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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.

 

Import of Justice

24.12.2014

Dmytro Shemelin, Lawyer at Ilyashev & Partners Law Firm
Source: Companion

Even the best of laws mean almost nothing if there are no good courts ready to apply them correctly.

The question now is how to create an investment climate comparable to the climate of the City of London? Firstly, for over the period of 300 years the country needs to regularly perfect the laws and the court system. Secondly, to host the English law and the courts.

As strange as it sounds, but the mentioned idea has really been implemented. Dubai International Financial Centre (DIFC) is a unique investment decision of the United Arab Emirates, which constitutes a “state within a state”: a small area within the Emirate of Dubai, measuring a little more of Kiev zoo (40 hectares) which has its own laws and courts.

In its nature, DIFC is a classic offshore zone with all the traditional attributes: zero income and profit tax, no restrictions on the exchange and transfer of currency, availability of various forms of incorporation, simplified immigration system for professionals. What makes it unique is a special legal system and a special system of justice.

DIFC financial legislation was specifically developed on the basis of a combination of English and international law to be used in modern financial and investment operations. Should there be a gap in DIFC legislation the court will not be governed by the law of Dubai, but by the English law. Thus, foreign investors may be confident that their transactions carried out according DIFC law will actually be governed by the same English law, according to which they have been working hundreds of years.

However, experience of Ukraine shows that even the best of laws mean almost nothing if there are no good courts ready to apply them properly. Therefore, the problem with DIFC courts has been resolved in a very radical manner. Rather than teach English justice to local sheikhs, DIFC invited well-known British judges and international lawyers.

Singaporean national Michael Hwang is a Chief Justice of DIFC Courts. He is an acclaimed international arbitrator, former vice-president of the International Chamber of Commerce and the International Council for Commercial Arbitration. His deputy is Sir John Murray Chadwick, an ex-judge of a Judge of the Court of Appeal of England and Wales.

Should anyone suspect DIFC Courts of being prejudiced (they still formally have the status of the state courts), DIFC still has an arbitration institute – DIFC LCIA Arbitration Centre which was established, of course, in partnership with the LCIA Court. From his fellow English counterpart DIFC Centre borrowed (with a little adaptation) Arbitration Rules, structure and database of arbitrators, for the arbitration costs as much as the arbitrators do.

In addition to the above, DIFC arbitration law is based not on the English 1996 Arbitration Act, but on the neutral UNCITRAL Model Law (United Nations Commission on International Trade Law), which allows the arbitration specialists from around the world to adequately understand the principal provisions of the arbitration law. In addition to reviewing commercial disputes DIFC Centre plays another important function. Within its structure it established Financial Markets Tribunal – a permanent arbitration body reviewing administrative complaints filed against the actions of the financial regulator DIFC (Dubai Financial Services Authority).

In such way foreign investors can be sure that their disputes with the regulator will be reviewed not even by a local court (although such court can hardly be called “local” as soon as there are only 30% of local judges in it), but by fully independent international arbitration court.

In view of the above, it is not surprising that last year the DIFC was considered the fastest growing financial center in the world. Its creators did their best to avoid even a hint of the possibility of the emirate’s government to anyhow interfere into financial activities in the economic zone.

It is clear that this level of economic freedom in Ukraine is unlikely, and the replacement of the administrative courts by arbitration courts, even in certain spheres is virtually impossible. However, DIFC can serve as a good illustration of how modern revolution in the economic and regulatory sphere can and should look like a real, but not a utopian idea of universal solution for everything.

 
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