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The invisible export

The invisible export


Competition between the international commercial courts of London and Dubai looks set to continue in the new global market, writes Rupert Reed QC

Recently, the Courts of the Dubai International Finance Centre (DIFC) tweeted on Clyde & Co’s ‘2017 Middle East Deal Study’, which included some very healthy metrics for the DIFC courts, the leading international commercial court in the Middle East. Of the regional M&A parties opting for litigation, 76 per cent now choose the DIFC courts, up from 47 per cent in 2015. Only 6 per cent still choose the English courts. Of those instead preferring arbitration, 84 per cent chose the DIFC-LCIA Rules and 69 per cent the DIFC as a seat, implicitly with DIFC court supervision.

The Commercial Court in London (CCL) doesn’t do social media, nor does it have a website. What it does have is Lord Chief Justice Lord Thomas, who recently gave a series of lectures in Dubai, Singapore, the Cayman Islands, and Beijing, marketing the CCL as the ‘ideal’ commercial court, responsive to the needs of international parties whose disputes are increasingly ‘mobile’.

Marketing, however, is one thing. The international competitors in this global market must also ensure that their rules are sufficiently flexible to allow recognition that their courts have jurisdiction. Both the CCL and the DIFC courts have recently confirmed their own jurisdiction to hear cases from a significant exporter of disputes, Saudi Arabia.

In Al Jaber v Al Ibrahim, the Court of Appeal confirmed the CCL’s jurisdiction in a significant Saudi dispute between Sheikh Mohamed al Jaber and two other Saudi sheikhs with royal connections. The issue is whether $30m advanced by Sheikh Mohamed in 2002 was a loan relating to the setting up of the satellite channel Al Arabiya, or compensation for the facilitation of a Saudi property deal.

Historically there has been a ‘muscular presumption’ against permission to ‘serve out’. The claimant must show first on the ‘merits’ that it has ‘much the better of the argument’, second, the existence of a connecting factor or ‘jurisdictional gateway’, and finally, that England is clearly the forum conveniens to try the dispute. The first and last hurdles appear to have been significantly lowered.

First, on the merits, the claimant must have ‘much the better of the argument’, but in terms of ‘relative plausibility’ on untested evidence. Why would Sheikh Mohamed, with all his wealth and honours, make up his case, with ‘no evidence of any bad blood or vendetta’.

Last, on forum conveniens, it was enough that the loan was likely to be under English law, the three protagonists had London residences and spoke English, and there would be obvious procedural advantages in having English disclosure and cross-examination.

In the case of one of the defendants, there was no need to serve out because he had been served in London at his ‘usual residence’. That need only be a ‘home’, even if the defendant’s principal residence is elsewhere. The Berkshire house used mainly by the defendant’s children in attending school in England was such a home.

In the DIFC court, a party does not need the court’s permission to serve proceedings outside the DIFC. Indeed, once the relevant jurisdictional gateway has been passed, the burden is on the defendant, if contesting the DIFC court’s jurisdiction on forum conveniens grounds, to show that some other forum, if outside the UAE, is clearly more appropriate.

In Proviti v Al Mojil, the DIFC’s court of appeal upheld a decision that DIFC courts had jurisdiction over a major Saudi commercial dispute. Claims were brought by the Saudi shareholders of a Saudi company about a report in Saudi Arabia produced as part of a Saudi regulatory investigation. In finding that the Saudi courts were nevertheless not the forum conveniens, the DIFC court focused instead on the fact that the defendant’s staff were English-speaking and had worked in English.

The DIFC appeal court further confirmed that there is no merits test to be applied in confirming that the DIFC courts had the requisite jurisdiction.

Jurisdictional tests in both English and DIFC law appear to be evolving to facilitate findings of jurisdiction. After all, Saudi business people often have residences in financial centres such as London and Dubai. Many are fluent and communicate professionally in English. Where their disputes concern oral agreements, trial will almost always benefit from disclosure and cross-examination. And technology makes it ever easier for witnesses to attend court by video conferencing.

The invisible export of legal services from London and Dubai to jurisdictions like Saudi Arabia looks set to grow. But so too does competition between the international commercial courts in this new global market.

Rupert Reed QC is a barrister at Serle Court