The Benefits and Disadvantages of Law on Expansion of the Jurisdiction of the DIFC Court - Case Study Example

The benefits and disadvantages of law on expansion of the jurisdiction of the DIFC Court University Student Id Course Date Abstract The following literature will account for the possible benefits and drawbacks of law that can be associated with the expansion of DIFC court’s jurisdiction. The role of the DIFC courts in the United Arab Emirates to settling disputes related to businesses is explored by looking at both the limitations and advantages that DIFC courts have on settling business related disputes. The DIFC courts have expanded jurisdiction aiming at serving the customers in a better manner. The expansion of the authority has led to numerous changes among the stakeholders due to the changes that have been introduced to the legal system. The effects of the changes have also been felt in the local courts as the change in DIFC court’s jurisdiction has attracted customers from the local courts. The paper provides different discussions concerning the benefits and drawbacks of the expansion of DIFC court’s jurisdiction. Table of Contents Abstract 2 Introduction 4 DIFC court 5 Benefits of DIFC Courts 6 Use of common law 6 Utilisation of English language 7 The judges from various parts globally boost expertise in DIFC courts 7 Reimbursements are done to winning parties from the losing litigants 7 Hearings of the small tribunal case 8 Introduction of court of appeal 8 Clients have trust with DIFC courts 8 Use of the modern technology 9 DIFC courts welcome international lawyers 9 DIFC courts can borrow civil law in ruling process 10 Preliminary arbitration, guarantee of penalties and rewards 10 Guaranteed rewards and penalties 10 Drawbacks 11 Abandoning the local courts 11 Misunderstanding concerning new ruling 11 The change to English is considered hectic 12 Loss of information is possible through the translation process 12 Additional costs related to increased number of judges 13 Plenty of work in waiting 13 Lack of international basis that is complicated 14 Untested systems 14 Forum non conveniens 15 Existence of prior precedent 15 Conclusion 15 References 17 Introduction The Dubai International Financial Center has expanded its jurisdiction to cater for increased number of buses that are conducted internationally in Dubai. The DIFC Court comprises of some small courts such as the Tribunal, and the court of appeal have limited jurisdiction concerning settling disputes (Demeter & Smith, 2016). Therefore, these courts are only permitted to settle down various cases which are related to civil matters only between the entities which are already registered as members of these tribunals of DIFC. The parties who have not been registered as part of the members of the DIFC or they have been engaged to the UAE are denied the chance to become the members of the DIFC courts. As a result, such parties will always remain to be under the jurisdiction of the courts of the UAE (Luttrell, 2008). However, before explaining the importance of the current changes that have taken place in the courts of DIFC concerning the jurisdiction, it is very advisable to evaluate the jurisdiction that exists in the courts of UAE. The courts which belong to the UAE also have an important jurisdictional net. Besides, various parties are always free in selecting the required laws for governing their jurisdiction in terms of the commercial arrangements. However, in a real sense, this is not the case for the parties of the UAE are incredibly restricted to have respect on their jurisdiction. Therefore, in the cases of the civil disputes with the DIFC courts, regardless of the contract performance or even the identity of the various contracting parties, the courts of the UAE have always been the subject to the foreign law. Also, the UAE courts are also used in the overseas litigation, whereby a certain party which is looking for enforcement in the overseas judgment under this case usually finds UAE quite frustrated (AlQahtani, 2015). DIFC court In the year 2010, a law update edition was publishing to explore the various improvements as well as the significant issues that have overruled the agendas for the DIFC courts. However, after almost two years after publishing this edition, the jurisdiction of the DIFC courts started being opened in various places such as in the local companies and also in the regional companies (Falaknaz, 2016). Therefore, this aspect now made the Dubai courts to be very much unique from the DIFC courts and also to be different concerning innovative jurisdictions for solving dispute issues in the worldwide. In the year 2010, it was clearly noticed that the courts of the DIFC had already turned into a much popular feature among the legal landscape in Dubai. Therefore, the DIFC courts took decisive steps to ensure that they position themselves in the whole world as the legal system which is most transparent and also effective in delivering equal justice in accordance with the law. Moreover, in the year 2009 was the supportive year