LD Abu Dhabi Global Market
[00:00:00] RICHARD EAST: This
[00:00:05] JOHN QUINN: is John Quinn, and this is Law Disrupted. And today we're going to be talking about the Abu Dhabi Global Markets, also known as the ADGM, which is a so called free zone in Abu Dhabi. Free zone meaning it's either tax free or, uh, reduced taxes. It has a number of different functions and authorities.
It has a financial regulatory authority. It has a registrar where entities can incorporate. Uh, it has other institutions and, uh, authorities associated with it. But what we're going to be focusing on today is the ADGM court. And we're going to be talking with Richard East, who's a partner in, uh, Quinn Emanuel's London office, and has had extensive experience litigating cases in the ADGM court.
In fact, he has litigated what I believe Is the only case that has gone to trial and to judgment from beginning to end in the A. D. G. M. But let me first begin by getting an understanding of Richard's perspective on the A. D. G. M. How he first came to get involved there and kind of maybe give us Richard a summary of your experience with
the A.
D. G. M.
[00:01:22] RICHARD EAST: Yeah, sure, John. Thanks very much for the introduction. So yes, so we've been involved extensively in matters that have been litigated in the AGM court, really, I think, since the summer of 2000, which also happened to coincide with the, with the pandemic. The reason that we got involved is that we ended up, uh, finding ourselves trying to help, uh, a very distressed group of companies called NMC healthcare, which had, uh, entities and hospitals throughout the UAE, which found itself deep in financial crisis.
And of course, it being a hospital group, it was absolutely essential that that group survive, continue to trade. Particularly in circumstances when it was one of the key companies to react to and provide assistance and services in relation to the pandemic, both in terms of immunization, but obviously also in terms of treating people.
So it was absolutely critical that this company survive and continue to provide its medical services. And one of the main problems at the beginning of this case was identifying, um, a system, a body of laws and in particular bankruptcy laws that would enable us to protect the company from litigation and claims that were ongoing.
And I think at one point there was over 100 separate, uh, claims being pursued in various courts around the United Arab Emirates. Um, but also would be a system which would allow us to restructure the company and leave behind. The liabilities and allow the company to emerge without that liability and to survive and one of the main problems in terms of identifying a system of bankruptcy was the first and foremost, neither.
For example, the U. K. administration regime or the U. S. Chapter 11 regime would have been very effective because they were simply weren't processes that would have been recognized in the various emirates within the UAE. So it was clear that we needed to find a solution in the UAE. Um, there were concerns about, uh, what everyone refers to as the onshore bankruptcy regime.
There had been a... A recent, um, updating of bankruptcy law in the onshore courts.
[00:03:54] JOHN QUINN: Onshore, I assume, means the, uh, the UAE domestic court system, as opposed to the so called offshore, which would be the, these entities that in, in so called free zones like the DIFC and the ADGM.
[00:04:09] RICHARD EAST: Absolutely correct. That's right.
And the problem with that, that particular system was that we had entities in three different emirates, Sharjah, Dubai and Abu Dhabi. And it was clear that we couldn't file a coordinated bankruptcy across the three emirates. In other words, all the companies in Sharjah would have to go into a Sharjah bankruptcy process.
All the companies in Dubai would have to go into a Dubai process. And all the companies in Abu Dhabi would have to go into a Dubai process. And it wasn't clear to us how that could be coordinated together. It was very unclear. And the other problem is the company needed money day one of the bankruptcy needed priority funding Um day one in order to allow it to continue to trade and it also wasn't clear to us at the time how that could be organized and financed and Blessed by the courts the various courts in that scenario Uh to allow it to uh have that priority funding.
So we It was suggested to us. Um That we look at the A. D. G. M. and that was, um, really, frankly, at a time when I certainly wasn't aware of. The court system of the adgm.
