The ADGM was established in Abu Dhabi in 2013. However, the ADGM has only recently (on 15 June 2015) published its first set of commercial rules and regulations for non-financial services (the Regulations) relating to companies, insolvency, employment and real property and strata title. It is also expected to publish regulations for financial services later this year. ADGM’s intentions are clear. It hopes to replicate the achievements of the DIFC, which has attracted a plethora of international companies and investors to the region, by delivering a robust regulatory framework designed to support a dynamic and competitive international financial centre.
A new legal jurisdiction within Abu Dhabi
The striking feature of the ADGM is that (as is the case in the DIFC in Dubai) it will be an English language, common law jurisdiction, separate from the ‘onshore’ civil law, Arabic language regime of the UAE. It will also have its own independent courts operating separately from the Abu Dhabi and Federal courts.
English common law and statutes
The ADGM has adopted nearly 50 selected English statutes as well as English common law principles as its regulatory base. This base will be subject to any specific ADGM regulation or UAE law applicable to the ADGM which may be introduced. It is also noticeable that the ADGM courts will not be bound by decisions of the Supreme Court of United Kingdom, although such judgments will be persuasive. The DIFC on the other hand enacted its own suite of laws and regulations which were largely based on English law and, as a result, over the past ten years, the DIFC courts have amassed large amounts of case law. As was the case with the DIFC and any new jurisdiction, we expect there to be an initial period of uncertainty, development and understanding of the new ADGM laws.
The ADGM courts, like the DIFC courts, will operate independently of the local courts and the Federal courts. The ADGM courts will consist of a Court of First Instance and a Court of Appeal. However, the scope of the DIFC’s jurisdiction is considerably larger than the ADGM’s at present. Currently, the ADGM courts will only have jurisdiction to hear and determine civil/commercial disputes connected to the ADGM. The DIFC courts however can hear and determine civil/commercial disputes between parties who have expressly “opted into” the DIFC courts’ jurisdiction even if there is no connection of the parties to the DIFC. It took a number of years for the DIFC courts to increase their jurisdictional scope, and with time, we expect the ADGM courts to follow a similar approach. Similarly, given the ADGM’s infancy, no guidelines have been published as to how judgments of the ADGM courts would be enforced in the UAE and beyond.
One question which remains unanswered is whether the ADGM will create a new arbitration centre and arbitration law. The DIFC has its own arbitration centre, the DIFC-LCIA Arbitration Centre, and its own Arbitration Law and any party can choose the DIFC as its seat of arbitration. An advantage of this is that the uncertainties relating to ‘onshore’ arbitration in the UAE, specifically concerning the procedural irregularities of the UAE Civil Procedures Code and the potential problems faced with enforcement of arbitral awards, have been largely eradicated by the DIFC Arbitration Law. It is early days for the ADGM. However, it is apparent that the ADGM wants to be a viable alternative to the DIFC, and we therefore expect the ADGM to produce its own arbitration centre and Arbitration Law. THE DIFC-LCIA Arbitration Centre and the DIFC Arbitration Law were created four years after the DIFC free zone was created. If ADGM was to follow a similar timeline, a new Abu Dhabi arbitration centre and Arbitration Law would be introduced by 2019. Given the competitive rivalry between Dubai and Abu Dhabi, our bet is on this happening much sooner.