Welcome to the first 2012 edition of the ‘Bahrain Client Updater’. As always, our aim is to provide a brief and regular update on a variety of subjects and legal issues of interest to our Bahrain based clients. Please let us know if you have any feedback or requests for future topics.
This edition examines the recent expansion of the jurisdiction of the Dubai International Financial Centre Court, the use of PPP as a possible solution to the affordable housing crisis, the potential impact of a collapse of the Euro on financial transactions and, finally, directors’ and officers’ duties and liabilities in Bahrain.
Litigation and Dispute Resolution
Dubai expands the jurisdiction of the Dubai International Financial Centre Court
The jurisdiction of the DIFC Court has been expanded by the passing of a new law which allows parties to use the DIFC Court to resolve commercial disputes (the New Law). Prior to the New Law coming into force, the jurisdiction of the DIFC Court was restricted to disputes that involved, arose from or related to the DIFC only The expanded jurisdiction of the DIFC Court is a significant development for parties conducting their business in, or with parties based in, the United Arab Emirates or the wider Gulf Cooperation Council. Parties can now contractually agree to resolve commercial disputes between them in the DIFC Court (which conducts its cases in English applying common law principles) without first having to establish whether the dispute falls within the DIFC’s previously limited jurisdiction.
A link to the article can be found here
Construction and Real Estate
PPP and Affordable Housing in the Middle East
Affordable housing in the Middle East was recently the focus of the 15th Gulf Engineering Forum in Bahrain. Joanne Emerson-Taqi presented the keynote speech at the Forum on how PPP can provide a potential solution to the affordable housing crisis in the Middle East. PPP procurement models in the affordable housing sector come in a variety of forms including:
- the traditional, basic model whereby the government pays a fee to a project company who contracts with specialist contractors for construction and maintenance of housing stock and with tenants for a pre-determined rental income;
- the hybrid model whereby the public sector grants an interest in land to develop commercial or middle-income housing for the purposes of subsidising the cost of the housing; and
- the joint venture in which the public sector retains greater control over the development of its land by entering into a joint venture agreement with a developer who in turn provides capital and skills.
Investors in an affordable housing scheme should be aware of key issues associated with such a project, including demand and rent collection risk, force majeure and a tenant's right to purchase. Joanne's presentation, a summary of which is available on request, covers key investor risks as well as highlighting how the risk allocation of an affordable housing scheme differs in the Middle East from more mature market such as the UK .
Norton Rose Group has produced a briefing note on the current problems in the Eurozone and the possible break-up of the euro currency. The note examines the following key questions:
- How would a member state's departure from the Euro affect an existing transaction?
- What can parties do to improve the situation when they plan a new transaction?
A link to the briefing note can be found here
Directors’ and Officers’ Duties in Bahrain
Adrian Woodcock and Rayhana Kapadia-Sheikh have recently given a series of presentations to Bahrain financial institutions regarding directors’ and officers’ duties and liabilities in Bahrain, highlighting the similarities and differences between directors’ duties in other jurisdictions and those found in the Bahrain Commercial Companies Law 2001. Lively debate has been generated at these talks - particularly in connection with the extent to which actions of directors can be ratified by shareholders (as is commonly found in AGM resolutions in Bahrain) and the current approach taken by the CBB regarding corporate governance since its implementation in September 2011. Topics also discussed include the role of corporate governance in minimising risks of mismanagement and breaching duties.
Back to top