Economic Update

Growing recognition among locally based and overseas companies seeking dispute resolution has seen the Dubai International Financial Centre (DIFC) Courts strengthen its position as one of the world’s leading commercial courts.

According to DIFC figures issued in February, the courts recorded a 5% increase in the value of cases dealt with last year. Between them, the courts of First Instance, Arbitration and Enforcement, and the Small Claims Tribunal (SCT) heard cases with a combined value of Dh5.85bn ($1.5bn).

The main Court of First Instance led this increase, with its caseload rising 22% in value to Dh2.71bn ($737.8m).

Established in 2004, the DIFC Courts provide a judicial framework for resolving all civil and commercial disputes and claims arising out of the DIFC and its operations. In addition, and as is increasingly the case, the courts can also rule on claims in which all parties agree to use the DIFC Courts.

Broadening judicial horizons

The workload of the courts is likely to expand further in the short to medium term as the institutions look to widen judicial expertise in line with business need. In a February Dispute Resolution Authority Academy of Law survey of 122 legal practitioners across the Middle East, nearly two-thirds of lawyers stated that they were choosing DIFC Courts as their business jurisdiction for cross-border transactions contracts.

Furthermore, as Dubai looks to further diversify its economy and prepare for industries of the future, DIFC Courts are mulling draft regulations to establish a new unit dealing with claims arising from construction and technology disputes, opening a one-month public consultation at the end of March.

The rules for the proposed Technology and Construction Division (TCD) have been opened up for public comment, with discussions set to close in the second quarter of this year.

Under the proposed remit for the division, claims could be brought covering disputes over engineering, buildings or other construction projects, as well as challenges to decisions of arbitrators in construction and engineering disagreements.

Claims could also be opened by and against engineers, architects, surveyors, accountants and other specialised advisers relating to the services they provide, or even between neighbours, owners and occupiers of land in trespass cases.

The technology component of the division additionally gives it responsibility for cases involving the design, supply and/or installation of computers, computer software and related network systems.

The TCD would also be empowered to hear claims by and against the DIFC or any DIFC body relating to their statutory duties concerning the development of land or the construction of buildings.

The establishment of a dedicated division of the court to deal with technology and construction-related matters could be a positive development, according to an article penned by Mark Raymont, a construction and engineering law expert with law firm Pinsent Masons.

“The TCD would provide an English-language forum which has the potential to be more time and cost effective than other forums,” Raymont wrote. “In this regard, the establishment of the TCD may affect the number of litigants using the local UAE courts, the proceedings of which are in Arabic only, and the conduct of arbitration in the UAE, in particular at the Dubai International Arbitration Centre.”

Another advantage identified in the report is that proceedings would be streamlined and less costly than arbitration, especially in the case of smaller disputes.

Smarter and faster

Technology will not just be a matter of jurisdiction for the DIFC Courts, with technological advances also being adopted to strengthen their role and expand their reach.

One of the reasons cited for the rise in the courts’ caseload was the expansion of its technological capabilities, which incorporates the use of video-conferencing in both the main and small claims courts. For the SCT, this is especially relevant for small and medium-sized enterprises (SMEs) owners, who can now attend hearings from anywhere in the world with a broadband connection.

“The DIFC Courts worked with major technology companies to design an online real-time case management system, integrated with video- and audio-conferencing directed by the SCT judge from our virtual courtroom,” Mark Beer, senior registrar of DIFC Courts, told OBG. “This way SME owners can connect with the tribunal whenever they are out of town, speeding up settlement while they focus on keeping their business running. Rapid resolution also has the benefit of keeping business relationships amicable, even when a dispute arises.”

In October of last year, the SCT launched its smart court platform, allowing claimants from anywhere in the world to bring cases worth less than Dh500,000 ($136,000) by utilising advanced technology. Last year the SCT handled Dh20.16m ($5.4m) worth of cases, a 5% increase on the previous year, with the adoption of smart technology helping to speed up hearing times and cut expenses.

Mazen Boustany, partner at law firm Baker McKenzie Habib Al Mulla, highlighted another advantage the DIFC Courts possess in settling cases with relative speed.

“Local courts can take two to three years to make a judgement on a civil matter,” he told OBG. “At DIFC Courts, losing parties are required to pay the legal fees of their opponents, creating an incentive to settle cases in a timely manner.”