DIFC Expansion likely to present new Opportunities for the DIFC Courts

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Jane Lambert

The Dubai International Financial Centre ("DIFC") is a free zone for banking, insurance, securities trading and other financial services. It was established with the aim of transforming Dubai into a major financial centre. On 7 Jan 2019, the Vice-President and Prime Minister of the United Arab Emirates and Ruler of Dubai announced plans to triple the size of the Centre (see the DIFC press release Mohammed Bin Rashid Approves DIFC’s New Expansion Plan 8 Jan 2019).

The press release states that

"Upon completion, the new district will comprise 6.4 million square feet of office space, 2.6 million square feet of creative space, 1.5 million square feet of residences, 1.3 million square feet of retail space and 700,000 square feet devoted to leisure and entertainment. This will be complemented by a financial campus covering approximately 400,000 square feet, an additional 250,000 square feet of hospitality offerings, and 3.5 million square feet of car parking space."

The DIFC already has its own laws based on English common law with its own English language courts and tribunals.  It is reasonable to suppose that those laws will apply to the new area.

I first discussed the DIFC's legal system in DIFC Courts 7 Jan 2011 JD Supra. When I wrote that introduction nearly all the judges of the DIFC's Courts were Commonwealth expatriates.   Many of those judges have now retired and been replaced by Emirati citizens.  Chief Justice Tun Zaki Bin Azmi is Malaysian but the Deputy Chuel Justice and four other judges are Emiratis.

The DIFC Courts will accept jurisdiction where parties choose those courts for the resolution of future or existing disputes (see Jane Lambert DIFC Courts Spread Their Wings  7 Dec 2011). Businesses in developing countries may prefer their disputes to be resolved in Dubai rather than London or New York for all sorts of reasons.  As the DIFC courts are English speaking common law tribunals, they are likely to be acceptable to many businesses in developed countries.  I discussed choice of jurisdiction clauses in DIFC Courts: Choice of Jurisdiction Clauses 28 Dec 2012.

Another development that could increase the importance of the DIFC Courts is the creation of a virtual commercial city. Art 3 of the Dubai government's Fifty Yeat Charter envisages "the establishment of the first virtual commercial city in the region that grants commercial licenses without having to reside in Dubai. The city will allow investors to open bank accounts and grant e-residencies according to best international laws and regulations." The government hopes to have 100,000 companies in that virtual city.  The reference to "best international laws and regulations" are presumably the laws and regulations of the DIFC and the tribunals that would apply those laws are likely to be the DIFC Courts.

The DIFC Courts belong to an organization known as The International Consortium for Court Excellence which has members from various parts of the world including Bhutan, Namibia, Papua New Guinea and Swaziland as well as the USA, Canada, Australia and Brazil.  Dubai hosted the annual conference of that consortium in November 2018 (see press release DIFC Courts host international court excellence and legal tech conference 7 Nov 2018).

Anyone wishing to discuss this article or the DIFC Courts generally should call me on +44 (0)20 7404 5252 during office hours or send me a message through my contact form.

Designers making use of the Small Claims Tribunal in Dubai

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Jane Lambert

A press release issued by the Dubai International Financial Centre Courts caught my eye with the headline "Designer Courts". It referred to a cooperation agreement between the Dubai Design and Fashion Council and the Dubai Dispute Resolution Authority which was signed on 15 March 2017 "to pave the way for wider adoption of the English language, international law courts system by Dubai’s fast-developing design and fashion sector."

I have not yet found a copy of the agreement but the press release suggests it contains the following provisions:

• "Dubai Design & Fashion Council (DDFC) support opt-in to DIFC Courts through new cooperation agreement with DIFC Dispute Resolution Authority (DRA)
• DIFC Courts Small Claims Tribunal to underpin Dubai’s expanding design and fashion sector through swift, English language dispute resolution
• Agreement lays foundation to explore adding Design IP as a topic for Courts of the Future"

I was particularly interested in the last of those bullet points which refers to "Design IP" because this is the first occasion that I have seen an official document considering the use of the DIFC's English language common law courts as a forum for resolving IP disputes.

Intellectual property is a federal responsibility in the United Arab Emirates and designs are protected by registration under Chapter 3 of Federal Law No. 31 of 2006 Pertaining to the Industrial Regulation and Protection of Patents, Industrial Drawings, and Designs.  The DIFC courts already had jurisdiction in breach of confidence and passing off cases under the DIFC Law of Obligations. The agreement between the DDFC and the DRA seems to extend that jurisdiction with the consent of the parties.

I have already discussed the DRA and the Small Claims Tribunal in my articles dated 27 July 2016 and 20 April 2017.  According to its website

"The Dubai Design & Fashion Council (DDFC) was established by the Dubai Government to raise the profile of Dubai as a regional and global destination for design. Leading the development of a sustainable industry, DDFC provides in-depth market intelligence and helps elevate local and regional talent, enabling the contribution of the creative industries to the development of the Emirate."

Looking through its news and resources pages I am glad to see that the DDFC already gives its members advice and information about intellectual property law.

The press release states:

"As design entrepreneurs start up and compete across the region and beyond, they are reliant on key partnerships for talent, funding and materials. These need to be protected to enable businesses to trade securely and grow. By opting in to DIFC Courts Small Claims Tribunal (SCT) using a standard contract clause, enterprises will benefit from its proven capacity resolve disputes amicably and fast in English, with 85% of cases settled within four weeks."

