Dubai or not Dubai?



Graham Lovett

During the past decade rapid rates of growth, adoption of common law regulations, low taxes, a relatively ­liberal culture and infrastructure links to elsewhere in the region made Dubai an attractive hub for international firms looking for Middle East footholds. But then came the global financial crisis, which took on particular significance locally at the end of last year when the Dubai ­government requested a standstill on $22bn (£14bn) owed by its wholly owned group of ­companies Dubai World.

Financial meltdown was averted, however, through a $10bn bailout by its richer neighbour Abu Dhabi. As a result there is the ­suggestion that Abu Dhabi’s role as the ­political and economic (and by implication legal) nerve centre for the United Arab Emirates (UAE) could be strengthened further.

Law firms have been aware of Abu Dhabi’s gravitas since the start of the crisis, with its hydrocarbons wealth increasing interest in office launches and leading to some taking the decision to transfer Dubai-based ­personnel and resources there. However, oil and gas are even more abundant over the border in Qatar, the world’s third-largest gas producer, and Saudi Arabia, the world’s largest oil exporter and the region’s largest economy.

In 10 years’ time, though, could one of these three take over Dubai’s role as the Middle East’s legal hub? The Lawyer has asked some of the senior partners at international and local law firms operating in the region to ­provide their insights.

Graham Lovett, Gulf managing partner, Dubai, Clifford Chance

In the wake of Dubai’s recent financial troubles, is a strategic shift in the legal world’s Middle East centre of gravity currently taking place? Where will the region’s hub be in 2020?

In this day and age it’s difficult to predict what will happen in a matter of months, let alone another decade. In the medium to long term you would have to be brave to write Dubai off. It has a lot of infrastructure that many countries in the region want to emulate, but would take years to do so. That also assumes Dubai will stand still for the same period, which is very unlikely. It’s pretty clear that, despite the recent headlines, Dubai is very much still in the game. It’s difficult to take away the success of the Dubai International
Financial Centre (DIFC), tourism and the free zones, all of which are pillars for
future development.

By 2020 must all credible international law firms have significant Arabic ­leadership in order to survive? If so, what steps has Clifford Chance taken in this direction?

I agree that firms will need Arab leaders, although it will be a competitive advantage and not necessarily a prerequisite for survival. Clifford Chance has recognised this and is ­actively helping key clients develop their legal capabilities by offering training to local lawyers as well as searching out talented Arab lawyers for regional careers within the firm. We already have an Arabic-speaking partner in the region and it’s our ambition to have more.

Given Abu Dhabi’s stake in Dubai, must all international law firms have an Abu Dhabi base in order to have a credible regional offering?

Undoubtedly, yes. Abu Dhabi cannot be ignored as the financial driver of the UAE.
It’s also a very ambitious emirate and so can afford to develop and invest for its future.
But you have to show real commitment – there’s no point in having a token presence there. If you’re unable to execute deals on the ground, you have the wrong business model.

Bander Alnogaithan, founder, The Law Office of Bander Alnogaithan, Riyadh, Saudi Arabia

In the wake of Dubai’s recent financial troubles, is a strategic shift in the legal world’s Middle East centre of gravity currently taking place? Where will the region’s legal hub be in 2020?

Dubai has the advantage of an open business environment and a ­strategic location between South Asia and the Middle East, as well as easy access to the country for ­foreigners. The ­latter is a weakness of Riyadh, but all three features are available in Doha. With a growing economy and a more stable one than Dubai’s, Doha is the real competition.

Saudi Arabia is the largest economy in the Middle East and will ­continue to be so for years, with a growing legal business. Foreign law firms see Riyadh as an important location for business within Saudi Arabia, but more as a major branch office with local, affiliated lawyers. The reasons for this are immigration and travel constraints into and out of Riyadh, not to mention a poor but improving legal system, as well as a lack of local ­professional lawyers. As the legal system develops in Saudi Arabia under the supervision of King Abdullah, a legal boom will be heading there in the next 10 years. Now is the chance for international firms to establish presences in Riyadh to flourish with the legal environment while competition is low.

Neil Cuthbert (pictured), Dubai managing partner, and David Courtney-Hatcher, construction partner, Dubai, Denton Wilde Sapte

In the wake of Dubai’s recent financial troubles, is a strategic shift in the legal world’s Middle East centre of gravity currently taking place?

