Dubai disputes: Arbitrary judgment

Most building disputes in this neck of the woods are, or were, sorted out in a majlis. Now then, that’s a word that might be new to you … unless of course you’ve spent much time in Dubai. I’ve just been there, and while I was, I had a chat with Zayed Road with Nick Carnell, who are partners in solicitor Kennedys.

He tells me that 12 months ago, the building boom here topped overnight. Literally. And then a new boom started. It was a boom in trying to get paid. The disputes were no different from what you and I see in the UK.

A job on hold does not stop the meter running. A job vacated does not stop the contractor seeking compensation.

All these embarrassing disputes are not the usual things sorted out in majlis. Doing business here is not what you and I are used to. I find it exciting. There are deep working relationships, patronage, favours, deals … yes, I know we have some of that in the UK, but here the final account for a 30-storey office block or swanky hotel gets sorted in the majlis. A majlis is “a place of sitting”. It is a room, perhaps at home, to entertain your guests. It’s a place to chat, mull over a problem or two, talk about future opportunities, forget differences, make a compromise. The majlis is at the heart of this beautiful, long-lasting community but it can’t cope with what’s happening here.

Despite its present problems, Dubai is a huge success. And it has welcomed construction folk, consultants and specialist contractors from all over the world. The snag is they bring with them their business cultures. They’re getting in the way now. Folk want to be paid and paid now. There isn’t much enthusiasm for turning a blind eye and making things up on the next project, and the next and next. So, these folk kept out of their cash are asking the same questions you would in a UK building project … where can we turn to get paid?

Nick Carnell explains that hitherto this was not a dispute-focused marketplace.

Moreover, unlike the UK, which has had a construction industry court for more than 150 years, the courts here are not designed to cope with highly technical and often intractable building and civil engineering disputes. No, that’s not a criticism. Indeed it is the reason why, all over the world, disputes go not to court but to arbitration. Arbitrators are men and women from or within construction who also know their law. And here in Dubai, the Dubai International Arbitration Centre reports a large growth in the number of cases begun. But as Carnell reminds me, arbitration can be a pretty long process, and folk want their cash sooner rather than later.

All this reminds me of where we were in the UK 20 years ago. Litigation was being attacked by senior judges for being too slow, too expensive and too uncertain. Arbitration was being attacked, too, for aping litigation. And while we had some very good arbitrators we had too many iffy ones as well.

Here in Dubai there are some very, very good arbitrators. Yet as with the UK 20 years ago the process is not fast enough. The potential payer likes the pace; the potential payee does not. So, the burden of managing disputes is on the appointed arbitrator.

And now let me blow the UK’s trumpet. Nobody in the dispute managing business has the same experience and know-how as we do in the UK. We know how to manage arbitration better than ever … and what is it that has taught the arbitrators? It is 28-day adjudication. The adjudicators have learned how to coax the parties and their lawyers to move much faster than they ever have before and we have injected the pace into arbitration.

Second we are practising; by that I mean not doing the odd dispute-deciding role. This is a daily task. Third (and this is crucial), we have the support of the High Court. We arbitrators are encouraged to get on with things and save costs.

Dubai is an arbitral centre already. So is London. But London arbitration needed adjudicators and the courts to show it how to improve. The challenge here in Dubai rests on the shoulders of the arbitrators.

Go to it chaps.

Credit: Simone Lia