for the improvement of the courts of the DIFC whereby both initiatives and also important protocols were designed in a manner which created access to the justice as well as developing the legal procedures. The majority of the organisations which were operating under the courts of the DIFC always expected both transparency and also the effectiveness of these courts (Husein & Burns, 2015). However, the courts of DIFC were in many governed two laws which were launched by the Sheikh Mohammad who was the ruler of Dubai. One of the laws was the Dubai Law of 2004 which stated the authority for the courts in judicial matters hence setting jurisdiction for the DIFC courts and also permitting the administration of justice in the DIFC courts. The other was DIFC Law of 2004 which gave out an outline for the powers, the procedures and also the various functions of the courts of the DIFC (Demeter & Smith, (2016). In the year 2011, the Dubai Law was signed which changed the various jurisdictional demerits which are imposed by law for the Judicial Authority. Currently, the Article 5A (2) introduced new laws which permitted various parties to enter into a contract so as to agree concerning the commercial disputes which to be presented to the courts of DIFC. For an instant, in a case when a dispute occurs can be still be solved in under the courts of the DIFC when the parties agree (Edwards, Ross & Adams, 2010). However, there are still some parties which have not come into an agreement concerning which court to refer to the jurisdiction of their disputes. Also, even though the jurisdictional have been changed through the Law, it is also required that there should be a connection with the DIFC either through territorial or the identity of the both parties. Benefits of DIFC Courts Use of common law The DIFC courts are now based on English common law system that was acquired from British hence incorporating the foreign investors and familiarising themselves with the judicial system. Also, the judges of the DIFC courts are usually well qualified with both international experiences and also with the jurisdictional experience too. Therefore, the investors now get to understand some various issues hence getting assured of protection (AlShamisi, 2010). However, this law being common for jurisdiction, the DIFC courts mainly depends on the legal precedent to decide on how some of the litigated issues will be solved. This is always in contrary to the law systems of the UAE courts. Utilisation of English language Apart from the courts of UAE, the DIFC courts usually conduct their proceedings by using the English language. Therefore, the use of this language creates more transparency between the advocates of the parties and the proceedings of a court. Also, the use of English language in these courts has permitted parties to review their pleadings and also attend their hearings in the courts (Demeter & Smith, 2016). Moreover, the aspect of oral advocacy which is one of the characteristics of the common law system, have also increased the understanding of the court proceedings by the parties. Additionally, the oral advocacy also provides chances for the advocates to either highlight or even argue some issues which are not actually in the proceedings. The judges from various parts globally boost expertise in DIFC courts Currently, the DIFC courts have stated their significant areas of promotions as well as the appointments which can cause important contributions to the judicial excellence for the courts of Dubai. Besides, there are several changes which have taken place in the DIFC courts, whereby both national judges, as well as the expatriate judges, have been made to strengthen the capability of these courts in handling some of the complicated commercial disputes (Falaknaz, 2016). For almost 350 years of a joined experience in around 34 nations, the judicial benches in the various courts of DIFC, it has created both confidence and also trust from the international legal society. Reimbursements are done to winning parties from the losing litigants The losing party after judgment is responsible for ensuring that the necessary remedies are provided. The winning party is the one who is entitled to be paid for the damages. The court after passing the judgment ensures that the party suffering the loss is reimbursed (Luttrell, 2008). This makes the DIFC courts fair as they pass judgment in a way that ensures that the party that has won the case is refunded any amount of money he or she has suffered. Hearings of the small tribunal case The DIFC Courts have started dealing with small tribunal cases making it possible for small businesspersons to access justice in the courts. Besides, the DIFC Courts have been ensuring that the cases are hard within the shortest period possible to make the businesspersons access the necessary justice (Moses, 2012). Expanding the legal services of the court has led to improvement in justice delivery for the case of different nature. Therefore, the expansion of the legal services of the DIFC Courts has contributed a lot in