The birth of a new jurisdiction damien horigan
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Transcript of The birth of a new jurisdiction damien horigan
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The Birth of a New Jurisdiction: The Abu Dhabi Global Market
Damien P. HoriganAssociate Professor of Business
American University of AfghanistanKabul, Afghanistan
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Abu Dhabi Global Market (ADGM)
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Al Maryah Island, Abu Dhabi
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United Arab Emirates (UAE) • Federation of seven emirates with Abu Dhabi and Dubai being the two main emirates
• Emerging market status• High per capita GDP• No foreign exchange controls • Currency (UAE dirham) pegged to the US dollar • Politically stable • Good physical infrastructure• Arabic as the official language, but English widely spoken
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UAE (cont.)
• Strategic location at the crossroads of Africa, Asia, and Europe
• Large airports in Abu Dhabi & Dubai• Time zone (UTC/GMT +4 hours; no DST) partly overlaps with normal office hours in East Asia & Western Europe
• Workweek (Sun.-Th.) for many businesses mostly overlaps with that of the West
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Financial Free Zones in the UAE
• Dubai International Financial Centre (DIFC)• Abu Dhabi Global Market (ADGM)• DIFC – open for more than 10 years• Many banks, etc. present in the DIFC• ADGM – only recently launched • DIFC located near Emirates Towers• ADGM located on Al Maryah Island
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Financial Free Zones (cont.)
• Special economic areas for wholesale banking & finance
• Conventional & Islamic banking/finance• 100% foreign ownership allowed • No corporate income taxes• No restrictions on the repatriation of profits• English language used in administration• Transactions in US dollars possible
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Financial Free Zones (cont.)
• Separate regulators in financial free zones: • DIFC: Dubai Financial Services Authority • ADGM: Financial Services Regulations Bureau • Elsewhere: • Central Bank of the UAE • Securities & Commodities Authority
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Financial Free Zones (cont.)
• Special legal structures• DIFC and ADBM as jurisdictions separate from Dubai and Abu Dhabi, respectively
• Most UAE laws do not apply within the DIFC• DIFC has its own legal system• ADGM is setting up a similar legal system
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Common Law
• The common law as the basis for the legal systems within both financial free zones
• The common law developed in England & Wales and then spread to many parts of the world due mostly to British colonialism
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Common Law (cont.)
• Despite once being British protectorates, Dubai and Abu Dhabi were not common law jurisdictions
• Some variation in the common law from one jurisdiction to another e.g., England & Wales vs. New York state
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Common Law (cont.)
• Key role of judges; precedent • Several major financial hubs have common law systems e.g., London, New York City, Singapore, and Hong Kong.
• At least somewhat familiar to many bankers, accountants, etc.
• Able to evolve over time with economic changes
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Common Law (cont.)
• The common law selected for the DIFC to attract foreign direct investment
• DIFC law is based on the common law, but DIFC law is not identical to English law
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Common Law (cont.)
• DIFC has its own statutes & regulations written in English
• ADGM statutes & regulations will also be written in English
• Currently, ADGM laws are just a few drafts posted on the ADGM website
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Court System of the DIFC
• DIFC Courts: Court of First Instance, Court of Appeal, and Small Claims Tribunal
• Most judges are foreigners from England or other common law jurisdictions with experience in handling complex business disputes
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Court System (cont.)
• Foreign lawyers may represent clients in the DIFC Courts
• Open court proceedings in English• No jury system • Decisions published on the website of the DIFC Courts
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Court System of the ADGM
• ADGM Courts have not yet begun to function, but the ADGM’s judiciary will likely be similar to the DIFC Courts
• Trial court & appellate court• Some foreign judges are expected • Foreign lawyers will probably be able to represent clients in the ADGM Courts
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Law outside of the DIFC & ADGM
• “Mainland” UAE has a mixed legal system based on Islamic law and the civil law tradition of Continental Europe
• Islamic law in the UAE mostly limited to family law and probate matters for Muslims
• Civil law (French/Egyptian influences) covers most business law matters in the UAE
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Law (cont.)
• Statutes drafted in Arabic• Problems with legal translation between Arabic and English
• Local courts function in Arabic • Documents in English need to be translated into Arabic
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Law (cont.)
• Role of Islamic law confusing for non-Muslims• Foreign lawyers normally cannot represent clients in the local courts
• Some use of commercial arbitration for business disputes to avoid the local courts
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Prospects for the ADGM
• Already has attracted banks and other businesses
• Abu Dhabi’s wealth & economic growth• Potential to become a major financial hub in the Middle East
• Legal system could be a “selling point” for the ADGM
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ADGM vs. DIFC
• The ADGM is likely to be similar to the DIFC• Less than two hours by car from each other• Will the two hubs complement or compete?
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Abu Dhabi Global Market Square
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Al Maryah Island as a mini-Manhattan
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Al Maryah Island at night
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Any questions?
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Thank you!
• All photos were taken by the author.
• Copyright © Damien P. Horigan, 2015