[00:05:18] JOHN QUINN: Yeah, let's take let's take a step back now and talk about what is the adgm court system
[00:05:23] RICHARD EAST: So it is I mean you rightly described it it's the court system that has been set up as part of the creation of a Economic free zone that's been created by the abu dhabi authorities in abu dhabi And so it's to some extent similar to the difc Although it's different in one important respect quite a significantly important respect Is that it is the 80 gem, it's common law, English common law court, which is designated as part of the onshore Abu Dhabi courts.
So it's very unusual in the sense that it is not like the DIFC, which is a completely hermetically sealed. court system based on English common law, but, but it is actually a court of Abu Dhabi, um, which makes it a very different beast. So within the Abu Dhabi emirate, you have courts of obviously, uh, applying local UAE law.
But you have a court, which is an Abu Dhabi court, applying English law.
[00:06:28] JOHN QUINN: That's a strange beast indeed. Yeah. You have a court in the court system, which is not applying whatever the local, uh, Abu Dhabi law is, but English law. And I think you're going to tell us English judges and largely English practitioners.
I mean, you look at it, you take a step back, and it sounds almost like a... Some type of imperial, uh, you know, system. I mean, why, why would any country tolerate this to say, to say anything about actually actively set up such a, such an occupying court system?
[00:07:02] RICHARD EAST: Yeah, well I think, um, obviously I can't speak for the Abu Dhabi authorities, but, but one would expect that they've seen the success of the DIFC, which has been a successful, you know, economic free zone.
It's been a huge amount of growth interest cases going through those courts. And two, one would assume that the reason they've set up the economic free zone and the court is to encourage. Inward inward investment and economic additional economic activity. That's a, as you said, has benefits in terms of the tax regime, how it's regulated.
And B, as a court system, you know, a rule of law, which is familiar to foreign investors, even, you know, American and English, uh, investors will be familiar with English common law. And it is obviously good for English lawyers that that system of law is respected worldwide.
[00:07:51] JOHN QUINN: What parties can litigate? I mean, do you have to be a foreigner?
Do both parties have to be non Emirati parties? Do they have to opt in? Do they have to choose? Uh, in a contract or otherwise to litigate in the DIFC? What, what is sort of the jurisdiction?
[00:08:08] RICHARD EAST: Well, the jurisdiction, um, much to, much to our surprise is, is very broad because, I mean, in terms of the story of NMC, we ended up with 36 companies in the ADGM in administration, in a group filing.
And the jurisdictional rules say that in a sense, once you have an a dgm company that ADGM company can sue. Almost, uh, any foreign, uh, defendant because it relates to an ADGM company. So. That jurisdictional rule is quite broad. So every time, for example, from the NMC perspective, we needed to sue, sue a defendant, the fact that we were an ADGM company and administration gave us, gave us jurisdiction.
[00:08:49] JOHN QUINN: When you say ADGM company, I mean, I assume you mean that it's a company that's incorporated, reflected on the registrar of the ADGM as an AGM entity. Correct. Yes, that's right. And I would assume that it's also true, I'm just guessing now, that if you have a claim against an AGM registered company, that claim can be brought in the ADGM as well?
[00:09:13] RICHARD EAST: Yes. Yes, on the basis that they're present in the jurisdiction. And of course, I think also, It's possible for parties to agree that the ADGM is the forum for dispute resolution in the same way they can agree any forum is a forum for dispute resolution. So, um, potentially it's quite, quite broad, uh, jurisdictional basis.
Obviously, if you are a foreign claimant or a foreign defendant, you have to think about how an ADGM judgment would ultimately... Uh, be recognized and where you need to enforce it, but the, the jurisdiction, um, in terms of the, you know, the, the, the start point of the claim is potentially quite broad. Um, just finish off the story on NMC, just to finish that point off is that in, in ultimately we looked at the edgy GM, they had the UK administration regime.
They had something additional actually to England. They had a clear. Uh, priority funding regime so you could put funding in day one and it had priority over all other, uh, claims, which was which was a very significant, um, factor and the A. D. Gemma rules allowed onshore companies. So companies established.
