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Welcome to the latest edition of Law Update titled “Rise of Generative AI.”
In this edition, we dive into the dynamic world of Technology, Media, and Telecommunications (TMT) across the Middle East and North Africa (MENA) region. TMT continues to play a vital role in positioning the region as an international business and social hub, driving significant growth and innovation.
Our focus in this Law Update is on the sector’s ongoing potential to advance and propel the region toward a more digital economy. We explore the benefits of embracing a digital transformation and how local authorities have responded by enhancing regulations to accommodate the evolving TMT landscape.
This edition covers a range of topics, including – the new Telecommunications & Information Technology Law in Saudi Arabia, the intricacies of trademarks in the Metaverse, and the legal challenges faced by the video game industry. Additionally, we take a regional perspective, discussing jurisdictions such as Kuwait, Saudi Arabia, UAE, Oman, and Bahrain to provide a comprehensive understanding of the TMT landscape.
We hope you thoroughly enjoy this packed issue of Law Update, filled with captivating articles that address key legal issues within a vital sector for the region.Read the full edition
Arbitration is gaining popularity as a preferred method of resolving family-related business disputes. There are several reasons for this. First, arbitration helps ensure the dispute and the underlying arrangements remain confidential. Second, it enables the parties to select an arbitrator or arbitral tribunal with expertise in trust disputes. And third it affords the parties the flexibility of choosing procedures that align with their preferences.
Indeed, international arbitral institutions are beginning to take note of this growing popularity. For example, the International Court of Arbitration of the International Chamber of Commerce recently updated its guidance note on Arbitration Clause for Trust Disputes, providing guidance on how trusts can include arbitration as mode of dispute resolution in these instruments.
The attractiveness of arbitration as a means of resolving family-related business disputes is also being recognized at the regulatory level as well. This article discusses the impact on the arbitration of family-related business disputes of Article 7.6 of the recently enacted DIFC Family Arrangements Regulations of 2023 (New Regulations), which became effective on 31 January 2023 (repealing and replacing the Single-Family Office Regulations of 2011 (Former Regulations)). Among other things, this provision introduces innovative provisions enhancing the role of arbitration in disputes arising from family trusts (i.e., legal instruments governing the affairs of family arrangements and trusts).
The nature of family-related business disputes, which often revolve around a family trust, raises unique issues from an arbitration perspective, including the question of whether an arbitration clause in a trust instrument binds beneficiaries who typically do not sign the trust instrument (or accept any burdens thereunder).
In a DIFC context, this question was addressed to some extent by the DIFC Arbitration Law and the DIFC Trust Law. Article 12 of the DIFC Arbitration Law requires only that an “Arbitration Agreement shall be in writing”; it does not require the arbitration agreement to be signed by the parties thereto.
The application of the DIFC Arbitration Law to trust disputes – which was not addressed under the Former Regulations – was not addressed until the enactment of the DIFC Trust Law (DIFC Law No. 4 of 2018). Article 31(1) (Arbitration of trust disputes) of the DIFC Trust Law provides as follows:
“(1) Where a trust instrument provides that any dispute or administration question arising between any of the parties in relation to the trust shall be submitted to arbitration (‘a trust arbitration’), that provision shall, for all purposes under the [DIFC] Arbitration Law have effect as between those parties as if it were an arbitration agreement and as if those parties were parties to that agreement.”
In addition, Schedule 2 (Application Of The Arbitration Law) of the Trust Law provides:
“1. The [DIFC] Arbitration Law shall apply and be construed with respect to a trust arbitration, as stated hereunder.
‘The settlor of a trust shall be free to determine (by provision in the trust instrument) how, in relation to a trust, disputes are resolved, subject only to such safeguards as are necessary in the public interest;’.
And Article 30 of the Trust Law helpfully clarified that:
“30. Articles 31, 32 and Schedule 2: Interpretation
For the purposes of Articles 31 and 32 and Schedule 2: […]
‘the parties in relation to the trust’ means any trustee, beneficiary or power holder of or under the trust, in their capacity as such.”
In contrast to the Former Regulations, Article 7.6 of the New Regulations does address the arbitration of family trust disputes. It provides makes express provision for the following:
The New Regulations build on the provisions of the DIFC Trust Law, which clarified the application of the DIFC Arbitration Law to the arbitration of trust disputes, confirming that an arbitration clause in a trust instrument can bind beneficiaries who are not parties thereto. This is a welcome clarification given the increasing usage by Family Businesses of the DIFC Trust law to provide for multi-generational succession planning and the preference for confidential arbitration to govern familial disputes.
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