the process of settling legal disputes hence guaranteeing success in the business operations. Introduction of court of appeal The introduction of the court of appeal to the courts of DIFC can only be applied to only the cases of second hearing after already the first hearing has been conducted. According to (Demeter & Smith, (2016), the DIFC courts usually permits appeals in the cases when the first instance has occurred. However, at the past, the DIFC courts usually granted an appeal since their ruling was only restricted to the areas in which they are within. Later on, after the jurisdiction was expanded, then the court of appeal was launched into, and also several various changes occurred to the parties which were registered to the DIFC. Clients have trust with DIFC courts The courts of DIFC have been trusted by the majority of the clients as a result of its expansion regarding jurisdiction hence leading to the improvements of the rulings since the majority of the parties prefer their cases to be heard in the courts of DIFC. In the year 2010, Edwards, Ross & Adams made an argument that the clients gained the trust of the DIFC courts from their rulings, whereby these courts can arrive at a consistent execution of any case. The most interesting thing about the courts of DIFC is that they always handle a case if they are their cases whereby they solve disputes in an honest way. Use of the modern technology The DIFC courts have made a remarkable record by providing rulings which have the best jurisdiction. In accordance to Demeter & Smith, (2016) stated that the courts of DIFC usually utilise the technological system, whereby they make use of the electronic learning in their various aspects of conducting an online forum. Moreover, through this technological system, people from all over the world are now able to access any necessary information which they require. Also, through this technological system the individuals from the various parts of the world can register as the partners of the DIFC through the online process. DIFC courts welcome international lawyers After the jurisdiction of the courts of DIFC had been expanded, the majority of the international lawyers were permitted to register to the court system and become part of the members of the DIFC courts. However, the individuals from the local council are not usually needed as it was before in the case of representing their client (Husein & Burns, 2015). For instance, an individual businessperson from the Europe will be allowed to come with a lawyer who will represent his or her case to the court on behalf. Also, this is a significant chance through which the popular companies work in a freestyle to the court whereby they usually appear to the courts with their qualified lawyers whom they have confidence on them. DIFC courts can borrow civil law in ruling process DIFC courts have the freedom choosing various forms of law that can include civil or common law in the process of making a judgment. This can be of benefit to the court as it can be in a better position to make reliable decisions (AlQahtani, 2015). However, the change experienced through adopting the English common law has faced numerous challenge from the stakeholders. Preliminary arbitration, guarantee of penalties and rewards The legal framework of DIFC Courts provides room for arbitration. The parties involved in the case are allowed by the courts to engage an external party in making the final decision of the case (Luttrell, 2008). Involving the external parties can be crucial in ensuring that the decision arrived at is satisfying for both sides in the case hence elimination the possibilities of appeal. Besides, through the preliminary arbitration, the case hearing process can be shortened hence ensuring that justice is delivered within the shortest time possible. Guaranteed rewards and penalties The DIFC courts ensure fairness in the judgment where the penalties and rewards are assured to the parties to the case after the outcome of the case. The innocent party is rewarded with the necessary remedies for damage while the party responsible for the damages is forced to pay for the damages (Edwards, Ross & Adams, 2010). Therefore, businesses are guaranteed secure and fair hearings through the legal framework established by the DIFC courts. Drawbacks Abandoning the local courts There has been a shift of treaties among corporations to DIFC courts making most of them abandon the local courts. The local tribunals that were being handled by the local courts are now being handled by the DIFC courts (Husein & Burns, 2015). Besides, the legal system is becoming more foreign due to the increased use of English common law causing some risks to the legal service delivery of the local courts. The customers that have been seeking legal services in the local court are now seeking the same legal services in the DIFC courts. The locals and foreigners in Dubai are all switching to the DIFC courts as they receive the best legal services hence negatively affecting the local courts. Misunderstanding concerning new ruling