A view from the UAE

Dr. Gordon Blanke is an International Commercial & Investment Arbitration Partner in DWF LLP’s Middle East office, based in Dubai. He has worked on arbitrations across a variety of industry sectors, including private equity, banking and finance, construction/real estate, commodities, hospitality, oil and gas and shipping.

Prior to joining DWF, Gordon was Counsel and Sector Leader of International Arbitration in Baker & McKenzie Habib Al Mulla’s Dubai and Abu Dhabi offices. He has acted as advising counsel and arbitrator under most leading institutional arbitration rules.

The UAE legal system is copied from the Egyptian system, including all the codes, and so most judges in the UAE courts come from Egypt. One of the most famous jurists in this region of the world, El-Sanhuri, was Egyptian. He was the author of the revised Egyptian Civil Code of 1948 and was instrumental in drafting civil codes of other jurisdictions in the Middle East modelled on the Egyptian Civil Code, subject to minor variations to meet local requirements.

In practice, the UAE Courts will only enforce a foreign Court judgment of a country that can be shown to have a track record of enforcing a UAE judgment.  Enforcement is built on the principle of practical reciprocity.

The Dubai International Financial Centre (DIFC) was established in 2004. It is an autonomous jurisdiction: an independent system with its own courts, modelled on the English legal tradition. International parties can contract into the DIFC Court as their forum of choice for resolution of their disputes. I normally recommend that international investors who are not familiar with the UAE local Court system do this because the majority of judges come from a common law legal background which will be more familiar to the average foreign investor than the UAE background.

The UAE is a very secular jurisdiction – it is unlike Saudi Arabia where interest charges are not enforceable in any manner. In the UAE, a distinction tends to be made between various Courts. The Dubai Courts are very liberal, with a practice of awarding nine per cent interest. This is what the Courts have consistently enforced both within the context of judgments as well as in the context of arbitration awards. So arbitration awards will not be set aside – certainly not here in Dubai – on the basis of having made orders for payment of interest.

Anything that requires Sharia compliance is normally already taken care of in the subset of laws that are applicable to the dispute. You do not find many Sharia law issues in the context of commercial disputes in the UAE – I have never had a problem relating to a Sharia conflict in any of the disputes I have dealt with.

When it comes to arbitration, you very often deal with other international law firms on the other side. This simply means that the individual lawyers who represent the clients will of course be bound towards each other by the relevant Law Society rules, and will respect rules of privilege, for example, which are not recognised in the UAE legal system.

The UAE has strategically taken the decision to create two free zones on top of its existing civil law system offering. It has a young legal system and it wants to be the front runner in legal evolution. Consequently, dispute resolution in the free zone offers a viable alternative to dispute resolution onshore and follows a more pronounced common law style. That’s why you get a lot of London barristers coming out here.

Previously, there was scope for an arbitration award to be set aside where there was a question of validity over the power of attorney, which goes back to whether the agreement was properly executed. It had to be authorised by an individual capable of divesting of the right to obtain a remedy in Court for a corporate entity, such as a managing director. Last year there were a number of consecutive judgments from the Dubai Court of Cassation that have deemed this no longer necessary. This is provided the person signing the arbitration agreement holds itself out as having the power to sign it, and there is a clear link with the designated party on whose behalf this particular individual is purported to have signed the arbitration agreement.

There is no doctrine of binding precedents. The UAE Courts are not bound by previous Court precedents, but, like any other civil law jurisdiction, the Courts have formed a coherent interpretation of the law: it is called ‘jurisprudence constante’ – a constant jurisprudence. If the UAE Court needs to revisit similar disputes in years to come they will rely upon the principles set by the competent Court of Cassation. This is the final instance Court in the Emirates and therefore the lower Courts will comply with the principles it has established.

Because the UAE is such a young jurisdiction and because there is so much foreign investment here, you see very rapid developments in the law, best practice and legal standards. There are reports of case developments, institutional developments and new jurisdictions every other week. It never stands still.

The onshore Courts are criticised for being archaic, slow and erratic in their judgments, but that’s just the media hype. A judgment from these Courts is very detailed – a six, seven, eight, nine page document. The only problems that arise are out of bad translations. You can get a translation of a judgment very quickly and a lot of the specialist publishers share them online. Today, it is relatively easy to practice here as a non-Arabic speaker.

In the UAE, civil and common law jurisdiction exists side–by-side in the same Emirate. You will not see that anywhere else in the world.

The Judges of the DIFC Courts mostly come from a common law background. They are normally retired Judges from Hong Kong and England and Wales, but we also have two or three local UAE resident Judges who started their legal career in the onshore Dubai Courts. For having gone through their education in the local Courts, the reasoning of the local Judges is astoundingly internationalist. As civil law Judges in the common law system, they help to build the bridge between common and civil law.

In the future we will have more and more local UAE national Judges. The universities and law courts here are second to none.