MECO/RICS Research Paper Infographics: Office Environments and Productivity in the Middle East

MECO/RICS Research Infographics

A Gulf-wide initiative examining the impact of office design and configuration on business productivity.

Download full Research Paper here:

MECO/RICS Research Paper: Office Environments and Productivity in the Middle East (May 2016)

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Alternative Dispute Resolution (ADR): Mediation Part II – The Opportunity for Mediation of Property and Construction Disputes in the UAE

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Is there an opportunity to develop mediation as an Alternative Dispute Resolution (ADR) process for the resolution of property and construction disputes in the United Arab Emirates (UAE)?

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Mediation Part I identified the key elements to the mediation process including both the advantages and disadvantages of this approach to dispute resolution.

Mediation Part II now seeks to identify both the opportunity for and challenges facing the introduction of mediation as an ADR process in the Region.

Although these notes focus on the UAE, many of the issues addressed will be equally applicable to other locations throughout the Middle East.

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To enable the opportunity for mediation of property and construction disputes to be considered, a number of key characteristics of the UAE (and wider Middle East) market need first to be understood. These include culture (including religion), business ownership and custom, legal framework as well as market opportunity.

The UAE, like most countries in the Middle East, is a Muslim country and the majority of business must have regard, either directly or indirectly, to Shari’ah the code of conduct or religious law of Islam. Fortunately, the binding principles of Shari’ah are supportive of mediation as a process. In particular, under Shari’ah Law, parties are required to honour their agreements and to seek amicable, consensual settlement of disputes with outcomes that are fair and just. There is therefore no barrier to mediation under Shari’ah Law. On the contrary, there is support for mediation as a process for resolving disputes. This is important as any conflict with Sharia’h Law would prevent mediation being promoted at either an individual or business level.

In the UAE, business ownership and licensing requires, except in free trade zones (e.g. Dubai International Financial Centre (DIFC)), businesses to comprise at least 51% local Emirati ownership. In some cases, this will take the form of sponsorship, providing little more than a local ‘sleeping partner’. In other cases, the local partner will take an active interest in all business matters and, in particular, key decisions. In addition, there are also a number of key ‘family businesses’ (wholly owned by Emiratis) including those controlled by the extended Royal Family in each Emirate.

At a day to day level, the majority of business in the UAE relies upon an expatriate workforce. However, in most cases, the final decision maker will be local Emirati. Arab nature is generally non confrontational with individuals actively seeking to avoid conflict in both their personal and business lives. Unfortunately, within this culture the avoidance of taking decisions is also prevalent thereby making the pace of business sometimes quite slow.  Often key decisions (including the resolution of disputes) are taken outside the normal Western business area (i.e. the office) between Emiratis in the majlis. Confidentiality and the avoidance of bad publicity are key drivers for this approach and non-Emiratis will generally not be present.

The understanding of this business framework and culture is important when seeking to promote any new business idea or approach in the UAE and particularly relevant to mediation where active involvement of the parties (with authority to settle) is a pre-requisite.

The UAE operates under a civil law jurisdiction. This is important when considering mediation as it is unlikely that the principle of “without prejudice” will apply thereby potentially leaving a party exposed in later proceedings.

The UAE also operates a legal framework comprising a federal court system which applies to five of the seven Emirates (Dubai being a notable exclusion) but which is not fully integrated into the federal judicial system. Each Emirate has its own secular and Islamic courts with all proceedings conducted solely in Arabic.

At a business level, the legal system is therefore considered to be time consuming, costly and unreliable. This provides an opportunity for mediation as an alternative to litigation.

