THE RULE OF LAW & BUSINESS


Why legal certainty is critical to economic prosperity


“My Lords, I appear on behalf of the Claimant in this matter...’ These are not the words one would expect to hear inside a courtroom in Dubai.

But those utterances have become commonplace at the Dubai International Financial Centre Courts, a place which seeks to administer a unique English-language common law system – offering swift, independent justice to settle local, regional and international commercial or civil disputes.

In this article, I seek to argue that this is a model which could work for Somalia.

As the country emerges from two decades of civil war, there is much interest in investing there, especially in major infrastructure projects as well as oil and gas. But with little legal framework to speak of, still less any clear and transparent procurement practices, it is not going to be straightforward.

In the past year alone we have seen the scandals which have played out through shady deals and contracts which have subsequently either found to be worthless or withdrawn. In the case of SomaOil an investigation by the Serious Fraud Office (SFO) has halted any prospect of investment moving forward anytime soon. A damning interim report by the United Nations monitors has highlighted alleged bribery of Somali offices by Soma, although Soma strenuously denies wrongdoing.

These, to my mind, are all symptoms of a nation crying out for a legal framework which underpins all investments and which will support it if matters go wrong. In that pursuit, Dubai seems to offer a particular system

The concept is astonishing; under the auspices of English speaking judges, mostly from the Commonwealth, a system based on the English common law reigns supreme. But with a local twist. Every judgment handed down has on it engraved, ‘In the name of Sheikh Muhammad Bin Rashid Al-Maktoum...’ - In case you need reminding that this is still the jurisdiction of the United Arab Emirates.

The Courts, based in Dubai, seek to provide certainty through transparent, enforceable judgments from internationally recognised judges. The Dubai International Financial Centre (DIFC) Courts are independent from, but complementary to, the UAE’s Arabic- language civil law system – seeking to offer a choice that aims to strengthen both legal processes. English jurisprudence is considered persuasive though not binding (i.e. no compulsion to follow) and crucially, the DIFC Courts do not have a mandate to preside over disputes related to family and criminal law. These are adjudicated by the local UAE courts.

You would be forgiven for missing this fascinating development at a time when all news reports highlight a collapsing Libya, Iraq and Syria, and of course ISIS dominated disaster zones. The United Arab Emirates and Qatar are but two examples where a different style of dispute resolution is being taken seriously, with a view to matching the shiny and glitzy towers famous the world over.

So why not something similar for Somalia?
True, where you have a largely clan-based system where tribal elders would rather thrash out disputes under a tree, a courtroom full of wigs and gowns may not be an easy transition. But it is the investors who need certainty and that’s the only way business and finance will flourish. This is something which the UAE, a country which is itself deeply tribal, has clearly understood.

A legal vision to match the economic direction
When the British packed and left in 1971, no one could have foreseen the resurgence of British-style justice. This relatively new frontier for the English Common Law, a much desired form of dispute resolution, has been flourishing and making waves across the Gulf.
The English system is attractive and in many ways universal; unlike the civil code systems, it evolves through case laws to stay more up to date with the surroundings and the wider world. This makes it more attractive to international business because the local courts are a very different system to the one used to by multinational corporations.

In the boom years of Dubai, pre-2008 economic crash, few had much interest in dispute resolution or courts of this type. However with the slowdown came increased awareness for the need to resolve disputes expeditiously and with greater deal of transparency.
All proceedings are conducted in English, with former British and Commonwealth judges sitting alongside their Emirate counterparts. English speaking lawyers are able to apply, and once approved, appear on an array of disputes.

But the DIFC Courts have sought to plug the perceived gap, by integrating the system into the larger framework alongside the financial regulator, the Dubai Financial Services Authority. In late 2014, Dubai airport surpassed Heathrow as the busiest hub for international air travel. Everything that Dubai does, it has sought to do big. This strategic direction is clearly aimed at competing with the likes of London and Singapore, with a view to establishing Dubai as the global dispute resolution hub – and one inspired by the revered English common law system.

A bright future?
All this is of course not meant to detract from the considerable challenges the Gulf region faces; the rights of migrant workers and the advancement of human rights to name but a couple.

But this is a clear step towards modernisation aimed at elevating the rule of law to a status it deserves, commensurate to the high towers
we have become accustomed with associating with Dubai and the region. Somalia, as it emerges from a time of war and uncertainty, can only sustain prosperity with a clear legal framework underpinning the incoming investment. Business and investment need certainty.

There may well be a lot of money being invested in Somalia today, but it won’t be sustainable if it is not supported by a framework which provides protection for that investment. Since time began people have had disputes, and especially so when it comes to business deals. But without
an effective dispute resolution system, nothing will endure.

Hashi Mohamed
Editor-in-Chief,
East Africa Business Journal

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