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Dubai International Financial Centre (DIFC): a country within a country

14 Juin

DIFC
An Interview of Nasser Al Shaali, CEO of the Dubai International Financial Centre (DIFC) Authority with Emirates Business

The DIFC would like to promote itself as a « liberal environment ». In which areas are you liberal and to what extent can you be liberal?

It is liberal in a sense that the DIFC is like a special zone. I’m not sure if liberal is the right term here but what’s important to know is what makes the DIFC so different is its legal framework, which is very different from the rest of the region. The DIFC has an area of 110 acres and is the only common law jurisdiction in the region.

The rest of the region is all based on civil law or civil code. But we recognised very early on that it was critical to have a legal jurisdiction or legal framework that international business and especially international finance was very comfortable working with – and that, of course, is the common law. About 80 to 85 per cent of business transactions occur under the governance of common law, it’s huge. So if you want to win the trust of community that embraces this kind of legal framework, such as the financial industries, you need to have a common law base to work on.

Are you regulated by the Central Bank? How are firms regulated in the DIFC?

No, we are not regulated by the Central Bank. The DIFC was made possible by an amendment to the constitution of the UAE, which allowed for a financial free zone or specialised zone. Then there’s another law on the federal level and two more laws on the Dubai level which followed. We needed a jurisdiction that was very independent from the rest of legal structure of the country so within the 110 acres of the DIFC all the commercial and civil laws of the UAE are not applied.

The only law on the federal level that applies here is the criminal law. So the DIFC drafts its own laws and regulations – that’s why it’s referred to as a country within a country. It reports directly to His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, who is also the president of the centre. And there’s no other reporting line. It’s a completely independent jurisdiction – basically it’s the world’s first « financial Vatican ».

So is it this kind of unique set-up that has prompted you to launch your own dispute resolution mechanism together with the London Court of International Arbitration?

Yes. The DIFC has three main bodies. The DIFC Authority, which I am responsible for, basically, does long-term strategic planning, promotion and development for the centre. The second body is the Dubai Financial Services Authority (DFSA ), which is responsible for regulating financial activities. The third part is the DIFC Courts. Because our legal system is unique we needed our own courts to understand it. We needed a court system and judges who were familiar with the common law system or framework.

Read: Emirates Business

By Karen Remo Listana

DIFC plans major expansion

Dubai International Financial Centre plans to open offices in the United States and East Asia (Honk Kong) this year to provide clients with launch pads into other markets.

The centre is looking at « strategic regulatory co-operation » with countries in the Far East to facilitate growth between them and the GCC, Nasser Al Shaali, CEO of the DIFC Authority, said. DIFC is weighing up options to buy assets in the US. Read: Emirates Business

 
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Publié par le juin 14, 2008 dans Dubai

 

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