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Fri 11 Dec 2015 03:36 AM

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Emirati lawyer Essam Al Tamimi explains why much of the UAE’s legislation, which is nearly half-a-century old, is in need of revision

The founder of the largest law firm in the Middle East is working to refresh antiquated laws and build up the indigenous legal workforce in the UAE to ensure the country remains a strong centre for domestic and international business

Emirati lawyer Essam Al Tamimi explains why much of the UAE’s legislation, which is nearly half-a-century old, is in need of revision
Essam Al Tamimi has over 30 years of experience in litigation and arbitration in the UAE and the wider GCC.

Essam Al Tamimi is tall — well over six feet. Together with an easy confidence and well-worn authority he commands attention without seeming dogmatic. He holds a law degree from Harvard and this year won the prestigious Lifetime Achievement award from the International Financial Law Review. Even if you did not know this, it would be easy to imagine him strolling down the UAE’s corridors of power, knocking on ministers’ doors (uninvited, as he admits he sometimes does) and putting forward his views on the latest legislative reforms and others that he believes should be made.

Sharjah-born Al Tamimi founded his practice Al Tamimi & Co in 1989. It is now the largest law firm in the Middle East with 350 lawyers across nine countries. It continues to grow, with year-on-year revenue hikes of about 10-15 percent, according to the firm.

In an interview with Arabian Business at his office in Dubai, Al Tamimi laments that much of the UAE’s legislation is nearly half-a-century old and in need of revision.

“Most of the country’s laws were enacted in the late 1970s or early 1980s, barely a decade after the unification of the emirates. The legal map of the UAE has changed; particularly in the last 10-15 years, it has become a totally different country,” he explains.

“The UAE has moved from being a traditional port-based Arabic state to an international hub used by companies to house goods or command regional banking and finance operations.

“Because of our experience working in the region, we can go to the authorities and suggest legal changes that may be required, or advise them of existing laws that need a facelift. This has become almost a weekly operation for us.”

Currently, Al Tamimi’s firm is involved in either amending or drafting new laws on shipping, investment, arbitration, labour, slander, commercial agency operations, franchise arrangements, and others. The firm also has been involved in drafting and redrafting laws governing free zones, including Dubai International Financial Centre (DIFC), Jebel Ali Free Zone, Silicon Oasis and Dubai Airport Free Zone.

It advised the UAE government on its new Commercial Companies Law, enacted on July 1 and intended to minimise bureaucracy for companies setting up and trading in the UAE.

But Al Tamimi says the country also requires a dedicated investment law alongside the new companies legislation, to regulate the complex banking and finance industry. In general, he says, the UAE’s banking laws have been helpful to investment — “the UAE has more banks than any other GCC country and allows international banks without any domestic partnership or sponsor to compete with local banks”.

But regulatory practices are frequently imposed via ‘circulars’ from boards of directors rather than through formal legislation, and Al Tamimi believes enshrining those in law would create greater certainty and transparency.

“Central bank laws here date back to 1979,” he says. “They have done a wonderful job in protecting the currency and fiscal structure but banking has changed since then, new ideas have evolved and there are areas where the law needs fixing.

“I think the establishment of different types of investment vehicles and how they operate deserves a dedicated law, as it is a highly complex field.”

Al Tamimi says he has been working to draft such a law — along with more general revisions to central banking legislation — for about three years, but convincing the authorities to implement change can be challenging.

“They are not in denial. [They know] there are a number of fundamental laws that could either break a business or help it to grow and are working to address this — maybe not as fast as you or I would like, but they are working on it.

“The first challenge is that we are a federation. These big laws require discussion and input from all of the different emirates, so the process is a bit slow.

“The second challenge is that any law you enact is going to have an impact on the economy — either give it a boost or knock business and it is my opinion that the authorities are being very cautious in trying to bring in the law at the right time to protect the local economy.

“The law should encourage foreign investment while not killing local industry, and this is a very fine balance to strike.”

Another challenge Al Tamimi faces is the clash between the traditional viewpoint held by many decision makers in government, and encroaching modernity. UAE laws related to slander and decency are notoriously strict and anyone caught, for example, kissing in public, gesticulating rudely while driving or otherwise offending people, can face heavy fines or even imprisonment.

Al Tamimi’s attitude to such rules is clear. He describes them as “silly” and reveals that he has been working with government for some time to remove them from legislation. “It is very much on the agenda to reform this,” he says.

“There are a couple of articles in our penal law that provide for such things as being crimes and because of this the parties are forced to take action otherwise they would be ignoring people who reach out to the authorities in honest respect of the law.

“I have had this discussion with the authorities many times — about somebody giving somebody else the finger from a car; maybe somebody gave a kiss to someone on the beach or somebody shouted at somebody.

“Opening a file and processing this sort of claim costs the legal system on average AED100,000 ($27,200) to get the criminal mechanisms in place each time to deal with such a silly offense.

“But the beauty of the system is that you have to execute the law as it is. The guy on the desk cannot exercise his judgment on these articles because otherwise he could exercise his judgment on, say, rape, and say, ‘sorry, no, I’m not going to prosecute you’. So these silly articles exist; they are applied, and sometimes we waste a lot of time and money in following them up.”

People fall into two camps, he says: those who consider such laws antiquated and irrelevant, and traditionalists who support them. “The reason you haven’t seen changes overnight is because of that clash with the classic, traditional people who think you should not open the door for people to kiss in every corner and go to the mall dressed in a bikini.”