In the onshore world, i. e. Dubai, Abu Dhabi, Sharjah, they could be continued, meaning essentially the change of the seat, the company moved from onshore into the ADGM. So on one day we had 36 companies that were established in Abu Dhabi, Dubai and Sharjah. The next day there was 36 ADGM companies. So they disappeared offshore and appeared in the ADGM.
And on that day, we filed for administration, we, we had the application for the priority funding, and hey, presto, we had a group administration that gave, uh, protection and established a moratorium, um, essentially against all of the creditor claims that were being brought across the UAE. So it was a phenomenal vehicle.
In which to protect the group, and then ultimately to use restructuring, um, processes, uh, that were built into the ADGM insolvency regime, in particular the deed of company arrangement, to implement a, um, a balance sheet restructuring which allowed ultimately the company to emerge from that administration and continue to trade.
And that happened, and the, and obviously NMC Healthcare is now trading as a solvent group. It's got some historical litigation that's going on, but ultimately it emerged from that situation and still exists today. As a consequence... of the effective rules of the ADGM.
[00:11:51] JOHN QUINN: Now, you said that it's an English law governed forum.
I mean, is it exclusively English or are there circumstances under which other law will apply? Can the parties choose to have other law apply and have judges from other jurisdictions other than England?
[00:12:08] RICHARD EAST: So, uh, dealing with those questions, the last of the first. So, the judges, I think there's eight. Uh, judges, uh, who can sit in either the first instance, which is the kind of first tier of court, or the Court of Appeal, so that's quite unusual.
You have a group of judges that can either appear first instance or, uh, Court of Appeal. There's no superior court to that. They're all drawn, I think, presently from either England or Australia or Scotland. Um, so they're all common law judges. The rules are is that the court applies English law, uh, but it has its own regulations, stroke statutes, um, which in certain circumstances provide for slightly different systems of law.
So, for example, in the bankruptcy, uh, arena, the deed of company arrangement, which we used at NMC, is actually an Australian bankruptcy process. So, uh, that, um, process Um, and in so far as it, you look at the law to understand how it's meant to work. Um, you would actually look at Australian cases and I think the judges in the ADGM would look at the Australian cases to how the, the, the company regimen is interpreted.
So, but the primary rule is, the primary directive, if you will, is that it's English common law, say to the extent it's varied by statute regulation in the ADGM, and say to the extent that you are looking at a, a feature of the ADGM statutes which has come from a different common law regime like Scotland or Australia.
So that's how it works, basically. So, I mean, it's very familiar for English lawyers. The civil procedure rules that you have to comply with in terms of bringing claim are also very close to English procedural rules, save there are some differences, particularly around disclosure, for example, where you don't have the same current regime that applies in England in the ADGM, you have something that's probably closer is a mishmash of kind of Um, kind of arbitration practice and, uh, and then, uh, the old English rules on disclosure.
[00:14:15] JOHN QUINN: From a professional standpoint, do lawyers need to be admitted to practice before the ADGM?
[00:14:20] RICHARD EAST: As a firm, we are a licensed ADGM firm. So, but I'm not aware that there's any requirements. So, for example, if barristers appear in the ADGM, I don't think Uh, they're presently required to be separately licensed, like, for example, if they appear in the BVI court or the Cayman court.
Um, so, um, obviously there are English lawyers who are present in the UAE who are, uh, who are licensed to appear in the DIFC or the ADGM. If I'm honest, I'm not entirely, uh, au fait with the whole, with that particular process. But I know that we as a firm are licensed as an ADGM branch.
[00:15:02] JOHN QUINN: Now, you've mentioned that, uh, you're in one of this NMC case threw off a proceeding, which was, uh, turned out to be a trial that went all the way to the judgment and, and, and that was the first case that had actually gone to judgment in the A.
