Pioneering Middle East financial centres gain an edge with common law legal basis
The first tribunal of the Qatar Civil and Commercial Court was opened in December 2010. Qatar like Dubai before it has set up court systems based on the Anglo American common law legal system. KENNEDY O’BRIEN writes on these pioneering precedents
January 2011: Like Dubai before it, Qatar has looked to the Anglo-American common law legal system as a founding base on which to build its QFC Civil and Commercial Court. The belief in the QFC is that developing a common law system is the best method to build trust and confidence from the ground upwards and safeguard businesses’ interests. Another step towards this goal came in December 2010 with the opening of the Qatar Financial Centre’s first Civil and Commercial Court and Regulatory Tribunal.
H.E. the Prime Minister of Qatar Sheikh Hamad bin Jassim bin Jaber Al Thani opening the Tribunal said, "Qatar now has a world-class centre for dispute resolution and I encourage businesses in Qatar and the region to choose the QFC Courts as their preferred venue to resolve disputes and to write this into their contracts. Qatari and regional companies can save both time and money by resolving their disputes in Qatar, rather than abroad, whilst still enjoying the same style and high quality of service".
The opening of the first tribunal is the culmination of a process that began with the plan to create an international financial centre in 2004 and then the establishment of the Qatar Financial Centre (QFC) in March 2005. Part of that plan was to develop a court system and legislative base founded on international common law that allows the judges to draw from precedents across the common law world thus creating a world class regulatory and legislative base for the QFC.
The role of the Court and Tribunal is to provide a legal infrastructure to underpin the work of the QFC Authority and QFC Regulatory Authority. The QFC Authority is the commercial, administrative and legislative body responsible for driving the commercial strategy of the QFC and for developing relationships with the global corporate community and other key institutions both within and outside of Qatar. In the event of disputes as to matters of law, the Court is the final arbiter. It is modeled on the Commercial Court in London, and it takes into account the needs of a sophisticated financial centre. It adheres to common law principles and has a flexible procedure designed to resolve disputes within the QFC.
During five years of gestation, the court's ambition has grown from resolving disputes within the QFC to wider disputes within the Qatari business community and now has widened its aims to be an international commercial dispute resolution centre open to parties from all over the globe (it is a "multi-door" court offering both litigation and alternative dispute resolution).
Lord Woolf, president of the Court and the former Lord Chief Justice of England and Wales explained how the Court hears commercial matters arising within the QFC but its jurisdiction laid down in law by the Council of Ministers extends beyond this. The Court has the discretion to accept disputes which are not connected with the QFC if it is appropriate to do so. The Civil and Commercial Court is a Qatari court and forms part of Qatar's court system, with judgments enforceable as such. The presence of the ADR Centre provides parties with an integrated dispute resolution facility, is open to all, and has systems and procedures in place to ensure that cases will be dealt with efficiently and in an economic and speedy manner.
But unlike Dubai, which has the most established track record for cases in the Gulf, the QFC Judiciary hopes also to become a dispute resolution centre for companies not necessarily based in Qatar. "A key difference for us is our jurisdiction," said Robert Musgrove, the recently appointed chief executive of the Qatar Civil and Commercial Court. Musgrove was previously the head of the civil justice council for England and Wales. "We are structured to hear cases between QFC companies but we also could hear a case between a Somalian company and a New Zealand company who contracted to build a bridge in Kenya if they wrote us into their contract. The latter is our wider aspiration," he said.
Jim Delkounis, a partner at the law firm DLA Piper said, "There is a growing recognition of how important it is to provide investors doing business in the region with a system of law, practice and procedure that they are familiar with.Once you have that, it promotes commerce."
A number of high profile appointments, other than Woolf and Musgrave, from Britain and other common law jurisdictions have been made to the court. Other judges include Lord Cullen, once the most senior judge in Scotland, former court of appeal judges Sir Peter Gibson and Sir Philip Otton, and Barbara Dohmann QC of Blackstone Chambers, one-time chairman of the Commercial Bar Association. The regulatory tribunal is chaired by Sir William Blair, a high court judge and brother of former British prime minister Tony Blair.
A lot of these advancements in Qatar follow the precedents of the pioneering work in Dubai. Together the two jurisdictions have helped each others’ development.
