The Seven Pillars of Wisdom

One of the emerging jurisdictions for lawyers from England and Wales which seems to generate an increasing amount of work is the Middle East and in particular the Dubai International Financial Centre.

As noted on its own website the DIFC was set up in accordance with the following vision:

The Dubai International Financial Centre (“DIFC”) was launched in accordance with United Arab Emirates (UAE) Federal Decree No. 35 of 2004 as a part of Dubai’s strategic vision to diversify its economic resources and attract capital and investments in the region. It is a Financial Free Zone defined in Federal Law No. 8 of 2004. An independent jurisdiction within the UAE, DIFC is empowered to create its own legal and regulatory framework for all civil and commercial matters. 

The following three independent bodies have been established at the DIFC to enable and support the growth and development of businesses in the Centre: the DIFC Authority, the Dubai Financial Services Authority (“DFSA”) and the Dispute Resolution Authority (“DRA”).

It is the Dispute Resolution Authority and in particular the courts applying the common law which sit in Dubai, which are of particular interest.

For an overview of the applicable procedures which apply, I can do no better than recommend the excellent guide produced by Rupert Reed QC and the team at Wilberforce Chambers, a copy of which can be found here: Rules-of-the-DIFC-Courts-2016, gratefully placed on this website with the permission of its author.

Now on its fourth edition, the guide may some day attract the authority of the White Book, when considering matters pertinent to disputes in the DIFC.

The pleasure with dipping into jurisdictions which are surprisingly similar but also very different, is to see how lawyers and judges overseas, have devised their own solutions to familiar problems.

Thus the guide has this comment to make on the possible introduction of costs budgeting:

DIFC practitioners will be relieved that they have as yet been spared the process by which English lawyers, under the Jackson processes of ‘costs management’, are now required to quantify their clients’ costs in advance and held to that ‘budget’, at least in terms of their clients’ ultimate recovery in costs.

There has, however, been a certain amount of discussion not least during the course of lectures in the DIFC Academy of Law lecture series of costs budgeting as a solution to the concern of general counsel that litigation costs require firmer control. In circumstances where most proceedings in the English Commercial Court are now subject to costs budgeting, it seems likely that the DIFC Court will give serious consideration to this and other prospective means of limiting costs.

Earlier this year the courts also consulted on the introduction of a new Practice Direction to provide some regulation of the practice of litigation funding. A copy of the Practice Direction can be found here: 16-Jan-2017-Practice-Direction-for-Third-Party-Funding-in-the-DIFC_NB.

The key provisions of the draft Practice Direction were as follows:

4. A Funded Party who enters into an LFA in respect of Proceedings must put every other party to the relevant dispute on notice, in accordance with subsection (5) and (6), of the fact that he has entered into an LFA in respect of the relevant dispute or Proceedings. For the avoidance of doubt, thus subsection (4) does not require disclosure of a copy of the LFA.

5. For Part 7 claims, notice under subsection (4) must be given:

A. In the Case Management Information Sheet to be submitted prior to the Case Management Conference (CMC), pursuant to RDC 26.3; or

B. When the Funded Party enters into an LFA after the CMC, within 7 days of the date of the LFA. Such notice shall be in writing and shall be served on every other party to the relevant Proceedings as well as the DIFC Courts Registry.

The draft Practice Direction thus proposed notification of the existence of litigation funding, in a way reminiscent of the provisions of the CPR which applied to notification of additional liabilities: but does not attempt to codify any principles or consequences applicable to a party having the benefit of litigation funding. As the draft Practice Direction noted:

This Practice Direction is without prejudice to any subsequent decisions of the DIFC Courts ruling on the legality of LFAs in general or any specific LFA in particular (or any part thereof).

It will be interesting to see over the next few years precisely how the law of litigation funding unfolds in the DIFC courts and to see to what extent it parallels that in the jurisdiction of England and Wales.

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