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The Legal System in the Dubai International Financial Centre
This article provides a general overview of the
Dubai International Financial Centre.
What is the Dubai International Financial
Centre?
The Dubai International Financial Centre ('DIFC') was built on an idea. The
idea that an inviting oasis of opportunity could spring forth from the desert
sands of Dubai, providing global investors and issuers of capital with a regional
capital market set in an international environment they could be comfortable
with. From this idea, the DIFC was born.
In September 2004, UAE legislation authorised the seven Emirates to create the legal structures necessary for international financial centres to be established, and Dubai was ready with a carefully drafted scheme. The late Ruler of Dubai, Sheikh Maktoum Bin Rashid Al Maktoum, enacted Law No. 9 of 2004 and appointed His Highness Sheikh Mohammed Bin Rashid Al Maktoum, who was then the Crown Prince and is now himself the Ruler of Dubai, to be President of the DIFC. The law provides that the Centre has three constituent bodies - the DIFC authority ('DIFCA'); the Dubai Financial Services Authority ('DFSA'); and the Judicial Authority, consisting of the DIFC Courts and a Disputes Resolution Scheme.
Today, the DIFC development project, which includes more than 40 major buildings and by 2009, will house a resident and working population of more than 40,000, is more than halfway towards completion. Banks, brokers, fund managers, insurance companies, accountants, and of course lawyers, have already moved into offices there, and the amount of commercial business transacted within the Centre is growing accordingly.
The DIFC is an autonomous financial free zone
operating on its own unique three-fold legal system consisting of its own
legislation, the laws that parties have freely chosen to apply and when applicable,
the commercial law of England.
How does the DIFC Court Operate?
The DIFC Court is part of the sovereign structure of the Emirate of Dubai
and the UAE Laws enacted by the Ruler of Dubai in accordance with UAE law
define its jurisdiction. The DIFC Court will have exclusive jurisdiction,
with respect to the Dubai Courts, over most civil and commercial matters occurring
within the DIFC, although parties are free to agree to submit their dispute
elsewhere. The criminal jurisdiction of the Dubai Courts remains effective
throughout the Centre, as it does in the whole of Dubai.
DIFC Court judgments can be enforced as judgments of the Dubai courts, both within Dubai and elsewhere in the UAE, and also globally as permitted by international law and under treaties signed by the UAE.
The DIFC is a Common Law and English language jurisdiction within Dubai whose courts' system is largely modelled on the English Commercial Court. Anyone familiar with the organisation and procedures of that court, and English civil procedure generally, will quickly understand the workings and governing principles of the DIFC Courts and the philosophy of its judges.
The judges of the DIFC Court are not resident
in the Dubai International Financial Centre but would hail from all around
the common law world. This would enable the DIFC Court to be staffed by judicial
talent with international commercial law experience.
The DIFC Court sits quarterly, with a Court of First Instance and a Court
of Appeal. Urgent hearings can take place by video or teleconference, without
the need for the judge to be physically present in the DIFC. Other daily procedural
and administrative matters are handled by the Registrar, who is resident in
the DIFC.
Legal Practitioners in the DIFC
Regulations are in the process of being drawn up to establish a Bar accredited
to the DIFC Court. In the meanwhile, in order to (i) conduct litigation in
the Court or (ii) exercise rights of audience before the Court, it is necessary
to apply to the Registrar of the Court to be entered on the relevant Register.
Only qualified lawyers possessing the right to
conduct litigation and/or a right of audience before the superior courts of
the jurisdiction in which they practise civil and commercial law are currently
eligible for accreditation. Every applicant must possess a sufficient command
of the English language in order to conduct proceedings before the Court.
Developments in the DIFC
The DIFC has been continuously rolling out new legislation to regulate commercial
activity in the Centre. For example, the Court will be looking into the setting
up of a Small Claims Tribunal similar to that in Singapore.
At present, the DIFC Court relies heavily on
the English Civil Procedure Rules. The DIFC Court will shortly adopt a customised
set of rules of procedure, which will be adapted to the needs of the litigants
as well as the unique operation of the DIFC Court, while still being consistent
with international standards of efficiency, coupled with fairness.
Arbitration in the DIFC
Alternative dispute resolution is very much encouraged in the DIFC and a Dispute
Resolution Scheme will soon be implemented to support arbitration and other
means of dispute resolution and will be launched as soon as negotiations with
a leading international institution are complete. The headquarters of the
Disputes Resolution Scheme will be housed in the same complex as the DIFC
Court, along with the DIFC Conference Centre, which will provide rooms of
different sizes as required for arbitration hearings, negotiations and mediation
conferences. All the facilities necessary for a state-of-the-art dispute resolution
service - court, arbitration, mediation and negotiated settlements, will be
gathered under the same roof.
By a Federal decree dated 13 June 2006 it was
announced that the UAE would be acceding to the New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards 1958. Upon the Convention
coming into force, the DIFC Court of First Instance will be bound to recognise
and enforce a foreign arbitral award upon the terms set out in the Convention.
In the meantime, the DIFC Court Law gives the Court of First Instance discretion
to ratify and enforce foreign arbitral awards within the DIFC.
My Experience as a Judge in the DIFC Court
The DIFC Court is still in its early days. As of today, I have heard one full
case in the Court of First Instance which has not been appealed, with a second
case progressing, as well as many applications for ex parte injunctions. As
the development of the DIFC approaches completion and the level of commercial
activity increases, the workload of the Court will also increase.
The structure of the DIFC and the DIFC Court means that parties, counsel and judges may all come from different jurisdictions and that by itself, lends an international character to many proceedings before the DIFC Court. Against this diversity of backgrounds will be the uniformity of the common law. We will look to the experience of the other common law countries, with the benefit of our multinational bench of judges, and will arrive at solutions which we believe are best for the DIFC.
Michael Hwang, SC1
Michael Hwang
E-mail: [email protected]
Notes
1 Mr Michael Hwang, SC was appointed Deputy Chief
Justice of the DIFC Courts in April 2005. Between 2000 and 2003, he also served
as a Commissioner of the United Nations Compensation Commission and currently
acts as Vice Chairman of the International Court of Arbitration and the International
Chamber of Commerce.