Like the QFC, the Dubai International Financial Centre (DIFC) was been designed as a common law jurisdiction. DIFC laws are distinct from regular Dubai laws. All DIFC laws have been enacted in English rather than in Arabic and a number of DIFC laws have been based to some extent on UK statutes. For example, DIFC laws codify general principles of the common law, like the body of tort law that forms a part of the DIFC’s Law of Obligations. The American legal influence is also present. For example, the proposed DIFC Electronic Transactions Law is based upon the Uniform Electronic Transactions Act of 1999.
The rest of Dubai has a mixed legal system based on civil law and Islamic law, with Arabic being the official language.
To support the DIFC’s legal status as a jurisdiction distinct from the rest of Dubai, a separate judiciary has been set up for the free zone. This judiciary is known as the DIFC Courts.
The DIFC Courts are based on the framework found in England/Wales and common law jurisdictions like New York, Hong Kong, and Singapore. Like Qatar, tthe English Commercial Court is the primary model.
The current cheif justice of the DIFC courts is Chief Justice Michael Hwang, SC, and Deputy Chief Justice Sir Anthony Colman. Hwang’s predecessor was Sir Anthony Evans who was the first chief justice of the DIFC. He is a former senior commercial judge in London before serving on the Court of Appeal from 1992 to 2000. Writing in the Times of London in 2009 he wrote on some the challenges of the task facing a court with a level of legal pluralism like that in Dubai and Qatar: “The national law, like most states in the Gulf region, is derived from Sharia and civil law systems, from France via Egypt, while the QFC court and tribunal will apply what are essentially common law rules to the disputes that come before them. The process of harmonising the two systems will require deep judicial insight and much political and commercial will. The process of applying common law rules in commercial and financial cases, particularly where international parties are concerned, alongside Sharia and civil-law based systems is challenging, but if the results are successful this will make a significant contribution to the jurisprudence of all three systems of law.”
“There are clear, even fundamental differences between the civil law and the common law, and between them and rules derived from Sharia principles. But this does not make them mutually exclusive, even within the same national system, and it is likely that in civil and commercial cases it will emerge that they have the same objective - to secure a fair, just and efficient resolution of the parties' dispute. It can also be recognised that other out-of-court procedures, including negotiation, mediation and arbitration, may in some cases be more appropriate than litigation in the public eye.”
“When court proceedings do take place, it is important to distinguish between substantive rules, which govern the eventual outcome of the case, and the different procedures by which this destination is reached. It is here that the greatest differences lie. What is encouraging is that these procedures can most easily be adapted, modified and developed by the courts themselves.”
“By a process that will be gradual, but that need not be slow, I believe that the common law courts both in Qatar and Dubai will merge into the legal scenery of the Gulf region, as the regional economy grows and the financial centres flourish in both countries,” Evans wrote.
Evans had also indicated that he would like the DIFC's jurisdiction to extend beyond the financial centre to allow it to handle specific cases involving banking, shipping and financial services - similarly to the business Qatar is targeting.
Mark Beer, the registrar of the DIFC Courts, said Dubai could well follow Qatar's example, ‘With the proven track record of the DIFC Courts to resolve English-language disputes, it is unsurprising that Qatar has adopted a broader and more accessible jurisdiction for the more recently established QFC Courts. Should the Government of Dubai broaden our jurisdiction in the same way, the DIFC Courts have the infrastructure and expertise to accommodate a similar remit.’
The common law advantage
The adoption of the English common law by overseas jurisdictions is long established. The trend goes back eight centuries to the spread of English common law from England to Ireland by the Normans which meant Ireland became the first overseas common law jurisdiction. Over time, the common law spread far beyond the British Isles to various parts of Africa, the Americas, Asia, Australia, the Caribbean, and the Pacific mostly due to colonialism.
Historically the common law has been adopted overseas because of colonialism but in the case of the QFC and DIFC it has been adopted because of the advantages it can give to the development of their financial services industries.
Woolf has said that, “The common law is found to be the most important backing for centres of this sort in different parts of the world and we in Qatar are going to have an international court and international tribunal to uphold the values for which the common law stands.”
The benefits to the courts system of both the QFC and the DIFC include familiarity to foreign investors, by being a common law jurisdiction with laws written in English, overseen by both an independent judiciary and an independent regulatory body. These advantages for the DIFC and QRFC allows them to stand out from other financial hubs in the Middle East.
The decision to use not only English as the official language for the DIFC, but also the common law as the legal basis for the DIFC has resulted in a new legal model of establishing a specialized common law jurisdiction in an otherwise non-common law environment to quickly develop the wholesale financial sector. Already this model seems to have inspired the QFC. Other planned financial hubs in the region like RAK Financial City may follow this model during the next few years. Indeed, the model could even spread beyond the region to other emerging markets.
