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Expertise in new Dubai specialist construction and technology courts could compensate for lack of confidentiality in comparison with arbitration

Out-Law Legal Update | 16 Oct 2017 | 10:39 am | 9 min. read

SPEED READ: Specialisation can increase the speed and effectiveness of courts, and this will hopefully be the case in Dubai.

Since 1 October the Dubai International Financial Centre (DIFC) Courts has operated a new Technology and Construction Division (TCD), a court specialising in technology and construction issues that is modelled on the Technology and Construction division of the High Court in England.

The DIFC Courts are part of the DIFC, an offshore financial centre or ‘free zone’ in the UAE which provides a platform for business and financial institutions to enter the markets in the region. The Courts administer an English language common law system for the resolution of local and international commercial and civil disputes.

Established in 2004, the DIFC Courts have had a Small Claims Tribunal ('SCT') function since 2007, which the DIFC Courts recently announced to be a faster and more effective way to resolve disputes with 88% of SCT cases resolved in less than 4 weeks after successful service of the claim. In March this year, the DIFC Court's jurisdiction was expanded to deal with labour claims arising out of existing and proposed labour contracts between DIFC companies and their employees, or contracts which are to be performed within the DIFC. This is expected to better facilitate litigation procedures for employees based in the DIFC.

The new TCD is a further step in the DIFC Courts' development of specialist functions with its judges focusing  on technology and construction disputes. It is expected that the determination of such claims will benefit from speedy and focused case management in an environment geared up to potentially complex and document intensive cases.

What kind of claims will the new TCD deal with?

The TCD can hear cases which involve 'technically complex' issues or questions. The rules governing the Court's operation give the following examples of such claims:

  • building, other construction and engineering disputes;
  • claims by/against engineers, architects, surveyors, accountants and other specialised advisers relating to the services they provide;
  • claims by/against the DIFC or bodies established by the DIFC (including, for example, the DIFC Authority) relating to their statutory duties concerning land development or construction;
  • claims relating to the design, supply and/or installation of computers, software and related network and IT systems and services;
  • claims between landlord and tenant for breach of a repairing covenant;
  • claims between neighbours, owners and occupiers of land in trespass, nuisance etc;
  • claims arising out of fires;
  • claims involving taking of accounts where these are complicated; and
  • challenges to decisions of arbitrators in construction and engineering disputes.

This is a wide-ranging list and a great number of disputes will fall under TCD jurisdiction. Construction is a substantial industry in the region, often involving complex and high value multi-party disputes which would benefit from efficient and specialist management and determination by judges with the appropriate experience and expertise.

But what about smaller claims? Presumably even a monetary claim of relatively small value could meet the TCD's threshold test, subject to the complexity of the technical issues. It is important that smaller claims are not excluded from the TCD's jurisdiction as they are likely to benefit considerably from the more specialised and streamlined processes that the TCD is likely to offer, as compared to for example arbitral proceedings or local Court proceedings.

It remains to be seen how the requirement for technical complexity alone will operate in practice and whether the number or nature of the technical issues, the monetary value of the claim, the number of parties or some other factors will be deemed to be relevant in case allocation.

Although the TCD rules largely mirror rules governing the English TCC about the types of claims which are likely to be appropriate to bring before the TCD, there are exceptions, such as for claims relating to the quality of goods sold or hired, and work done, materials supplied or services rendered; and claims relating to the environment, such as pollution cases.

It is not clear why claims relating to goods and services have not been included within the TCD jurisdiction, particularly given the fact that disputes regarding performance issues and defective materials or equipment are likely to be very much within the capability of a TCD judge. Hopefully the exclusion of this relatively broad category of claims from the TCD does not unduly limit the TCD's jurisdiction.

The exclusion of environmental claims is also a little surprising given that they very often form part of the issues in construction disputes. It may be that there are other courts or governmental bodies which can more appropriately deal with such claims. However, with the relatively undeveloped nature of this area of law in the UAE, it would be advantageous from an environmental protection perspective to also permit the TCD to deal with civil environmental claims. This may well be an area for future development of the Court's jurisdiction, recognising that other bodies will have the relevant jurisdiction to deal with environmental claims from a regulatory or penal perspective.

Application must be made to commence proceedings in the TCD and to transfer existing DIFC Court proceedings into the TCD. The TCD rules permit any DIFC Court judge to direct that a claim does or does not fall within the TCD's jurisdiction. This is in contrast to the English TCC rules which require a specialist TCC judge to make such a direction. This is relevant to the question of the experience and familiarity of the TCD judge with TCD matters. It is therefore to be hoped in the interests of consistency, predictability and confidence in the TCD's jurisdiction, that any decision or determination as to the TCD's jurisdiction will be made in consultation with the head of the TCD division..

Experience and expertise

The head of the TCD will be Sir Richard Field QC, who brings 20 years of experience handling complex disputes in the London courts.

