Editor: Mr. Greenwald, would you tell our readers about your background and professional experience?
Greenwald: After graduating from the University of Minnesota Law School in 1976, I joined Chadbourne's New York office and in 1979 transferred to its Washington, D.C. office. In 1986 I moved to Chadbourne's Dubai office because I wanted more international experience. In 1989 I left the firm to join an Arab investment company, as in-house legal counsel and head of the corporate finance department. Plans changed, and by the early 1990s I started to focus on a solo legal practice, with the objective to maintain the high standards I learned at Chadbourne with a clear focus on client needs. As Dubai grew, I realized that my solo practice needed to expand, and I began hiring legal staff. Now, I am taking the next step, by rejoining Chadbourne, which had closed its Dubai office in 1993, and bringing my entire team to become the nucleus of Chadbourne's new Dubai office.
Editor: As head of this new office, would you share with our readers the strategy behind this step?
Greenwald: The Chadbourne strategy is to serve its clients' needs in that part of the world. As Chadbourne has grown internationally, Dubai is a natural addition to the practice. There is tremendous opportunity in Dubai for Chadbourne's resources and areas of expertise, particularly project finance and private equity.
Editor: Would you describe the Dubai government structure?
Greenwald: Dubai is one of seven Emirates forming the United Arab Emirates, which was established in 1971 by the Rulers of each of the Emirates. The U.A.E. Constitution, in terms of governmental powers and relationships, is like the U.S. Articles of Confederation, with the individual Emirates having significant powers. Nevertheless, the federal government is increasing its responsibilities and scope of authority and is also adding democratic elements. For example, in the past, the Rulers appointed the members of the Federal National Council, a form of legislative and advisory body, but starting this past year, half of the members are elected from large councils or rolls of Nationals in each Emirate. That trend should continue.
Editor: How have the demographics of Dubai changed over the past 20 years?
Greenwald: Dubai has had an interesting shift in demographics, which applies to law firms and companies as well. When I moved to Dubai in 1986, large international companies were present, but many had only one or two senior executives from the head office and one or two supporting staff hired locally. The bulk of the substantive work was done elsewhere. The Western population in Dubai reflected that business structure, with many senior executives and families, and few young single people.
In the 1990s that changed - most international offices are now fully staffed with multiple departments, as in any large city. International law firms now have the usual pyramid of attorneys and support staff in their Dubai offices. That has affected the population and the nature of the city and of the legal market. The city is bustling, filled with ambitious young professionals, and clients now expect to receive a full range of legal services in Dubai. Law firms might have to tap into London or New York for certain expertise, but clients expect the center of gravity of a project to be in Dubai.
Editor: I understand that Dubai also has a stock exchange and is encouraging foreign investment.
Greenwald: At this point the Dubai stock exchange is relatively small. Many local issues impede progress - for instance, fifty-one percent of the shares have to be owned by U.A.E. Nationals, and certain regulatory requirements discourage listing of good local companies. That is now changing on two levels. On the level of the existing exchanges, the authorities are increasingly discussing linking the various stock exchanges in the countries of the Gulf Cooperation Council, which includes Kuwait, Saudi Arabia, Oman, Bahrain and Qatar. Some countries are also changing their laws to allow majority foreign ownership and to facilitate the listing of existing companies. On another level, some countries are creating international financial centers with their own exchanges and with international-standard regulatory regimes, 100 percent foreign ownership, and no taxes. The Dubai International Financial Center is perhaps the leader in this regard, but Bahrain and Qatar also are developing financial centers.
An increasing number of free zones also encourage and facilitate foreign investments. These free zones, of which Dubai has over 20, are distinct physical areas with reduced regulation, 100 percent foreign ownership, and no taxes. In some of the free zones, companies are limited to international activities; they cannot serve the Dubai market. However, increasingly, companies in the free zones are being allowed to serve the local markets. Further, one of the interesting initiatives of the Ruler of Dubai is to use free zones to form "clusters" of companies in similar or related businesses as well as centers of excellence, such as Dubai Media City, Dubai Internet City, Dubai Healthcare City and Knowledge Village. These clusters serve as a magnet for international companies and also address special needs of the region.
Editor: Is there a future for these capital markets?
Greenwald: There is potential for these stock exchanges and capital markets. The region needs stock exchanges to channel and utilize the tremendous liquidity available in the region from high oil prices and also from the increasing interest of Gulf investors in opportunities in their own neighborhood. However, both legal and cultural developments must occur before they can be truly effective. In addition to the legal issues noted earlier, businessmen in the region are accustomed to family owned and controlled companies; a move to transparent, properly governed, publicly held companies is a big transition.
Editor: What practice groups reside in the Dubai office?
Greenwald: We have had a general corporate and commercial law practice covering the region, with transactional work, complex dispute resolution, and the provision of legal advice. With Chadbourne, we will be adding project finance and private equity capabilities. As the practice evolves and grows, we will add other capabilities as needed.
