Anil Shah interviews Kaashif Basit Ahmed of KBH Kaanuun on the recent announcement that the DIFC Courts will be allowing more cases to be brought before them.
What will the new ruling mean for law firms already on the ground in the region?
The development is important because previously parties could not choose the DIFC Court Jurisdiction at will. Parties previously interested in bringing disputes before the DIFC Courts would have had to satisfy certain legal tests. For example an onshore Dubai company and a Kuwait company which had no connection with the DIFC i.e. they were not based there or there was no contractual arrangement involving a DIFC client in place, then if a dispute subsequently arose it could not be heard before the DIFC Courts. This has now changed and subject to seeing the detail in the decree any transaction unconnected with the DIFC can now be heard in the DIFC Courts subject to agreement between the parties involved (pre or post dispute). There is no legal hurdle to satisfy. Because parties now have to agree it will now be pre-dispute via clauses within contracts. From now on parties will have to incorporate these clauses within contracts, which are likely to Middle East transactions. Pre new decree only companies registered within the DIFC , around 400 or so, could potentially use the DIFV Courts. Only around 50 substantive cases have been heard before the DIFC Courts in the last 5 years.
What are the implications of this opening up of the DIFC Courts to the local Courts and local lawyers who litigate in them?
The decree will likely take work away from the local courts, which will likely not please the local lawyers.
Will English barristers and Chambers benefit from this new development?
For individual barristers based in the UK then if they have an interest in the Middle East region and are willing to invest the time and money to gain early exposure and build up their name and track record in the region then the longer term rewards could be attractive. This would be challenging, as the scope for winning high quality work regularly is limited in the shorter term. For Barristers Chambers considering setting up in Dubai this would be a high risk strategy due once again to the limited levels of work that currently exist. Those with a presence in the region via a ‘post box’ have made the first steps in having a presence in the region but clients are savvy and will know if you are actually physically on the ground and in the right local networks. The key is to start to invest time in winning the limited available work that is available and to develop your ‘deal list’ for the region and in particularly in the DIFC Courts.
What types of cases are currently being brought before the DIFC Courts and how is this likely to change?
Most of the current cases are either insolvency related, property and employment law with the odd partnership dispute. Going forward it is likely that more commercial disputes will appear including higher value matters such as joint venture disputes, shareholder disputes, cross border litigation and specialist areas such as IT disputes. There is also likely to be an increase in injunctions as presently it is difficult to obtain injunctions or injunctive relief in the Dubai Courts.
How is the current litigation market in the Middle East?
As litigation started from such a low level the potential going forward is significant as anyone can now use the Courts and coupled with the increase of litigation in any period of recession or market turbulence is likely to increase.
Is there sufficient court capacity to handle the likely increase in disputes?
There is currently capacity to handle any short-term increase in litigation and there are currently 6 non-resident judges and 2 resident judges. These numbers will increase. There will also be a need to invest in infrastructure with more Courtrooms and facilities. Electronic filing took place for the first time recently.
How will the changes affect the relationship with international firms and then local firms?
It will be interesting to see how this dynamic develops. Currently local advocates get the bulk of local litigation work in the region. This will diminish going forward and it will become more of a two way street. Relationships between the local and international Bars will need to increase. There should be more referral work between the two as clients will increasingly have DIFC clauses in their contracts which when disputed means they will appear before the DIFC Courts as opposed to the local Courts. Reciprocal work between the international firms and the local firms will increase and the Bar could take more direct access work if they have the client relationships in place.