He says the UAE government has for some time been mulling the idea of a ‘tourist court’ to fast-track cases directly from police to a hearing, or a traffic violation-style system under which people are fined for offences rather than being treated as criminals. But progress is slow.

“The authorities are aware of the issues and are trying to do something about it, but between smuggling weapons, drugs, murder, rape and everything else, two people kissing on a beach is not top of the agenda.”

Though he is unable to disclose figures, Al Tamimi says legal disputes are on the rise in the UAE and the rest of the region — a direct result of the country becoming larger and more sophisticated.

“Dubai is growing, the property market is huge, transactions are more complex, more imports are coming in, more cars are being sold, people are relocating here and more deals are being done,” he says.

“Take construction. The whole process involves multiple contracts — procurement, leasing, supply — and when you increase the number of projects taking place, the probability is that a higher percentage are going to fall apart. Goods will not be delivered, goods will arrive but be defective; buildings will not be built in the way they were envisaged.

“And if one payment stops it has a knock-on effect on the others and you suddenly have the labourer who has not been paid, the building materials that have not arrived, a stalled property and an investor who has not got his return. This is why disputes are rising.”

In Dubai, the Palm Jebel Ali and Dubai Pearl construction projects are at the centre of protracted litigations. Their investors around the world are fighting to recoup money lost from repeated delays.

Al Tamimi says Dubai Pearl appears to be “haunted”. “It has moved from owner to owner over the past 12 years and every time the project starts to move, some other complication happens.”

The Abu Dhabi government plans to introduce a real estate law aimed at protecting off-plan investors from losing money if their project fails to materialise, but Al Tamimi insists such protections are already in place in Dubai. Under rules set by the Real Estate Regulatory Authority (RERA), it is illegal to sell off-plan unless the investment is secured in trust until the project is complete, instead of handing the money upfront to the developer.

“Outstanding disputes on projects [such as Dubai Pearl or Palm Jebel Ali] are historic, they pre-date the regulations. It would be very difficult now for someone to flout the rules,” he says.

The UAE has ambitions to more efficiently resolve disputes by providing arbitration and mediation services. Al Tamimi says the country wants to “emerge as an arbitration hub” to rival Singapore as well as DIFC, whose jurisdiction is based on international common law and offers world-class arbitration services.

“We’ve been very late to arbitration here [in the UAE’s general courts],” Al Tamimi admits. “It is not a popular form of dispute resolution, perhaps because it requires a certain maturity [in approaching corporate matters], and the large number of family businesses in the region in particular tend to [be] more emotional.”

He says the country has been working to draft a law on arbitration for the past five years and it is “long overdue”. It was intended to come into force by the end of this year but is not likely to be ratified until the first quarter of 2016. The law in itself is not complicated to draft, Al Tamimi says, as it is based on international arbitration laws.

“There are certain laws — shipping is another — where you cannot deviate from the [global] norm. If you want to be a banking centre, if you want to be an arbitration hub, you have to speak the same language and fly at the same altitude. If you fly differently, you fly alone.”

The UAE’s population and business environment is increasingly international and it is logical to presume that DIFC Courts, with its global jurisdiction, will become more and more valuable. If the UAE government is working to also internationalise the country’s legislation, could the two systems end up in competition with one another? Will one become obsolete? Al Tamimi does not think so; DIFC Courts caters specifically to the banking and finance community. But he admits he often uses it as inspiration to refresh UAE laws and, once those are upgraded, “there could be a time when DIFC Courts is not needed”.

“The DIFC was created to serve a particular industry and as the UAE develops it could all be merged into a single system. Take free zones: they were a big enabler of economic development but now they are just one option. That’s the beauty of the UAE — we have different vehicles to cater to different purposes and our legal structure should do that, too.”

Al Tamimi is gracious in his account of the dealings he has had with the UAE authorities. “They are mindful of change and extremely receptive to constructive criticism. They try to work with you to find a solution rather than hiding the problem. That’s very important and [that] is why the UAE has evolved to where it is today. Even if we’re not invited, we basically stick our neck in the door and they invite us to continue that discussion.”

A major source of frustration for him, however, is what he describes as the poor standard of legal training in the UAE.

“Universities and colleges are not up to the challenge. There is a huge shortage of good, qualified legal professionals in the UAE,” he says.

“I can tell you, all government departments are looking for in-house lawyers, international corporations would love to have a local Emirati general counsel, and as a private firm we’ve struggled to recruit Emirati nationals. We have 27, which is probably more than anyone else.”

This is despite the fact that a trained Emirati lawyer is extremely well paid — the minimum salary is between AED80,000 to AED120,000 ($21,780-$32,670) per month. The problem is the education, he says. In an attempt to tackle the issue, Al Tamimi & Co launched its Leadership Academy in 2012, an apprenticeship scheme that recruits between six and 10 young lawyers every month and seeks to deepen their training and expertise. It does not focus exclusively on Emiratis, but there are “a lot” of Emiratis on the programme.

Meanwhile, Al Tamimi is working to expand the firm’s presence across the region. He predicts the UAE will continue to be the main driver of growth and is “bullishly optimistic” about Saudi Arabia. The firm opened an office in Egypt in April but Al Tamimi says both Egypt and Iraq are “still in a big mess at present and unlikely to be a big earner for us in the short term”. He also reveals the firm has plans to set up in Iran — “once sanctions are lifted and if politically safe”. That Iran practice would comprise around six lawyers, he says.

With its outspoken leader at its helm, Al Tamimi & Co is likely to continue its steady growth, while the UAE is on a path to ripping up the remaining outdated laws that could be holding back its development, for good.