DIFC courts are causing some misunderstanding in the process of offering the legal services as they use civil law in the process of discharging their legal services. The misunderstanding can be associated with the conflicting and unpredictable judgments that are not consistent with the old system used in delivering justice. The legal practitioners are forced to change to adapt to the changes by researching more on the civil law to deliver legal services that are of high quality (AlShamisi, 2010). This might be a challenge to many of the legal practitioners in the process of enforcing the civil law which is embraced by DIFC courts. Many of the challenges faced are related to the process involved in the process of handling both the international and local tribunals, as the way they have been interpreted in the past is different from the current judgments made by the DIFC courts. The change to English is considered hectic The changes that have been brought by the DIFC courts have been affecting the way legal services are delivered. For instance, the use of English as the common language has been a challenge to the new legal system hence affecting the level of understanding, as some are not fluent English speakers. Many people are more conversant with the Arabic language hence using English in the legal writings and proceedings are likely to cause some challenges (Falaknaz, 2016). The process of learning English is time involving hence changing from the Arabic language to English can make the legal proceedings ineffective, as English is not understood by many of the lawyers. Language is critical in the process of delivering justice hence the lack of necessary language in the legal system can affect the effectiveness of the legal services offered by DIFC courts. Loss of information is possible through the translation process The loss of information is made possible in the process of changing language to English from Arabic. The loss of legal information can negatively affect the delivery of legal service delivery. This is because most of the reports and books are written in Arabic has to be translated into English creating some chances of losing important information in the process of converting Arabic to English (AlShamisi, 2010). Also, the process of translating the legal documents into English from Arabic is likely to affect the legal service delivery. This is because time is needed to make the necessary adjustments to the new legal system hence affecting the operations of the courts for a while as the legal practitioners adjust to the changes. However, likely any other change, there is the possibility of resistance to the changes for various stakeholders hence affecting the legal system. The resistance can be associated with the difficulties related to the transmissions and the possibility of failure to cover all the aspects contained in the Arabic documents in the new English versions of the documents. Therefore, the loss of valuable legal information is possible. Additional costs related to increased number of judges The DIFC courts are likely to create the need for an increase in the number judges needed in the legal system. This is because of the need for many judges to assist in delivering the legal service as the demand for legal services from the DIFC courts has been increasing. The increase in some judges needs more resources hence increasing the costs to cater for the additional number of the judges employed (Demeter & Smith, (2016). Therefore, the expansion of the operations of DIFC courts to meet the customer needs is likely to result in increased costs of operations associated with labour. Besides, there is a need for an expert to help in implementing change in the DIFC courts to ensure success in achieving the set objectives of the changes. Therefore, the experts and the increase in the number of judges can lead to increase in labour costs incurred in the DIFC courts. Plenty of work in waiting The DIFC courts have expanded its services making many customers seek legal services creating a high judicial workload in the court. This is likely to affect the speed of service delivery in the courts, as many customers would wait for long to be served (Falaknaz, 2016). The number of companies is likely to increase, as the cases will take long to be heard making many of the customers dissatisfied. The time limit can affect the effectiveness of the process of delivering the legal services to the customers. Therefore, there is the possibility of comprising of the quality in the legal judgments, as the judge will be in a rush to reduce the workload of the waiting cases. Lack of international basis that is complicated The legal framework adopted by DIFC courts is complicated as it fails to follow the external requirements. The court seems to employ the use of international regulations and rules on different sets of issues affecting the final judgment provided. DIFC courts fail to consider the various contemporary issues facing the legal service provision. There is the need to consider the various perspectives associated