H.E. the Prime Minister of Qatar Sheikh Hamad bin Jassim bin Jaber Al Thani opening the Tribunal said, "Qatar now has a world-class centre for dispute resolution and I encourage businesses in Qatar and the region to choose the QFC Courts as their preferred venue to resolve disputes and to write this into their contracts. Qatari and regional companies can save both time and money by resolving their disputes in Qatar, rather than abroad, whilst still enjoying the same style and high quality of service".
 |
| (Back L-R) The Honorable Ronald Sackville AO; The Right Honourable Sir Philip Otton; Chief Justice Aziz Mushabber Ahmadi; The Right Honourable the Lord Woolf of Barnes (President of the QFC Civil and Commercial Court); Barbara Dohman QC; The Lord Cullen of Whitekirk; The Right Honourable Sir Peter Gibson. Front: Michael McKenzie CB, QC |
The opening of the first tribunal is the culmination of a process that began with the plan to create an international financial centre in 2004 and then the establishment of the Qatar Financial Centre (QFC) in March 2005. Part of that plan was to develop a court system and legislative base founded on international common law that allows the judges to draw from precedents across the common law world thus creating a world class regulatory and legislative base for the QFC.
The role of the Court and Tribunal is to provide a legal infrastructure to underpin the work of the QFC Authority and QFC Regulatory Authority. The QFC Authority is the commercial, administrative and legislative body responsible for driving the commercial strategy of the QFC and for developing relationships with the global corporate community and other key institutions both within and outside of Qatar. In the event of disputes as to matters of law, the Court is the final arbiter. It is modeled on the Commercial Court in London, and it takes into account the needs of a sophisticated financial centre. It adheres to common law principles and has a flexible procedure designed to resolve disputes within the QFC.
During five years of gestation, the court's ambition has grown from resolving disputes within the QFC to wider disputes within the Qatari business community and now has widened its aims to be an international commercial dispute resolution centre open to parties from all over the globe (it is a "multi-door" court offering both litigation and alternative dispute resolution).
Lord Woolf, president of the Court and the former Lord Chief Justice of England and Wales explained how the Court hears commercial matters arising within the QFC but its jurisdiction laid down in law by the Council of Ministers extends beyond this. The Court has the discretion to accept disputes which are not connected with the QFC if it is appropriate to do so. The Civil and Commercial Court is a Qatari court and forms part of Qatar's court system, with judgments enforceable as such. The presence of the ADR Centre provides parties with an integrated dispute resolution facility, is open to all, and has systems and procedures in place to ensure that cases will be dealt with efficiently and in an economic and speedy manner.
But unlike Dubai, which has the most established track record for cases in the Gulf, the QFC Judiciary hopes also to become a dispute resolution centre for companies not necessarily based in Qatar. "A key difference for us is our jurisdiction," said Robert Musgrove, the recently appointed chief executive of the Qatar Civil and Commercial Court. Musgrove was previously the head of the civil justice council for England and Wales. "We are structured to hear cases between QFC companies but we also could hear a case between a Somalian company and a New Zealand company who contracted to build a bridge in Kenya if they wrote us into their contract. The latter is our wider aspiration," he said.
Jim Delkounis, a partner at the law firm DLA Piper said, "There is a growing recognition of how important it is to provide investors doing business in the region with a system of law, practice and procedure that they are familiar with.Once you have that, it promotes commerce."
A number of high profile appointments, other than Woolf and Musgrave, from Britain and other common law jurisdictions have been made to the court. Other judges include Lord Cullen, once the most senior judge in Scotland, former court of appeal judges Sir Peter Gibson and Sir Philip Otton, and Barbara Dohmann QC of Blackstone Chambers, one-time chairman of the Commercial Bar Association. The regulatory tribunal is chaired by Sir William Blair, a high court judge and brother of former British prime minister Tony Blair.
A lot of these advancements in Qatar follow the precedents of the pioneering work in Dubai. Together the two jurisdictions have helped each others’ development.
Like the QFC, the Dubai International Financial Centre (DIFC) was been designed as a common law jurisdiction. DIFC laws are distinct from regular Dubai laws. All DIFC laws have been enacted in English rather than in Arabic and a number of DIFC laws have been based to some extent on UK statutes. For example, DIFC laws codify general principles of the common law, like the body of tort law that forms a part of the DIFC’s Law of Obligations. The American legal influence is also present. For example, the proposed DIFC Electronic Transactions Law is based upon the Uniform Electronic Transactions Act of 1999.