Editor: Are the lawyers Americans or recruited locally?
Greenwald: A unique aspect of Dubai is the extent to which it is an international city. About 90 percent of the residents are expatriates. The largest population is the Indian community. The next largest is probably Iranian, followed by expatriate Arabs and a multitude of other nationalities. I heard recently that 160 nationalities have resident visas here.
Our legal practice reflects that international character. Among my staff are Jordanian, Dutch, Syrian, Egyptian and German professionals and para-professionals. We will be adding more nationalities because that is the market that we are serving. We also need more good lawyers from large U.S. and U.K. firms. With their training and experience, they understand the more sophisticated corporate transactions and are more likely to have the necessary attention to detail and desire to provide a quality work product.
Editor: Are the laws in Dubai based on the common or civil law?
Greenwald: The laws are based more on the civil code system, although Dubai does have a strong English tradition, a kind of mix in terms of approach.
Editor: Who are the clients?
Greenwald: One of the reasons I stayed in Dubai is that I like the international mixture, including that of our clients. About one-third of our clients have been from the U.S. and Canada, another third from Europe and England, and another third from the Arab world. We also work with clients from Asia, South America and Africa. They represent businesses ranging from Fortune 500 companies to individual entrepreneurs. The industries include financial services, oil and gas, construction and real estate, healthcare, and technology - a very broad mix. Dubai is a regional center, and although the Gulf is known as a major energy producer, the client base has the same broad mix as New York or London.
Editor: Have the private equity groups entered the Dubai market?
Greenwald: An increasing number of private equity groups are establishing operations in Dubai, and ones that have been in Dubai are expanding their operations. In the past, many of the private equity firms only visited the region from their head offices or maintained small representative offices in Dubai. The substantive financial work was done out of New York, London or other European financial centers. However, as with the international law firms, the private equity firms have found that they can justify, and must have, a more fully staffed office in the region offering a range of services, and Dubai is the natural choice of location. This trend has been accelerated as a result of the launch of the Dubai International Financial Center as well as the increased liquidity in the region.
Editor: Are transactions done under Dubai law?
Greenwald: For international transactions, the jurisdictional preference is English law. If a contract or transaction is purely local, one might use Dubai law. However, U.A.E. and Dubai law are not fully developed, and it can be difficult to know what the law is on many key or complicated issues. No body of jurisprudence or binding court decisions surround the law to explain or elaborate it. Even the Dubai government has used English law in some contracts, recognizing that a more developed, comprehensive legal regime is needed for some of the more complex transactions.
Editor: Would you tell us about the judicial system in Dubai?
Greenwald: The court structure is familiar to most lawyers, with lower courts, appellate courts, and a court of cassation. However, the court proceedings are largely documentary, with minimal (if any) oral testimony or argument and with frequent use of court-appointed "experts" to investigate the facts. The courts operate entirely in Arabic, and as a general matter, only U.A.E. Nationals can appear in court. Many of the judges, though, are from other Arab countries, and they at times apply the civil procedure rules and legal principles from their home country. Unfortunately, the judicial system is one of the weakest links in the legal system for international business. The problems stem from not having sufficient experience dealing with sophisticated commercial and international transactions and not having the staff and other resources to address the legal and factual issues that can arise. Bias in the court system has not been my concern in Dubai. I suspect that the Dubai courts are more impartial towards American businesses than some of the U.S. state courts are to foreign businesses.
Editor: What is being done to bring the judiciary up to speed?
Greenwald: The government is increasing training and is recruiting more lawyers with higher standards to be judges. We are also seeing the development of alternative court systems. The Dubai International Financial Center has its own totally independent court system, which conducts business in English under English rules and is headed by a senior English judge. The DIFC Court is available for transactions involving parties in the DIFC, but it is not necessarily restricted to those cases. It might become an alternative that parties in a commercial transaction can choose, as one would choose arbitration. I understand that Qatar has also developed a specialized commercial court as an alternative to deal with international commercial transactions.
Editor: Does the government abide by contractual arrangements with third parties?
Greenwald: The Dubai government definitely does, as do other governments in the region. But with any government, one can always run into problems. An advantage in Dubai is that strong government policy supports the rule of law and foreign investment, so one can often use official government policy to counter any attempt by an individual to subvert a contract or transaction.
Editor: What types of project do you anticipate handling over the next five years?
Greenwald: Project finance, project development, and private equity are areas that have tremendous potential because of the liquidity and the incredible array of infrastructure, industrial, and real estate projects being built in the Gulf region. Other specialized areas will appear and grow. For example, Dubai is developing free zones or cluster cities for production of media and entertainment, for biotechnology, and for computer technology research and development. As these centers take off and the economy diversifies, Dubai will need to develop laws that support them, particularly IP laws, and we lawyers will need to interpret and apply those laws.