Above, John Thomas, the lord chief justice of England before the opening of parliament in London. PA Archive / Press Association Images
Above, John Thomas, the lord chief justice of England before the opening of parliament in London. PA Archive / Press Association Images

UAE’s legal structure must evolve as its economy grows



An economy becomes more complex as it matures. Just as an economy develops the capacity to handle market complexity, so it must build the capacity to resolve the issues that greater complexity will inevitably generate.

In stock market terms, Arabian Gulf economies have moved from “pioneer” to “emergent”. That description would seem to be behind the curve. Even so, the trend is evident.

Gulf states are in the process of developing legal architecture to match. As William Blair, a commercial court judge in England, recently noted: “The importance of commercial justice is linked to economic development.” This means setting up specialist courts (or circuits, or lists). It means providing specially trained judges with appropriate expertise. It means encouraging specialist professional competence among advocates.

The first wave of regional economic maturity has involved the growth in financial services through specially developed markets like the Abu Dhabi Global Market, Dubai International Financial Centre and Qatar Financial Centre. Global best practice has clearly been established by laws such as the Financial Services and Markets Act 2000 in the United Kingdom, together with subordinate regulations and rule books. It is therefore possible to create a separated jurisdiction (as in Abu Dhabi and Qatar) or a wholly separate jurisdiction (as in the DIFC) to administer and regulate such markets, and solve disputes arising in stand-alone courts.

The second wave of economic maturity is different. Economic laws on commercial companies and competition policy are already on the Federal Statute Book. Dubai implemented its law regulating public-private partnerships late last year. More economic legislation on indirect tax, corporate insolvency and regulation of wasteful energy and water use is being drafted or considered.

This is “onshore” economic maturity, and unlike financial services is not susceptible to being segregated. An Emirati company that encounters trading difficulties or becomes insolvent and needs to file for administration or liquidation will need to do so in the domestic Emirati courts applying the relevant federal law. Likewise, a dispute between the national tax authority and an Emirati company will need to be resolved domestically, as would any review by a court of an administrative decision relating to a licence or tender.

In England, cases in the superior courts are categorised under two broad divisions: queen’s bench (QBD) and chancery (ChD). But within those divisions, there are specialist courts and lists such as the commercial court and the administrative court in the QBD, and the companies court and the patents court in the ChD. There are also specialist tribunals, such as the competition appeals tribunal and the tax chamber.

The London commercial court began life as the commercial list in 1895, in response to business demand and broader social circumstance. In October last year the financial list was created, not only to bring together specialist judicial skills but also to establish a programme of judicial training to make sure judicial skills keep pace with market developments.

As John Thomas, the lord chief justice of England, said in a recent speech: “The London commercial court and the financial list must keep properly abreast with rapidly changing market developments. This is now done through the provision of market seminars by an independent body … It ensures that [judges, and particularly those] of the commercial court and the financial list are provided with regular and well-informed updates on changing market practices and the development of new financial products”.

He also noted that the financial list had been adopted because “from a range of possible reform options it was the one that the financial community, [from regulators to traders], strongly preferred” – business demand was again the driver. He added that “where necessary, its processes will be refined in light of experience and court user feedback”.

Business demand and the physical infrastructure and human capacity-building of legal architecture must go hand-in-hand.

The parallel drawn with architecture is surprisingly exact.

Thomas Krens, when he was the director of the Guggenheim Foundation, said: “The architecture plans for Saadiyat Island and the cultural district, envisioned and developed by the Abu Dhabi government, are, quite simply, extraordinary. When this comprehensive and inclusive vision is realised, it will set a standard for global culture that will resonate for decades to come”.

The Performing Arts Centre designed by Zaha Hadid will be a flagship building on the island. Last year Ms Hadid said: “the current state of architecture and design requires extensive collaboration and an investigative attitude and we continue to research and develop new technologies”.

For “architecture”, read “law”; for “design”, read “legal process”; and for “technologies”, read “procedures”. The similarities are striking.

Will Abu Dhabi and the UAE set a standard in law that will resonate for decades to come?

The new ADGM Courts (and the DIFC Courts, too) aim to resonate in the regulation and dispute resolution of financial services, related employment issues and opt-in contract disputes.

There are clear signs in the GCC that the vision goes wider, including the creation of domestic commercial circuits. Here, too, the “investigative attitude” and “extensive collaboration” of which Ms Hadid spoke will be required. As for the former, the UAE will doubtless recognise business needs and look at experience in other jurisdictions to identify appropriate court infrastructure and case allocation and management techniques.

Extensive collaboration will encompass research (from policy and academic perspectives) of international best practice and knowledge, taking soundings from business and consulting with judges and advocates to fashion a result that meets particular needs.

Innovative thinking can be a catalyst to achieve a distinctive outcome, setting a resounding standard nationally (even regionally) in legal architecture for years or decades to come.

Michael Patchett-Joyce is a commercial lawyer and arbitrator, based in London and the UAE

business@thenational.ae

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