We understand that TCD cases will be heard by the existing DIFC judges, including three UAE judges who have experience in technology and construction cases. Given the volume of construction and technology disputes in the UAE and the wider region, it may be that future consideration will be given to the appointment of a small panel of specialist TCD judges. This is likely to aid the effective development and functioning of the TCD as a "go to" construction and technology dispute resolution forum and to offer a viable alternative to arbitration.

The largely successful and efficient operation of the TCC in England has, based on our experience in that jurisdiction, been due in large part to the TCC judges' experience in and knowledge of the technology and construction industries, the nature of claims and issues that arise and the particular case management techniques that have been developed to deal with document and issue intensive disputes. An important distinguishing feature of the English TCC is the fact that, where possible, the judge assigned to the matter oversees it from beginning to end and we would hope that this practice be adopted in the TCD.

Case management in the TCD

Proceedings in the TCD would lack the confidentiality that comes with arbitral proceedings. However this potential disadvantage may be off set by the attraction of a potentially more cost effective and streamlined process, especially in the case of large scale disputes and smaller technical disputes which would benefit from effective case management and the array of procedural and enforcement tools available in the DIFC Courts.

The Court must fix a case management conference within 14 days of the issue or transfer of the claim to the TCD. Generally, the TCD's proposed case management conference procedures are comprehensive. The TCD rules expressly provide for the Court to make orders in respect of a Court-appointed expert, conducting inspections, obtaining samples, conducting experiments and producing calculations, as well as the production of a Scott Schedule itemising the claims and the other party's response and counterclaims. If well managed, the express provision for orders in respect of Scott Schedules is a positive addition to the TCD rules.

Use of experts

Orders in respect of Court-appointed experts and inspections are prevalent in UAE local court proceedings and can be useful, cost-saving devices. We are also aware that the use of a single Court-appointed expert has proved to be effective in the TCC in England in suitable cases. However, the use of single, Court-appointed experts in the local UAE courts can be a somewhat mixed experience with doubts being raised as to the suitability and expertise of some of the experts appointed. Accordingly, there is a risk, that, unless properly managed – in particular ensuring that the pool of experts from which expert appointments are to be made will inspire confidence in the system - such orders may result in 'shadow' experts who simply duplicate the role of the parties' experts.

There are a relatively limited number of suitably qualified and experienced experts available in the region, particularly in the case of very specialist technical issues, and if a party lacks confidence in the Court-appointed expert, parties are likely to engage their own experts, resulting in considerable additional costs and time delay. The TCD may find itself weighing up considerably more expert, and potentially conflicting, evidence than would have been the case had the Court not appointed an expert. It will be interesting to see how the procedures for use of Court-appointed experts develop in practice in the TCD.

Opportunities for settlement

At present  the TCD's case management directions form (schedule A to the rules) does not provide an option for a stay, for example of one month, in order for the parties to pursue settlement discussions or alternative dispute resolution options such as mediation. This option is provided for and has been successfully used in the equivalent English TCC. Although the opportunity for such a stay can be used as a means of delaying a proceeding, the matter is in the Court's discretion and both parties must still have included all the necessary case management information in the form, and expended the accompanying time and cost of having assessed the primary claims, issues, witnesses, expert evidence and costs at this stage.

The frank and early exchange of information, including about costs, in respect of English TCC construction claims, with a view to entering settlement discussions, is supported by the Pre-Action Protocol for Construction and Engineering Disputes (2nd edition, November 2016) which applies to most construction and engineering disputes, including professional negligence claims, in the UK. Its objectives are 'to exchange sufficient information about the proposed proceedings broadly to allow the parties to understand each other’s position and make informed decisions about settlement and how to proceed' and to make attempts to resolve the claims, including through the use of ADR. The Protocol expressly states that it must not be used as a tactical device to secure advantage for one party or to generate unnecessary costs, and that the cost of producing the claims and responses should be modest.

Again, based on the UK experience, this may be something that the TCD may wish to consider for the future. This could be introduced through the TCD's case management directions form which could be adapted so as to require the provision of such information in order to facilitate settlement between the parties. Some modification would be required to the TCD rules and the form and it may also be appropriate to include a few key questions in the TCD's case management directions form in respect of 'costs in the case' to help focus the parties' on the extent of costs incurred to date and anticipated expenditure.

Trial and pre-trial review

Another effective feature of the English TCC is the early fixing of a trial date, often at the case management conference, and vacating that date in only exceptional circumstances. This is a useful tool in bringing together, as early as possible, what is often a considerable number of witnesses and experts, as well as the parties and their advisors.

The TCD's proposed pre-trial review procedure suggests that it is not compulsory, although it proceeds in a similar way and requires the parties to complete a pre-trial review questionnaire in a very similar form to that of the English TCC. There may therefore be some scope for this issue to be clarified, as even a brief pre-trial review is beneficial to the management of proceedings and assists both the Court and the parties' final preparation for the hearing.

Mark Raymont and Eveline Strecker are construction experts at Pinsent Masons, the law firm behind Out-Law.com.