Both Abu Dhabi (Abu Dhabi Commercial Conciliation & Arbitration Centre) and Dubai (Dubai International Arbitration Centre) have established alternative dispute resolution offerings. Currently, these are primarily focussed on arbitration. The Royal Institution of Chartered Surveyors (RICS) and Chartered Institute of Arbitrators (CIArb) – the two key professional bodies in the field of property and construction dispute resolution – are also both well established in the region. The promotion of mediation, as an alternative, will therefore be into a market that already understands the principle of alternative dispute resolution (ADR) mechanisms. See also my earlier post: Arbitrating Property Disputes in the UAE

A major part of the growth in the UAE economy has been driven with the support of real estate, construction and infrastructure projects. The UAE saw a phenomenal growth in the number of such projects prior to the recent and ongoing global economic crisis. Unfortunately, this now leaves the UAE with an increasing number of disputes post crisis as parties scrutinize (often weak) legal contracts for opportunities to protect their position in a significantly weaker economic climate. The market opportunity for mediation as a confidential (this is key) dispute resolution process is immense.

In spite of the rapid growth in the real estate sector, the UAE property (and business) market remains quite immature. All business tends to operate on a two-tier basis – expatriates at one level, Emiratis (including Government) at another level. For any new initiative, separate approaches will be required for each taking into account the business and cultural differences.

So, is there an opportunity? Undoubtedly, yes! The real question is: how can the use of mediation be developed in the Region for the resolution of property and construction disputes?

Let’s see how things unfold …

Arbitrating Property Disputes in the UAE

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Arbitration is growing in popularity and now there is increasing emphasis on getting access to arbitrators who are experts in the subject matter

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Arbitration, as one form of Alternative Dispute Resolution (ADR), is growing in importance as a way to resolve property and construction disputes in the UAE. As a business community, the UAE is actively supporting arbitration as an alternative to litigation in the courts.

Using arbitrators who are experts in property and construction can reduce costs and ensure arbitral awards are based on commercial realities that the parties understand and can more readily accept.

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There is a real commitment to arbitration as an alternative to litigation in the UAE and this is evidenced by the fact the UAE is a signatory to the New York Convention on Arbitration Awards. There are clear signs too that the UAE has been rapidly improving access to arbitration by creating modern arbitration institutions and developing rules which draw on  best international practices.

Under the UAE legal system, a contract which contains an agreement to arbitrate a dispute is binding on the parties and no party can withdraw from such an agreement unilaterally. When arbitral proceedings are completed and an award has been issued, that is the end of the matter and parties may not take the same dispute on appeal to the courts.

The fact that the UAE is a member of the New York Convention on Arbitration Awards sends out a clear signal that the UAE will ensure that the courts support the decisions of arbitrators. It also reinforces the international status of awards made by arbitrators in the UAE. The Dubai International Arbitration Centre (DIAC) says that “arbitral awards made under DIAC have the same effect as final and conclusive judgments awarded by courts under the law” and “as a result of the UAE’s active participation in several regional and bilateral treaties, its arbitral awards are enforceable in many neighbouring Arab states, in addition to other countries worldwide.”

It is evident that, over the last few years, the courts have become increasingly supportive of arbitration, and are indeed leading the development of arbitration in the UAE. For example, the UAE courts have ruled that arbitration clauses are separable from the rest of a contract. This has been incorporated into the rules of UAE arbitral institutions and it means that parties cannot argue that an arbitration clause is no longer valid because the rest of the contract has been terminated. In making this ruling, the UAE courts have confirmed a principle that exists in other countries where arbitration is used viz that an arbitrator has the authority not only to determine his own jurisdiction, but also the validity of the contract which gives rise to his appointment in the first place.

Figures currently provided by DIAC reveal that the number of arbitrations taking place in Dubai has increased year on year since 2007. Interestingly, and perhaps unsurprisingly, the subject matter of the majority of disputes has been real estate. The increasing use of arbitration to resolve real estate disputes is crucial to business confidence in this sector and the continuing emergence of the UAE as the regional commercial centre for the Middle East.

As the number of property disputes increases, we are seeing more and more businesses choosing arbitration over slow and costly litigation. Whilst some people may argue that arbitration can be expensive, in reality it can offer a far more cost-effective and expeditious resolution than the courts. This is particularly so if the arbitrator has a great deal of experience and knowledge of the subject matter, understands the issues and arguments put forward by the parties in detail and so can deal with the arguments and evidence quickly and efficiently.

