Thursday, 5 February 2015

"Get yourself a good robust agreement"

Arab states
Source Wikipedia

Yesterday I attended a members' networking event at the Arab British Chamber of Commerce in Upper Grosvenor Street. There were 5 minute speeches by 11 businesses whose activities included training under-performing employees, software development, personal security in Southern Iraq, locating art and antiquities on public display, medical insurance broking, accountancy, wellness, money transfer, banking and facilitating business and investment in Saudi Arabia. All good stuff and I personally wish all those companies and business owners the very best of luck.

Before the speeches we heard an interesting presentation by Mr Abdelsalam El-Idrissi, Director of Trade Services of the Arab British Chamber of Commerce, on the history of the Chamber, the economic importance of the Arab world, the Chamber's services and some solid advice on doing business in the Middle East and North Africa ("MENA") in which I learnt a lot of things that were new to me. One of those things was that the Chamber had been created pursuant to decree No:K1175/D52/G of the League of Arab States in 1975 with the mandate of promoting, facilitating and encouraging bilateral trade so the Chamber must be approaching its 40th anniversary. Another was the volume and value of the trade that we do with the MENA region which Mr El-Idrissi demonstrated was more profitable to us than our trade with Brazil, China and India combined.

Mr El-Idrissi concluded his talk with the following top tips for businesses that wish to sell to the region:
  • "Know your product
  • Do some desk research
  • Identify your market
  • Visit the market
  • Appoint a good agent
  • Understand the 40/51 rule
  • Draft a robust agreement
  • Agree payment terms
  • Export documentation"
There was a question and answer session at the end of his talk. I got up and asked Mr El-Idrissi "What should be the proper law of the 'robust agreement'? Should it be local law? Could it be English law or the law of the Dubai International Financial Centre ("DIFC") or Qatar Financial Centre ("QFC") where the laws are in English and they have English speaking judges applying the common law?" Mr El-Idrissi turned the question back on me. "You're a lawyer" he said. "Maybe you should be telling us." He then added that Sharia law is very fair and suggested that we should use that.

I have no doubt that Mr El-Idrissi is right to say that Sharia law is fair and it does have the advantage of being the source of law for the states in which British companies wish to do business. The problem for us is that we don't know very much about it and what little we do know tends to be on the penal sanctions and that scares us (see, for example, the BBC report What is Sharia and how is it applied? 14 May 2014).

As the question was turned back on me this is my advice. Try to persuade your customer, supplier, licensee, joint venturer, agent or other trading partner to accept an agreement in English which is widely spoken in the MENA region. Many business owners and professionals in the region speak the language well having lived in, or travelled to, the UK, the USA or Commonwealth.  English law is also well known and the English courts are well regarded throughout the world. Try to persuade your trading partner and his or her advisers of the advantages to them of choosing English law as the proper law and England as the jurisdiction for the resolution of disputes. If they are not persuaded of those advantages then the DIFC or QFC courts would be acceptable alternatives. If your partner would prefer not to use those legal systems then there is always arbitration in the region.

If you cannot do business on the basis that the agreement is in English and governed by English law then make sure that you are properly advised by a local lawyer who speaks English well and understand our legal and commercial systems as well as his own. I am sure that Mr El-Idrissi and his staff can find you such a lawyer but if they can't I can suggest some names. Over the years I have met a lot of lawyers (particularly in IP) and my former pupil, Alex Khan, has practised in Dubai. Between us we can come up with some reliable practitioners. Call them, talk to them about their education, training, specialization and experience and use your judgment just as you would if you were choosing a lawyer here. Finally, I have a suggestion to Mr El-Idrissi for another event for the Arab British Chamber of Commerce, namely an in-depth workshop on Sharia law for business people. I for one would certainly attend it as a delegate.

Should anyone wish to discuss this article or related matters, call me on +44 (0)20 7404 5252 during normal British office hours or use my contact form.