D. G. M.
[00:15:17] RICHARD EAST: I think that's the first full trial. They've had actually physically in the A. D. G. M. So you'll remember that I mentioned when we first got involved, it was in the pandemic. And so there were lots of pairings that were remote, but in terms of a. As far as I'm aware, unless somebody Emails in to correct me.
Um, that was the first physical trial in the ADGM building used in the ADGM facilities with witnesses present who were cross examined. So myself, uh, and a team of lawyers from Court of Manual, our barrister's team, were physically present for almost four weeks in the ADGM, uh, with the team on the other side from Evershed's and their council.
And we had a, um, a trial, a four week trial in the ADGM, which ran incredibly well. The judge was Andrew Smith, who's a, who's a retired, uh, English commercial judge. And so it was very familiar. I suppose, uh, one of the great things about it being a modern court is it's highly digitized. The court has amazing facilities in terms of The presentation of bundles and materials all done electronically.
There are screens everywhere. So, um, you only have to look online and you can see some pictures of the courts. It's an it's an incredibly modern facility where everything is, you know, done electronically. So it works very well and very efficient and. Uh, you know, the registrar of the ADGM who, uh, essentially runs, runs the court and makes sure everything runs effectively, did an excellent job in making sure that that, uh, trial went, went very well as a process.
So, yes.
[00:16:55] JOHN QUINN: The ADGM court has has been around for several years, um, it's surprising that this would be the first case in person that went all the way to judgment. Do you have any sense about, uh, what the volume of the caseload is or and and why it is that's been several years to actually have a full trial there?
[00:17:15] RICHARD EAST: Well, you're right. It was established as I understand it in 2013. And I think, um, I mean, the volume of the of the case is going through the. Through the court now is very, very different from when we first got involved. Um, I mean, in 2020, you know, we were looking at the court diary and, and, you know, if we wanted a hearing next Tuesday at three o'clock, we could, you know, there was a good chance that we would get that hearing.
Um, now it's very different. Uh, it's very busy. And I just think it's because people have become a combination, I suspect of people setting up in the region. It takes a while for. You know, disputes to kick off, so there may have been economic activity, people establishing ADGM companies, there being economic activity, and it's taken a while for these disputes to feed through.
Um, I mean, our, the NMC case was obviously a, um, one of those events that doesn't come along very often is where you have a massive bankruptcy filing, which then throws off hundreds, you know, dozens and dozens of hearings, which, which we've had. Uh, so I think. Partly the NMC has breathed life into the court, um, partly it's because it's been going now for 10 years and there are just disputes becoming kicked up.
Partly I think it's because people are aware of the court. Um, I know speaking to some of our clients that they are now actively choosing the ADGM as a forum in which disputes can be fought out, having seen how effective it's been, having seen some of the judgments that are coming out and they're, you know, sensible judgments that you would expect to see, you know, in the English Commercial Court or, uh, anywhere else in the common law world.
So I think it's a combination of, uh, you know, people seeing it now as an effective court, there being a certain amount of economic activity over the last 10 years, which is generating disputes, people submitting their disputes to the court. And, you know, to the sort of situation like NMC, which creates a lot of activity.
[00:19:16] JOHN QUINN: Now we, we all know there are enormous pools of capital in Abu Dhabi, the sovereign wealth fund and. And other pools of capital, some related to the ruling family, some not, some private, and that capital is being deployed in significant investments, both in the region and outside the region. I'm wondering whether, as always happens, there'll be some number of, not every investment turns up roses.
Uh, and so sometimes there are disputes. I'm wondering if that's going to lead to more disputes in the ADGM relating to the, to investments of that nature. Do you have any insight into that?
[00:19:55] RICHARD EAST: Well, as I said, I just made the point that I think, you know, you and I, as we've been going around to see people, more and more we're hearing that people are seeing the AGM and choosing the AGM as a dispute forum for, you know, uh, deals and investments they're currently, currently making.
