Out-Law / Your Daily Need-To-Know

Dubai opens up English-language courts to foreign companies

Out-Law News | 04 Nov 2011 | 2:20 pm | 2 min. read

Foreign companies doing business in Dubai now have the option of using English-speaking courts in the Dubai International Financial Centre (DIFC) to settle their disputes, the Ruler of Dubai has said.

His decree to extend the jurisdiction of DIFC Courts to any business means that companies will be able to use the independent common law courts in the financial free zone rather than having to take commercial disputes to the Arabic-language civil courts.

Alan Wood, a Dubai-based company law expert with Pinsent Masons, the law firm behind Out-Law.com, said the change would allow companies contracting in the Gulf a regional alternative to using common law courts in the UK. However, it would be "crucial" to ensure the court's judgements would be easily recognised internationally.

"Parties will not be attracted to use the DIFC Courts if they are then effectively going to have to re-litigate the matter in the 'local courts' to achieve enforcement," he said.

However, the change would result in increased transparency in the dispute resolution process for overseas companies in Dubai as a result of the use of the English language and common law principles, he said.

Dr Ahmed bin Hazeem, Director General of Dubai Courts, described the change as a "very positive development for justice".

"This is a reflection of Dubai's commitment to supporting investors and businesses both domestically and from around the world. We believe it provides the business community, which Dubai has so successfully developed, with even greater choice as they seek swift and effective resolution to commercial disputes," he said.

DIFC Courts was established in 2004 as an independent common law court system with jurisdiction over civil and commercial disputes in or relating to the DIFC. The court previously only had jurisdiction over companies incorporated in or raising a claim relating to a contract that was performed in the DIFC.

DIFC is designated a financial 'free zone', which is an area of economic priority which has a unique legal status. Companies operating in free zones are treated as if they operate outside of the United Arab Emirates (UAE).

DIFC Courts said in a statement that it remained committed to cooperating with other courts both nationally and internationally. DIFC Courts has signed a number of commitments with other bodies to work together towards furthering judicial excellence and innovation and meets regularly with judicial bodies from across the region, it said.

Overseas companies operating in Dubai have traditionally used arbitration as a means of settling their disputes, Wood said.

"Some commentators have put this down to a desire to maintain confidentiality. Whilst this may have been and may remain true for some, for many the key driver was the desire to avoid the local courts because of language issues and the difficulty for overseas companies to maintain clear visibility to ensure that their claims have been put forward and argued as they wish them to be in all respects," he said.

Arbitration hearings are usually held in private, unlike court proceedings which are held in public. However, those companies for which confidentiality was less of an issue would likely welcome the change, Wood said.

"The fact that the proceedings will be conducted in English will also remove the often considerable time and cost involved with translating reams of case documents into Arabic. The relative speed and costs of obtaining a judgment in the DIFC Courts compared to one of the various arbitration forums previously available in the region would also encourage overseas businesses to use the court's services," he said.

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