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UAE and China building legal ties to match strength of trade links

UAE and China building legal ties to match strength of trade links

November 3, 2016


China and the UAE first established diplomatic relations in the mid-1980s. In the intervening three decades, trade between the two countries has grown strongly, and is now estimated to be worth in excess of $55 billion annually. Indeed, since 2011 China has been the UAE’s second largest trading partner, while since 2014 it has been the number one trading partner of the emirate of Dubai.

In 2005, just 18 Chinese companies operated in the UAE. Today that figure is more than 4,000, with Chinese companies actively involved in many key sectors of the UAE economy, with a particular focus on construction, real estate, financial services and technology. The emirates are also an important hub for reaching new markets, with approximately 60% of trade between China and the UAE re-exported to Africa and Europe.

With more contracts being signed between Chinese and UAE companies than ever before, the potential for commercial disputes to arise has also risen. Given Dubai’s position as part of China’s “One Belt One Road” initiative, the DIFC Courts have made forging links with their counterparts in the world’s second largest economy a strategic priority in recent years.

Understanding how different courts will interpret the each other’s money judgments is an absolutely essential catalyst for boosting trade between countries. October 2016 witnessed a significant first step in this regard as the DIFC Courts signed a landmark cooperation agreement with the Shanghai High People’s Court, the foremost business court in the commercial and financial centre of mainland China, designed to bring certainty to businesses through enabling them to trade securely.

The DIFC Courts are the first foreign commercial court to cooperate closely with the Shanghai High People’s Court, with the two organisations agreeing to work together to achieve shared strategic objectives, provide the basis for future judicial exchanges, and deliver legal excellence.

Chief Justice Michael Hwang of the DIFC Courts said the agreement can “make a significant contribution to the Dubai-China relationship in relation to judicial matters.” In its official announcement, the Shanghai High People’s Court noted the “collaboration will act as a stimulus for economic and social development between the two cities.”

In a separate but related move, the DIFC Courts have published a guide for law firms and business on the mutual recognition and enforcement of monetary judgments in China and Dubai.

It has been drafted jointly by the DIFC Courts and King & Wood Mallesons, a leading global law firm headquartered in Asia and China, and provides detailed explanation as to how a DIFC Courts judgement can be recognised and enforced in China, and vice versa. The guide is based on the existing 2004 Judicial Assistance Treaty between the People’s Republic of China and the UAE, and each court system’s own laws, and is available on the DIFC Courts website.

Mr. Shao Zili, Co-Chairman of King & Wood Mallesons China’s Management Committee, said the guide “provides valuable explanations for law practitioners in both countries.”

The two China initiatives build on the DIFC Courts’ work to be the world’s most connected court system. Since their jurisdiction was opened to businesses worldwide in October 2011, they have established one of the world’s strongest enforcement regimes through arrangements with many common law courts overseas, including the Commercial Court of England and Wales, the United States District Court for the Southern District of New York, the Federal Court of Australia, the New South Wales Supreme Court, the Supreme Court of Korea, the High Court of Kenya (Commercial and Admiralty Division), and the Supreme Court of the Republic of Kazakhstan.

By signing agreements with the Shanghai High People’s Court and King & Wood Mallesons, the DIFC Courts are helping to ensure legal ties between the UAE and China match the strength of the trade links between the two countries.

The DIFC Courts look forward to building on these initiatives over the coming months and years to ensure that any business operating between China and the UAE can have completely certainty that a dishonoured contract will be enforced.


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