Courts

DIFC Courts fund established to aid needy litigants

The DIFC Courts are setting up a pro bono fund to help cash-strapped litigants press their cases.

Asa Fitch

September 13, 2011

The court system in the Dubai International Financial Centre (DIFC) has set up a fund to help cash-strapped litigants press their cases.

The fund follows the establishment two years ago of a pro bono programme under which 20 local and international law firms agreed to represent people who could not afford lawyers. The fund is to be filled with legal costs awarded in successful pro bono cases.

"The DIFC Courts were founded with the vision of being as accessible as possible to the community," said Michael Hwang, the chief justice of the DIFC Courts. The fund would "help improve access to justice for people that may not have had the resources to pursue a case otherwise", he said.

The DIFC Courts pro bono programme has been used three times so far - once for a legal consultation and twice for full representation before the courts.

In deciding whether to approve pro bono representation, the courts consider the nature of the case and the financial need of the litigant.

The programme was "vital to supporting access to justice", said Ghada Audi, the manager of judicial support and communications at the courts.

The pro bono fund is currently empty, but court officials say money that builds up in it could be used to support legal research and a clinic where a lawyer would be available for consultations with members of the DIFC community at set hours.

The number of cases in the DIFC's courts has ballooned after the financial crisis, thrusting the relatively young common law-based system into the spotlight.

Last year, 27 cases came before the court of first instance and 81 were filed with the small-claims tribunal. There were two appeals, 27 enforcement cases and two arbitration cases.

The DIFC Courts are also handling cases brought against Dubai World, the government-owned conglomerate that completed a US$24.9 billion (Dh91.4bn) debt restructuring this year. The Dubai World Tribunal has held more than 40 new cases this year alone.

The DIFC Courts pro bono programme is the only one in the Gulf. Many law firms have signed up for it, including local heavyweights such as Hadef & Partners and Al Tamimi, and international firms such as DLA Piper, Norton Rose and Dewey & LeBoeuf.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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