And so I think, you know, more and more people will elect this court as a forum in which uh, disputes can be fought out because... Particularly if you're, um, an external investor, the fact that the ADGM is part of the Abu Dhabi court system means that it's going to be potentially better and easier to seek recognition of that judgment within the UAE, as opposed to if you have a New York court judgment.
And an English court judgment, I mean, although there is a memorandum of understanding between the commercial court in England and the ADGM, it's not clear how you would then enforce that judgment if you got recognition of the commercial court judgment in the ADGM, whether you can then bounce that into other emirates.
That's a little bit unclear. But what is clear is the ADGM court is an Abu Dhabi court judgment. Which will be recognized in Dubai, Sharjah and other Emirates. So I definitely think it's going to grow in popularity. And we certainly know from our discussions with lots of people, there are many funds and clients moving into the ADGM, both in terms of seeking, uh, to raise money, uh, and also to potentially invest money within the region.
So, uh, for sure, in my view, it's going to increase in popularity and use.
[00:21:39] JOHN QUINN: Will an adgm judgment be recognized in england? Yes, and elsewhere would be recognized in the u. s
[00:21:46] RICHARD EAST: Uh, I don't know about the u. s. Um, but if there's I think there's already good authority that says that now an adgm judgment Will be recognized in england.
And in fact, there is a memorandum of understanding that was established. I think in 2006 which provides for recognition, um if there's any um criticism though or uh You know work to be done. Um In the area of insolvency and bankruptcy, one of the problems where was that whereas there are routes to recognize money judgments.
When you're seeking to have an administration order or a deed of company arrangement or something more complex recognized, that's where we run into issues and it took us a great deal of time to get recognition of the administration order in, um. Not so much in Abu Dhabi because it is part of the Abu Dhabi court system, but certainly in Dubai, it was more difficult to have that admin regime recognized in Dubai.
Um, ironically, it was easier to get recognition of the ADGM administration in the English court under the cross border regulations in England. That it was to get recognition of the administration in Dubai or the D. I. C. That's surprising. Uh, it's just the ironies of, uh, the different, because it's a federal system, the UAE, of course.
And so they're different Emirates and they have very distinct, um, you know, senses of, uh, they have their own internal regimes that govern how things are recognized. So, yeah, so it was more difficult getting the ADGM. Order administration recognized as a common law order in a, you know, in a UAE Emirates than it was having it recognized in England, which is, of course, another common law jurisdiction,
[00:23:36] JOHN QUINN: any final observations or recommendations for litigators who are contemplating litigating in the A.
D. G. M.
[00:23:45] RICHARD EAST: Um, well, I would have no hesitation in, in certainly, um, recommending the court, uh, to, to clients and to other lawyers. I've been very impressed with the way, uh, that the court, uh, operates and, um, the registrar is incredibly responsive. Um, you know, you get court, uh, listings in periods of time, which mean that you can litigate effectively.
Uh, so certainly I would, I would, uh, highly recommend the jurisdiction to any client or any other lawyer. I guess where the work needs to be done, and this is probably where it's hardest, is it certainly would make sense to, in my mind, In having some inter emirates, uh, clear agreement on the enforcement recognition of judgments and the enforcement recognition of bankruptcy orders.
So a little bit like we have in, you know, had in Europe when we were part of Europe and England is where you have regulations that deal with interstate recognition of money judgments and interstate recognition of, um, you know, main and non main bankruptcy proceedings. If the Emirates could get together and hammer out that sort of inter Emirate agreement, then I think it would be very helpful and would further improve the system of justice in the UAE.
That's just my personal view, but no doubt that would be very difficult to achieve and would take some time.
[00:25:19] JOHN QUINN: This is John Quinn, and this has been Law Disrupted, where we've been talking to Richard East about the Abu Dhabi Global Markets Court. Richard, thank you for joining us.
[00:25:29] RICHARD EAST: Welcome, John. Thanks very much.