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Middle East: back to growth

18 July 11

Despite recent turbulence, the Middle East remains a region of opportunity for legal firms, as a recent seminar organised by the Society for Scotland's larger practices confirmed

by Peter Nicholson

The region having been in the news for several months now as one of some political turmoil, this might seem an inauspicious time to be holding a seminar on doing business in the Middle East. However an extensive panel of guests at the Society’s latest meeting for our big firm, on this subject, all continued to regard the area as one of opportunity.

To be more specific, the countries they were particularly discussing were those of the Saudi peninsula with the exception of Yemen. Of these, Bahrain has experienced the greatest instability, but Colin Crabbe, Scottish Development International’s regional manager for the Middle East, explained that the situation on each country was different: the UAE, for example, was a “sea of calm”.

It is also well known that the wave of major building projects in Dubai, for example, suffered a severe seizure as a result of the global financial crisis in 2008. But the subsequent bounceback has also been impressive: there are more projects in progress for the 2010-15 period than there were in 2005-10. There are still many wealthy families and conglomerates there who are willing to invest.

Hub status

What sort of work is available in the region? Not just oil related, anyway. In addition to a conscious local effort to diversify, there is much infrastructure work on hospitals, power plants, refineries and more, to support a burgeoning population. Some global companies, Pepsico for example, use Dubai as a hub from which to run their African and Asian operations. Heriot-Watt University has an 1,800-strong campus there and has begun work to increase its capacity to 3,000. Other nationalities such as the French have spotted the opportunities and are moving in.

We already have some Scottish legal pioneers in the region, and Alan Shanks of HBJ Gateley was there to tell us of his firm’s experience since it decided in 2007 to set up a Dubai office. Driven at the time by client demand, especially in shipping and energy work in the region – and unless you have a global brand, he commented, you need such drivers – the firm now finds its presence in Dubai leading to more instructions in the UK also.

Shanks warned that trading conditions for law firms are still tough there also, but confirmed the “hub” status of Dubai. He assured us that our skills as Scots lawyers are “very transferable”, and pointed out that English law is the basis for many transactions (another speaker quoted an Arab colleague as saying it is “easier to talk in English when you are talking about business”). There are also many Scots out there in senior positions, for example in the oil and gas sector.

Space does not permit a discussion here of the various ways of opening up in business in the UAE, and the pros and cons of each – acquiring a local business, joint venture, establishing your own branch: some indication can be found at Journal, October 2008, 20. Suffice to say that HBJ failed to find a local firm they regarded as the right fit, and went through the longer and more expensive route of obtaining their own licences. But the only thing they would have done differently, with hindsight, said Shanks, would have been to move more staff out from the UK, at least for the initial period. And despite having opened there shortly before the slump hit, he was certain it had ultimately been a “very rewarding move” for the firm.

Arbitration preferred

Shanks was followed by a trio from London-based Clyde & Co, who supported much of what had been said already, and also gave their own take on the various ways of doing business in the region. They warned, for instance, of the local bureaucracy, and the “culture of consents, and stamping” – but all could be overcome. They also pointed out that local litigation can be unpredictable, so arbitration is the preferred method of dispute resolution, though it is more expensive and you have to be sure of being able to enforce your award.

Another pair of SDI speakers then described their roles in helping Scottish businesses grow internationally through market research and advice, keeping databases of procurement projects, and more; and the presentations concluded with an overview of the GlobalScot network.

Discussion afterwards threw up some interesting comments from in-house counsel present, as to the respective business approaches of Scots and English firms: don’t be too self-protective, was the message that came across.

At all events the evening was a positive affirmation of business opportunities for those with the right platform to take the step. With McGrigors having recently obtained a licence to open in Doha, Qatar, we have not heard the last of Scottish firms making their presence felt in the Middle East.

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