The rest of Dubai has a mixed legal system based on civil law and Islamic law, with Arabic being the official language.
To support the DIFC’s legal status as a jurisdiction distinct from the rest of Dubai, a separate judiciary has been set up for the free zone. This judiciary is known as the DIFC Courts.
The DIFC Courts are based on the framework found in England/Wales and common law jurisdictions like New York, Hong Kong, and Singapore. Like Qatar, tthe English Commercial Court is the primary model.
The current cheif justice of the DIFC courts is Chief Justice Michael Hwang, SC, and Deputy Chief Justice Sir Anthony Colman. Hwang’s predecessor was Sir Anthony Evans who was the first chief justice of the DIFC. He is a former senior commercial judge in London before serving on the Court of Appeal from 1992 to 2000. Writing in the Times of London in 2009 he wrote on some the challenges of the task facing a court with a level of legal pluralism like that in Dubai and Qatar: “The national law, like most states in the Gulf region, is derived from Sharia and civil law systems, from France via Egypt, while the QFC court and tribunal will apply what are essentially common law rules to the disputes that come before them. The process of harmonising the two systems will require deep judicial insight and much political and commercial will. The process of applying common law rules in commercial and financial cases, particularly where international parties are concerned, alongside Sharia and civil-law based systems is challenging, but if the results are successful this will make a significant contribution to the jurisprudence of all three systems of law.”
“There are clear, even fundamental differences between the civil law and the common law, and between them and rules derived from Sharia principles. But this does not make them mutually exclusive, even within the same national system, and it is likely that in civil and commercial cases it will emerge that they have the same objective - to secure a fair, just and efficient resolution of the parties' dispute. It can also be recognised that other out-of-court procedures, including negotiation, mediation and arbitration, may in some cases be more appropriate than litigation in the public eye.”
“When court proceedings do take place, it is important to distinguish between substantive rules, which govern the eventual outcome of the case, and the different procedures by which this destination is reached. It is here that the greatest differences lie. What is encouraging is that these procedures can most easily be adapted, modified and developed by the courts themselves.”
“By a process that will be gradual, but that need not be slow, I believe that the common law courts both in Qatar and Dubai will merge into the legal scenery of the Gulf region, as the regional economy grows and the financial centres flourish in both countries,” Evans wrote.
 |
| The DIFC Courts |
Evans had also indicated that he would like the DIFC's jurisdiction to extend beyond the financial centre to allow it to handle specific cases involving banking, shipping and financial services - similarly to the business Qatar is targeting.
Mark Beer, the registrar of the DIFC Courts, said Dubai could well follow Qatar's example, ‘With the proven track record of the DIFC Courts to resolve English-language disputes, it is unsurprising that Qatar has adopted a broader and more accessible jurisdiction for the more recently established QFC Courts. Should the Government of Dubai broaden our jurisdiction in the same way, the DIFC Courts have the infrastructure and expertise to accommodate a similar remit.’
The common law advantage
The adoption of the English common law by overseas jurisdictions is long established. The trend goes back eight centuries to the spread of English common law from England to Ireland by the Normans which meant Ireland became the first overseas common law jurisdiction. Over time, the common law spread far beyond the British Isles to various parts of Africa, the Americas, Asia, Australia, the Caribbean, and the Pacific mostly due to colonialism.
Historically the common law has been adopted overseas because of colonialism but in the case of the QFC and DIFC it has been adopted because of the advantages it can give to the development of their financial services industries.
Woolf has said that, “The common law is found to be the most important backing for centres of this sort in different parts of the world and we in Qatar are going to have an international court and international tribunal to uphold the values for which the common law stands.”
The benefits to the courts system of both the QFC and the DIFC include familiarity to foreign investors, by being a common law jurisdiction with laws written in English, overseen by both an independent judiciary and an independent regulatory body. These advantages for the DIFC and QRFC allows them to stand out from other financial hubs in the Middle East.
The decision to use not only English as the official language for the DIFC, but also the common law as the legal basis for the DIFC has resulted in a new legal model of establishing a specialized common law jurisdiction in an otherwise non-common law environment to quickly develop the wholesale financial sector. Already this model seems to have inspired the QFC. Other planned financial hubs in the region like RAK Financial City may follow this model during the next few years. Indeed, the model could even spread beyond the region to other emerging markets.