Abu Dhabi’s importance as the capital of the UAE and one of the world’s major producers of oil and gas is having an ­increasing bearing on the ­strategic planning of ­international law firms in the region. In 2009 Dentons ­corporate partner Dean Alderton moved from Dubai to Abu Dhabi and a projects partner will move shortly to meet the upsurge in projects work in Abu Dhabi. We expect further such moves to happen in 2010-11. Demand for legal ­services in Dubai remains reasonably healthy, but the nature of the ­services has changed – insolvency, ­restructuring, Islamic finance and dispute resolution continue to grow in importance.

Where will the region’s hub be in 2020?

Saudi Arabia is attracting foreign investors but remains a difficult place to do business, both from a legal and social perspective. The country has cash to invest and a desire to diversify its economy, but it’s not Dubai.

Qatar plans for a real estate market recovery in 2013 and Dohaland has launched a breakthrough urban and cultural reclamation project to ­transform the older neighbourhoods in the city into a vibrant economic ­centre. But it still has a way to go to rival Dubai.

Bahrain will increasingly challenge Dubai’s supposed leadership in the region’s leading financial centre sweepstakes. It was the historical leader and is set to reassert itself in the Islamic finance and funds sectors.

Given Abu Dhabi’s stake in Dubai, must all international law firms have Abu Dhabi bases in order to have credible regional offerings?

We do not expect to serve Abu Dhabi client needs from Dubai. Most of our 65 lawyers in the UAE work interchangeably between both cities. We believe there is also a trend towards greater transparency in the UAE and a more obvious rule of law operating. This is particularly so in Abu Dhabi, which will also serve to heighten its profile further as an ­international ­business centre.

Lewis Jones, UAE managing partner, Abu Dhabi, Vinson & Elkins

In the wake of Dubai’s recent financial troubles, is a strategic shift in the legal world’s Middle East centre of gravity ­currently taking place?

Dubai is, and will likely remain, an ­important place for professional services firms to operate in. The DIFC has done an excellent job of developing a very ­business-friendly location, and I don’t see that changing any time soon.

What steps has your firm taken in terms of Arabic leadership?

We have four native Arabic-speaking partners in our Middle East offices out of a total of nine partners, as well as a diverse team of associates. We’ll ­continue to seek out talented lawyers with an affinity for, or connection with, the region as we build our practice here.

Sachin Kerur, Dubai head, Pinsent Masons

In the wake of Dubai’s recent financial troubles, is a strategic shift in the legal world’s Middle East centre of gravity currently taking place? Where will the region’s strategic hub be in 2020?

Dubai will continue as a primary hub for legal services in the Middle East for some years to come. Despite the financial ­troubles the markets here have shown the sort of resilience that will remain attractive to international businesses looking for a launch pad or headquarters in the region. Given Dubai’s early-mover advantage, its established and ever-expanding ­infrastructure and its ­logistical networks, it seems hard to ­imagine it being eclipsed.

Sadiq Jafar, Dubai managing partner, Hadef & Partners

What will be the importance of the region’s indigenous law firms? By 2020 must all credible international law firms have significant Arabic leadership in order to survive?

Strong independent domestic law firms will play an increasingly important role. Clients seek quality advice built on depth of knowledge and local expertise and ­relationships. Longevity, language, ­operating to internationally expected standards and cultural awareness are undoubtedly valued. The top ­domestic law firms work on joint assignments with, and referrals from, ­international law firms on an increasing basis.

Some areas, such as litigation, remain the domain of domestic law firms due to restrictions on rights of audience. Many jurisdictions, such as Saudi Arabia and Bahrain, have additional ­restrictions on operations of international law firms. In Saudi they must ally with a ­domestic firm, and in Bahrain certain types of legal ­opinion can only be issued by locally ­qualified lawyers.

Rula Dajani, head of the Middle East corporate, projects and finance group, Dubai, Holman Fenwick Willan

Where will the region’s legal hub be in 2020?

By 2020 Riyadh and Abu Dhabi will have developed into core legal hubs. The backbone of both economies is energy and the ­majority of law firms represented in the region have an interest in this field. Saudi is the largest economy in the region with vast domestic consumption and huge energy reserves. Dubai will continue to act as an important market for law firms.