with corporate governance to ensure that the best judgment is provided in a way that is fair (Edwards, Ross & Adams, 2010). The complexity of the legal system brought by the DIFC courts is making the legal framework redundant. Therefore, there is the need for adjustments to the current legal framework in the process of eliminating the complexities and guarantee high-quality legal services. Untested systems The system has not been tested to assess its functionality leading to a lack of the necessary knowledge concerning its functionality. This is creating the possibilities of failure to meet the set international requirements. The legal framework established does not consider the different jurisdictions and the legislative systems hence the need for adjustment complies with the set standards (Husein & Burns, 2015). The applicability of the legal system established by DIFC courts needs to be assessed while considering the relevant jurisdictions. For instance, considering the nature of business law in the United Arab Emirates, medication has a place in the legal framework hence there is the need for DIFC courts to consider this fact among other jurisdictions. Forum non conveniens The judgments made by the DIFC courts can be challenged through appeals. This creates the possibility of failure to enforce the decisions of DIFC courts as no proceedings related to appeal cases are conducted. The fact that the judgment passed by the courts can be challenged in the tribunal of appeal creates some difficulties in the process of attaining justice (Falaknaz, 2016). Companies can escape the judgment of the DIFC court hence making it ineffective in settling legal issues. Therefore, the forum no convenient hindering the DIFC courts from achieving their objectives due to the challenges posed by appeals. Existence of prior precedent The prior precedent existing in the DIFC courts is causing some ineffectiveness in the process of administering justice. The ineffectiveness of the DIFC courts can be associated with the fact that few cases are solved using the new jurisdictions. This is because many businesses are challenging their judgment through appeal in case they are not satisfied. The DIFC courts lack the necessary expertise in the emerging fields of contemporary jurisdictions making it face some difficulties in ensuring that it remains relevant in the modern jurisdictions (AlQahtani, 2015). As a result, the DIFC courts lack the necessary prior precedents necessary for making judgments making the legal framework vague. Conclusion Despite the limitations facing DIFC courts expansions, many benefits have been realised in the business operations as business-related legal disputes are effectively handled. The courts of DIFC have made use of the various tools in their process of enforcing their judgment for themselves within the bounds of the DIFC. However, in the case when the assets are situated in Dubai but not within the DIFC, an already existing protocol for the enforcement between the various courts in Dubai and the courts of DIFC should be used. Therefore, this aspect should cause an automatic enforcement in the Dubai courts over the judgment of the DIFC courts. Additionally, the courts of Dubai are not mostly preferred for either international civil and also for the commercial disputes. At the past, the jurisdiction related to the DIFC courts was strictly limited to the civil cases and also to the disputes which are under the jurisdiction established. However, under the law, the DIFC courts were issued jurisdiction whereas the jurisdiction which was granted to the courts of Dubai. This certainly excluded with an exceptional of the both criminal matters and also the matrimonial matters. Therefore, for an individual dispute to be solved under the jurisdiction of the DIFC courts, there should be a connection between the dispute itself and the DIFC regarding the subject matter. References AlShamisi, H. S. M. M. (2010). Investigation into Market Abuse in the UAE Financial Markets: A Comparative Legal Study. AlQahtani, A. H. (2015). The Dubai Experience: Evaluating the Effectiveness and Efficiency of International Commercial Arbitration Laws in the Gulf Arab Region. Demeter, D. R., & Smith, K. M. (2016). The Implications of International Commercial Courts on Arbitration. Journal of International Arbitration, 33(5), 441-469. Edwards, B. B., Ross, T. N., & Adams, C. (2010). Restructuring and Insolvency in the Dubai International Financial Centre. Pratt's J. Bankr. L., 6, 195. Falaknaz, S. A. (2016). Types Validity of Arbitration Agreement Under United Arab Emirates Law (Doctoral dissertation, The British University in Dubai (BUiD)). Husein, A., & Burns, J. G. (2015). Choice of Forum in Contracts with Saudi Arabian Counterparties: An Analysis of the DIFC Common Law Courts from a Saudi Arabian Perspective. The International Lawyer, 48(3). Luttrell, S. R. (2008). Arbitration Law of the Dubai International Finance Centre, The. J. Int'l Com. L. & Tech., 3, 170. Moses, M. L. (2012). Introduction to International Commercial Arbitration. Read More