Sarah Malik FCIArb argues that the Middle East is emerging as a significant player in the dispute resolution space.

As somebody who practised at the London Bar for 15 years and who has been in the Middle East for the last decade, I can safely state with first-hand knowledge and experience that the Middle East is undergoing significant cultural shifts and reform in various aspects.

Disputes worth billions are being heard effectively, executed and enforced with a buy-in of most, bar the odd rogue decision which, let’s face it, we have everywhere in the world. I’ve had the privilege of witnessing the evolution of the legal landscape in the Middle East in various jurisdictions and been a part of that change. I’ve seen tremendous growth and vision.

Over the last ten years, I’ve worked in various jurisdictions throughout the Middle East. I’ve witnessed a huge assimilation and coming together between the local and the international, an adoption of best practice with international standards, legislation introduced at a rapid pace, institutions being modernised, and new institutions being introduced.

The Middle East is a jurisdiction where the common law and civil law exist side by side, mostly in harmony. The legal framework within the Middle East includes, in some countries, onshore and offshore jurisdictions, incorporates both civil law and common law systems, and processes in English and Arabic.

Onshore courts encompass a civil law system where proceedings are conducted in Arabic.

Offshore jurisdictions, such as the Dubai International Financial Centre (DIFC), the Abu Dhabi Global Market (ADGM), and the Qatar International Court and Dispute Resolution Centre (QICDRC) adopt their own commercial and civil laws and procedures, establishing their own courts which are conducted in English through the common law system.

Several arbitral institutions have undergone wholesale reform in recent years and new ones have emerged. There has been a shift towards modernisation and enhancement of the Middle East as a prominent business hub. This includes streamlining dispute resolution procedures and the modernising of disputes centres.

International investors throughout the world invest and global businesses expand where they see an economic opportunity, stability, ease of business, and robust legal frameworks with a trust in effective dispute resolution mechanisms. Few put their money where they feel there is no recourse in the event of problems.

The establishment and modernisation of specialised dispute resolution institutions with robust legal frameworks and state-of-the-art facilities for arbitration and mediation, adopting international legal standards and practice, adds the reassurance needed for investors and those who chose to seat their disputes in the Middle East. The Middle East is attracting global and international financial powerhouses to its shores, signalling a shift in attitude, approach and perception in the region.

Plans for the future

The Middle East has diversified its economy in recent times: moving away from reliance on traditional oil. Economic agendas in Dubai, Qatar, and Bahrain all underscore a commitment to sustainable economic growth and a diversified economy.

KSA’s Vision 2030 aims to diversify its economy away from oil dependency to focus on developing sectors such as tourism, entertainment, technology, and finance. KSA is leading the way in entertainment and sports and with that comes infrastructure. Five years ago, I wouldn’t have thought about jumping on a plane to watch a concert or a boxing match in Saudi. Now, the whole world visits KSA.

Qatar’s National Vision 2030 aims to transform the country into an advanced society capable of sustaining its development. This includes enhancing the legal framework to support international arbitration and dispute resolution.

Dubai Economic Agenda (D33) is designed to increase Dubai’s economy by 100% by 2033. Around 100 projects are envisaged including the launch of Dubai's Future Economic Corridors with South East Asia, Africa, and Latin America. Additionally, Dubai plans to increase its foreign trade adding 400 cities to the trade map.

Bahrain Economic Vision 2030 is a comprehensive plan to develop the economy while focusing on the main objective to improve the living standards of all Bahraini citizens. It is based on three principles: sustainability, competitiveness, and justice.

Overall, the vision and plans in the Middle East are unrivalled. Middle Eastern countries collectively have short-term and long-term visions of reform, and are implementing policies to enhance their environments, attract foreign investment, and offer robust dispute resolution mechanisms.

There has been a revision of several commercial laws, relaxing of foreign ownership restrictions, and the improvement of intellectual property protections to bring in foreign investment and open doors to the world. Ease of business is spreading across the Middle East. Social reforms and cultural openness are contributing to a more inclusive and progressive environment making the region much more appealing. There have been reforms in gender equality that reflect broader shifts in society towards inclusivity and modernisation. There are reforms that mandate female presence in the boardroom. These changes make a more equitable and diverse environment for conducting business and resolving disputes.

Middle Eastern countries are embracing modern values and practices, but they are preserving their cultural heritage. This balance is unique and commendable. It creates an environment where traditional methods coexist with contemporary approaches.

The Middle East’s multilingual capabilities and cultural adaptability help parties from diverse backgrounds, fostering a conducive environment for resolving disputes.

There have been major investments in infrastructure, such as advanced transportation networks and world-class conference facilities, which support the region’s capacity and capability to host international arbitration and mediation proceedings.

Major infrastructure projects, such as Saudi Arabia’s NEOM city are designed to attract global business and tourism. NEOM is a $500 billion mega-city project envisioned as a hub for innovation and business.

Saudi is undertaking 14 giga projects. The sheer size and volume is staggering along with the vision of what the projects will bring to tourism, to new ways of living, to sustainability.

Middle Eastern countries are rapidly reforming legal and regulatory frameworks to create business-friendly environments. In Saudi Arabia, there has been fundamental modernisation of the law governing civil contracts in late 2023. The Civil Transactions Law (the Civil Code) codified rules in respect of contract formation, execution and termination, acts causing harm, and loss and damages, and included provisions for construction, partnership, and agencies amongst others.

Archaic views of the Islamic Sharia Code as a barrier to international dispute resolution no longer prevail. We still need to have regard for underlying principles of Sharia, but the Civil Code in Saudi makes it easier for businesses to understand their rights and obligations under Saudi law. In turn, this creates gives greater confidence to allow Saudi law as the governing law of their contracts.