There are many other advantages to using arbitration instead of litigation. In arbitration, parties have a greater degree of freedom over the proceedings and timetable. Unlike court hearings, arbitration allows parties to resolve their disputes privately. But perhaps the most significant advantage of arbitration is the fact that parties can choose their arbitrator.

The Royal Institution of Chartered Surveyors (RICS) sets, maintains and monitors high quality standards for its Members (Chartered Surveyors). The RICS is therefore able to guarantee that Chartered Surveyors who take on arbitration appointments are both experts in the subject matter of disputes and are regulated according to the highest international professional standards.

The RICS has a well-established process of training and accrediting Chartered Surveyors to be arbitrators for real estate and construction disputes. A small number of Chartered Surveyor arbitrators based in the UAE have recently been assessed and accredited by the RICS. They are the beginnings of a panel which will grow over time.

Moving forwards, the RICS will be working closely with the UAE government and courts to assist the further development and growth of arbitration in the region. The objective is to help ensure that parties will be able to easily access experienced arbitrators who have deep understanding of property and construction disputes and who can provide an internationally recognised level of cost-effective and expert arbitration.

An abridged version of this article first appeared in the RICS UAE National Association Annual Review 2012-2013 – see Publications.

Leadership – From The Top

Leadership - Dice

For my first post, I wanted to cover a subject close to my heart – Leadership.

What follows is a transcript from an interview which I provided to Modus, the RICS (Royal Institution of Chartered Surveyors) monthly magazine circulated to c.100,000 Members wordlwide.

The article, entitled ‘From The Top’, covered views from 25 inspirational people in the global real estate industry who have risen to the top of the profession to find out what leadership means to them. Only a small excerpt from the interview with myself was published – in the 10 Industry Leaders section of the article.

Q: What do you believe are the most important qualities for a good leader in the real estate business?

A: Questions about leadership qualities always generate responses full of adjectives seeking to capture the key ingredients to the recipe for leadership excellence and success. For myself, an individual must feel invigorated by the success of others to become a truly effective leader.

Teams perform at their best not when the boss demands it, but when their colleagues expect it. A good leader brings a team together around a common purpose, agrees upon goals & objectives and then uses the social bonds between members to influence their behaviour. The key is to get team members to work hard not to please you, their leader, but so that they don’t let everyone else down. This indirect approach is hard for some leaders but, in my experience, individuals perform better when they feel part of a team.

For specific individual qualities, the following version of the PRIDE acronym works for me:

  • Passionate – a leader must be passionate about the goal, objective or purpose
  • Respect – a leader must encourage and listen to the views of others and, from this, earn their respect which is so essential to achieving success
  • Inspirational – a leader must have the charisma to generate interest and following in his/her ideas
  •  Daring – a leader must always test limits and push boundaries
  •  Expert – a leader must know the business in which he/she is operating

“Leadership is the art of getting someone else to do something you want done because he wants to do it”. Dwight D. Eisenhower

Q: Are there special skills that a leader needs in the Middle East?

A: The Middle East is a multi-cultural business environment which requires a clear understanding of etiquette, protocol and accepted business practice – successful leaders need to be adaptable to all business environments.

The Middle East is still an emerging or developing market. There is still a very limited legal and regulatory framework for real estate – successful leaders need to be opportunistic to take advantage of these less well-developed markets and capable of working without structure.

Other characteristics of the Middle East include rapid change, uncertain pace of decisions and, at all times, a need to expect the unexpected – successful leaders need to develop a range of skills to protect teams from the impact of these issues.

Q: Thinking about the last few years and the issues facing the real estate industry today, what are the particular skills needed for future leaders?

A: Just one here – having the confidence to drive growth and set courageous goals!

A copy of the full article can be downloaded from my Publications page. Alternatively, use the following link to this edition of the whole magazine:

 http://www.rics.org/ae/knowledge/journals/modus/recent-editions/the-leadership-issue-emea/