cases in both sectors since the late 1990s.

The creation of the new division has been broadly welcomed by Dubai's legal community.

“The TCD is certainly a welcome addition to the framework of the innovative and expanded DIFC Courts,” said John Smy, head of engineering & construction at Hadef & Partners in Dubai.

“It should hopefully (if the development of the Technology & Construction Courts of England and Wales are used as an example), prove to be a highly knowledgeable and capable court which provides specifically focused expertise and understanding and a degree of certainty in its English-language judgments.”

However, Mr Smy questioned the extent to which developers and contractors would want to use the public forum of the TCD to resolve disputes, rather than the confidential forum of international arbitration.

“Technology and construction companies already choose the DIFC Courts because their proceedings are in English and follow familiar rules," said Tarek Shrayh, a Dubai-based litigation partner with Al Tamimi & Co

"Appeals and delays are less common than in the local courts, and DIFC Court orders are generally easier to enforce than arbitral awards. The new TCD, with its tailored rules, will increase the DIFC Courts’ appeal to such companies, particularly for complex disputes requiring expert evidence."

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”