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Explainer: What is the state of the GCC’s legal industry?

Explainer: What is the state of the GCC’s legal industry?

With the region’s regulatory landscape constantly evolving, practitioners have to keep pace, says Paul Jarvis, managing partner at Dentons

How is the GCC’s legal industry performing at present?

The performance of the legal industry largely mirrors the performance of the economies in which they operate. There is still a lot of economic uncertainty in many international markets, and the GCC is not immune from this. We have seen a number of international firms leave some of the jurisdictions in which they operate. We know for a fact that market conditions are becoming more challenging which is putting more pressure on law firms to innovate and look at ways of delivering legal services at a lower cost.

How does the region’s legal regulatory landscape compare with global markets?

There is an inherent tension between civil and common law practice in the GCC. The legal system of the GCC is, for the most part, based on civil law. However many contracts are documented using common law principles that, for the most part, remain untested in civil court. As a result, there is still generally some resistance from international clients to start proceedings in local courts. However, clients are much more comfortable with the courts of certain financial free zones, in particular the courts of the Dubai International Finance Centre and the courts of the Abu Dhabi Global Market. Generally speaking, these courts operate in a similar way to English courts. Importantly, proceedings are conducted in English, rather than Arabic, meaning that they are much more familiar to common law lawyers.

There have been some recent much welcomed improvements in AML laws although there is still some way to go to meet OECD standards for anti-bribery, corruption and anti-modern slavery legislation. The area of biggest focus, however, should be on the overlap between criminal and civil disputes. Some disputes that are, in essence, purely commercial can sometimes result in criminal charges being levied against one or more parties. This is something that international investors are generally very concerned about.

What are the main changes that the industry has seen in the last few years?

In the last few years, we have seen the legal industry become more regulated in a number of jurisdictions, which is a good thing. For instance, there are now continuous legal educational requirements in Dubai for all lawyers. This is in line with other legal markets. We anticipate that the amount of regulation relating to the legal sector will increase over the coming years in most of the jurisdictions in which we operate.

With GCC states rapidly adopting new regulations, how can the legal industry keep up?

We are seeing a number of large knowledge providers like LexisNexis and Westlaw developing online platforms that cater for the GCC legal markets. These are subscription services and published laws as and when they are issued. Of course, laws are nearly always issued in Arabic. This can raise issues around translations, as quite a lot of the market still uses English as the primary language. Over time, it would be helpful if the legislatures started to provide official English translations of some of the main laws. Ideally, it would be fantastic if there was a central dual-language collection of new legislation, like that hosted by the UK government. We are also seeing increasing engagement from the various regulators, and this is very welcome. We anticipate that this engagement will continue to increase over time. In particular, it is very helpful when law firms are given an opportunity to comment on legislation before it is published.

Where do you see the most opportunities in the market?

We anticipate that there will be an increasing amount of work around the anti-bribery and compliance sectors. We are also anticipate an increase in work from the construction sector.

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