There has been a notable effort to combat corruption and enhance transparency across the region, which resulted in the UAE being removed from the Financial Action Task Force (FATF)’s grey list. Additionally, there have been geopolitical shifts and realignment, promoting cooperation in trade, technology, and security.

We have political stability and neutrality in Qatar and the UAE, making them attractive venues for dispute resolution. Their reputations as being safe and neutral grounds are crucial when parties seek impartial venues for arbitration and mediation.

Let's not underestimate the Middle East’s geographic strategic position between Europe, Asia, and Africa which makes it a convenient and attractive location for business and dispute resolution.

Dubai's ascension as a top international arbitration seat was highlighted in last year’s Queen Mary University of London's survey on arbitration in the energy sector. Dubai was placed number seven, surpassing Hong Kong and Beijing. Alongside Saudi Arabia's fundamental modernisation of the Civil Code and Qatar's progressive Arbitration Act, all are examples that underpin the Middle East’s dedication to offering a trustworthy and neutral destination for alternative dispute resolution.

Amendments to arbitration laws that we have seen in the UAE, the publication of modern arbitration rules by various institutions, and the emergence of institutions in Saudi Arabia, UAE and Qatar have cemented the region's reputation as a reliable dispute resolution destination.

Challenges

Traditional hubs like London, Paris, New York, and Singapore have long-standing reputations, legal traditions and trustworthiness, assurance and institutional expertise in dispute resolution. Legal consistency is an issue: ensuring consistency and predictability in legal outcomes across different Middle Eastern jurisdictions does remain a challenge and in addition we are faced with rogue decisions every now and again from courts.

Historical perceptions of instability and conflict in the region and the notion of Sharia Law, and what that means in practice, can deter some parties from choosing the Middle East for dispute resolution.

What does the future hold?

In 2023, Dubai was considering the implementation of common law across its freezone jurisdictions in the Emirates, meaning that English common law may well apply beyond the DIFC. This would certainly assist in the vision and plans to place the Emirate as a leader in the economic and financial world.

There are plans in other Emirates to establish international freezones with world class dispute centres – watch this space.

Long gone are the days where the Middle East was seen as a Sharia restrictive, conservative environment where international business couldn’t thrive and there was fear that effective dispute resolution couldn’t take place. The Middle East that presents itself today is a very different landscape: there has been a wholesale cultural shift with a modernisation of laws and attitudes. The last decade has been phenomenal.

All eyes are on the Middle East and those who attended Riyadh International Dispute Week 2024 experienced a spectacular inaugural week, highlighting KSA as a significant player in the disputes space. There has been a lot of momentum, effort, time, expense, and thought to build ecosystems of dispute centres in the Middle East.

There is a buy-in of stakeholders, local counsel, international counsel, businesses, Government, and Ministry. DIAC, ArbitrateAD and SCCA all have an internationally renowned Court of Arbitration and Advisory Boards.

The Middle East of today boasts world class practitioners, arbitrators, judges both homegrown and internationally.

There is still work to be done, but strong foundations have been laid. There is no doubt that the Middle East of today is a significant player in the field of international dispute resolution. The combination of modern legal frameworks, advanced facilities, economic reforms, cultural adaptability, and international best practice mean the region is increasingly becoming an attractive venue for international dispute resolution. The specialised courts and arbitration centres are successfully handling high-profile, high-value, complex cases. More and more businesses are setting up in the Middle East and trusting the legal resolution options that it offers.

I leave you with this thought. The Middle East may not yet be the pre-eminent global hub for dispute resolution, but it’s certainly in the running. An open gateway underpinned by robust legal frameworks, effective eco-systems, modernised centres and visionary initiatives form a solid and promising foundation and future. The ongoing reforms and cultural shifts are firmly laying the groundwork for the region to emerge in the very near future as a leader in global dispute resolution. The Middle East is a significant player that is performing extremely well and here to stay. I can safely say the Middle East is very much open for business.

A version of this article was given as a talk at the 7th Annual Conference on Energy Arbitration and Dispute Resolution in the Middle East and Africa, 30-31 May 2024.

Sarah Malik FCIArb is an award-winning lawyer who founded SOL International Ltd, a boutique legal consultancy registered at the Abu Dhabi Global Market (ADGM) in 2018. Sarah achieved ‘Litigator of the Year’ (2022) at the first GCC Women in Law Awards and received an honourable mention as ‘Law Firm Leader of the Year’ category at the same awards. In March 2022, SOL was named by Legal 500 EMEA as ‘A Firm to Watch in Dispute Resolution: Arbitration and International Litigation’. In 2023 Sarah was listed as a ‘Leading Practitioner’ in The Arbitration Powerlist: Middle East Legal 500 EMEA.

In March 2023, Sarah was appointed to the Inaugural Advisory Committee for the Dubai International Arbitration Centre (DIAC). In June 2024, Sarah was appointed as ICC UAE Delegate for the ICC Global Commission on Arbitration and ADR.

Sarah is a member of the Singapore International Arbitration Centre (SIAC) Users’ Council in the Middle East and is one of 20 arbitrators appointed on the Lagos Panel of Arbitration Neutrals. Sarah accepts appointments to sit as an arbitrator, and undertakes international commercial arbitrations as counsel at DIAC, Abu Dhabi Commercial Conciliation and Arbitration Centre (ADCCAC), Dubai International Financial Centre-London Court of International Arbitration (DIFC-LCIA), and the ICC. She practices commercial litigation at the DIFC and ADGM Courts.