It is important to stress that the parties must consent to the DIFC courts' jurisdiction.  For licences, distribution, franchising, joint venture and other agreements, the following clause is suggested:

"Any dispute, difference, controversy or claim arising out of or in connection with this contract, including (but not limited to) any question regarding its existence, validity, interpretation, performance, discharge and applicable remedies, shall be subject to the exclusive jurisdiction of the Courts of the Dubai International Financial Centre (“the DIFC Courts”)."

For existing disputes, the press release suggests the following:

"Any dispute, difference, controversy or claim arising out of or in connection with [Define Dispute], including (but not limited to) any question regarding the existence, validity, interpretation, performance, discharge and applicable remedies of the underlying contract in dispute, shall be subject to the exclusive jurisdiction of the Courts of the Dubai International Financial Centre (“the DIFC Courts”)."  

There appears to be no reason why the court should not hear infringement disputes thought perhaps not revocation and invalidity applications without further federal legislation.  That appears to be in the contemplation of the Emirati authorities: "

"Thinking ahead for businesses of the future, DIFC Courts and DDFC will work together to understand the industries needs from a legislative perspective for IP law."

An incentive to opt into the Small Claims Tribunal's jurisdiction is that it offers speedy resolution.  According to the press release:

"Through the award-winning smart SCT, firms with claims can access a virtual courtroom online from anywhere in the world. With the option of serving notice via instant messaging and social media, business owners can now solve legal problems using their smartphones or laptops with minimal interruption even as they travel."

Anyone wishing to discuss this article or design law generally should call me on +44 (0)20 7404 5252 during UK office hours or send me a message through my contact form.

Angels in Dubai

According to its website, Envestors Dubai is the only active business angel network in the region. Angel investment is not entirely new to the Middle East and North Africa or even to the Gulf Co-operation Council region. I wrote a short piece about Angels Den in Qatar on 26 Sept 2011.

For those who are still unfamiliar with the concept I defined a business angel on the Inventors Club website as "a wealthy individual who wishes to invest in a new business." Typically, he or she may well have already built up and sold a business and will therefore have acquired skills, knowledge and experience that can be shared with the new business. Some angels invest as individuals and others as members of syndicates.   In the UK an investment can fall anywhere between £10,000 and 750,000.  I wrote a little primer on angel investment for my former chambers website in "On the Side of the Angels" on 8 July 2011.

Envestors Dubai appears to be the trading name of Envestors MENA Ltd. which is a member of the Braveheart Investment Group plc of Perth in Scotland.  Braveheart was formed in 1997 and manages around £120 million.  It offers equity, loan and mezzanine funding to SME as well as advice on corporate finance and investment readiness. For more information on that country and Envestors see "Envestors to operate YABA" in my IP Yorkshire blog (13 April 2013).

Envestors Dubai claims to have met and advised over 1,000 companies in the last 3 years, and have selected about 20 to take forward and present to its investors, of which approximately 50% have been funded.   A profile of the company's investors appears on the "Our Network" page of its website, The investment opportunities on offer are on the "Current Deals" page.

Anyone looking to invest and indeed anyone seeking angel investment will require advice on company law, contracts, employment, tax and, of course, intellectual property. I can help with IP and I have written a short article "What Business Angels and VCs need to know about IP" which can be downloaded from the JD Supra website. Parties to a licence, joint venture, shareholders' agreement or other transaction can write their contracts in English, choose to govern them according to DIFC law (which is based on the common law) and to refer any disputes to an English speaking common law court with a judge from the United Kingdom or other common law country by inserting a Dubai International Centre Courts jurisdiction clause (see "DIFC Courts: Choice of Jurisdiction Clauses" 28 Dec 2012).

If you want to talk to me about this article, you can reach me through my contact form or call me on any of the above numbers. You can also follow me on Facebook, Linkedin, twitter or Xing.

DIFC Courts: Choice of Jurisdiction Clauses

In DIFC Courts Spread Their Wings, 7 Dec 2011, I discussed the amendment to art 5 (2) of Law No. 12 of 2004 which extended the DIFC's courts' jurisdiction to any dispute that the parties might refer to them.
Practice Direction No. 2 of 2012 DIFC Courts' Jurisdiction suggests the following choice of jurisdiction clauses.

If the parties want the DIFC courts to have exclusive jurisdiction, they can use the following words for future disputes:

"Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be subject to the exclusive jurisdiction of the Courts of the Dubai International Financial Centre.
This contract shall be governed by and construed in accordance with the law of [INSERT PLACE]."

Or this formula for existing disputes:

"A dispute having arisen between the parties concerning [DEFINE DISPUTE], the parties hereby agree that the dispute shall be subject to the exclusive jurisdiction of the DIFC Courts.
The governing law of this agreement shall be the law of [INSERT PLACE]"

If they want to confer non-exclusive jurisdiction they can choose the following clause:

"Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity or termination, shall be subject to the non-exclusive jurisdiction of the Courts of the Dubai International Financial Centre.
Each party irrevocably submits to the jurisdiction of the DIFC Courts and waives any objection it may have to disputes arising out of or in connection with this contract being heard in the Courts of Dubai International Financial Centre on the grounds that it is an inconvenient forum (forum non conveniens).
This contract shall be governed by and construed in accordance with the law of [INSERT PLACE]."

Should anybody require further information he or she can call me on +44 (0)161 850 0080 or email me through my contact page. You can also follow me on Facebook, Linkedin, twitter or Xing..