Once profitable hubs of legal activity, the economies of the United Arab Emirates faced destruction during the GFC. But Greg Skehan, a senior partner with the only Australian firm with an office there, Colin Biggers & Paisley, says the region is coming back to life
The UAE comprises seven states or emirates of which Dubai, until the recent economic implosion, has been a favoured destination for workers and tourists around the world. There is no doubt the problems it is experiencing are making many expatriates rethink their role in a country that has been a media darling for many years. It is certainly no longer booming and my personal feeling on the future of the UAE is that it will remain subdued for some time, particularly in Dubai.
While the Dubai property market will take a while to come back, Abu Dhabi is emerging as the economic centre for the near future. Its government is planning to establish this state as the cultural hub of the Middle East, having commissioned local branches of the Louvre and Guggenheim museums. It has maintained a healthy economy, and while there are more opportunities emerging for law firms due to the increased number of disputes from Dubai's construction downturn, Abu Dhabi is where many companies are choosing to turn for the next chapter in the UAE's growth.
The necessity of humility, grace and friendship
My firm, Colin Biggers & Paisley, has had a presence in the UAE for a number of years. We set up in the UAE early on when many of our Australian clients were undertaking work or providing services there, and we recognised the future growth potential it offered. We are now the only Australian law firm that has a true equity partnership there.
Our partnership is with Lutfi & Co, the oldest law firm in Dubai. We were introduced to them via the legal firm alliance group ADVOC Asia and went on to develop a genuine friendship and mutual professional respect, which led to us forming a joint venture four years ago. While you do not have to partner with a local firm to set up in the UAE, going it alone generally means that you cannot obtain a licence to act as advocates or litigators. Many foreign law firms in the UAE are licensed to provide advice but cannot litigate.
We now have about 35 Lufti-CBP employees, located in both Dubai and Abu Dhabi.
The UAE way of conducting business is very much focused around "face-saving" and social protocols. The surest way to "kill" a meeting with a local Emirati is to launch straight into a business discussion without some initial "chit chat" about family, health and the like. Fortunately, Australians are well-regarded in the UAE. There is a perception that we don't make excuses or pass the buck, and are outcomes-focused and service-oriented. A local businessman once said to me somewhat cynically, "the British have been in our country for 50 years yet have never made a mistake". It's an observation that says a lot about how far a little humility and graciousness can take you in this region.
For its part, Lufti was keen to tap into Australian clients as well as the Australian know-how and style of doing business. In turn, we were impressed by their strong local connections and expertise.
Language and cultural challenges
There are challenges to working in any overseas country and within the UAE, they are primarily based around language and cultural issues. The legal systems between Australia and the UAE are very different and present a major challenge to staff.
Meanwhile, licensing conditions in the UAE are very restrictive and effectively bar most foreign law firms from getting a full practicing certificate. To litigate you need to be fluent in spoken and written Arabic and also be a local. We employ qualified people in our office to deal with this. When it comes to arbitration however, you do not need to be a local and proceedings can occur in English.
The legal framework is also rudimentary and evolving when compared to Australia. For example, the UAE has a dual system of religious and civil laws but overall, very few laws.
Within the property industry for instance, there are no strata title laws - these are being contemplated but are not yet enacted. Contracts must therefore build in enough flexibility should such laws eventually be introduced. The inclusion of arbitration clauses is a "must" in this uncertain environment to allow disputes to be resolved pragmatically.
Another challenge is a distinct lack of transparency in government decision-making as many of the major developers are owned by the government and things can change very quickly. There is also no effective court or case reporting system. As such, decisions are not generally recorded for public access. This, with the absence of binding precedent, denies the profession a vital source of guidance.
The litigation framework is also limited. Processes such as discovery and subpoenas do not exist and cross-examination is very limited. The standard of the judiciary can also vary dramatically.
All English versions of documents have to be translated into Arabic for use in UAE Court proceedings but as the Arabic language is highly nuanced, with words often possessing a variety of meanings, there is always the danger of imprecision and misinterpretation.
As an example of how complex work in the UAE can be, Lutfi-CBP recently had to put together a team to deal with a disagreement over a major development in Sudan. The arbitration clause said it had to be resolved in Dubai in Arabic under Sudanese law. Our legal team therefore included senior Arabic-speaking litigators, dual Arabic-English lawyers to assist and a Sudanese lawyer. As it turned out, Sudanese Law called up aspects of British Law on the interpretation of arbitration clauses, just to make matters more interesting.
Finding alternative work sources
Lufti-CBP has remained profitable since the global financial crisis, although the situation has obviously affected our growth goals. Our response was to develop alternative sources of work such as tapping into insurers and property investors to offer litigation management solutions, as well as developing multidisciplinary products for the construction sector in conjunction with major consulting and project management firms.
We are also shifting our attention to Abu Dhabi where construction projects are playing catch-up to Dubai following the lifting of a government embargo on construction in the 1990's. Abu Dhabi is widely regarded as an "old money" town. Blessed with significant oil and gas reserves, there is a greater concentration of wealth there and it is perceived to present more "Greenfield" opportunities.
Following the downturn, front-end work on projects receded but back-end work - such as litigation and dispute work increased. We stepped up the marketing of our litigation and arbitration capabilities to clients and insurers to capitalise on these growth areas. As there is more flexibility in the UAE for a greater range of fee models, we also offered more innovative arrangements such as success and lump-sum fees.
As a result of these efforts we are continuing to win new work on big ticket projects including a recent case where we acted for the developer of two high-rise towers in Abu Dhabi.
Because of our ability to adapt to the changing economic landscape, we are on track to increase our turnover in the UAE by 100 per cent within three years. Even though the impact of the financial crisis has been severe, we have remained profitable and importantly, have avoided putting off staff.
Despite the downturn, I believe there are still opportunities for law firms in the region. Provided you are prepared for the unexpected and have the mettle to adapt to change and challenge, the UAE can be a highly rewarding market for Australian lawyers.