Cultural and legal dynamics of contracting and resolving disputes in the GCC. Bertrand Alexis, Senior Director, Legal, Ooredoo

Transcription

1 Cultural and legal dynamics of contracting and resolving disputes in the GCC Bertrand Alexis, Senior Director, Legal, Ooredoo

2 Ooredoo at a Glance

3 Overview Results Review Strategy Review Operations Review Additional Information Ooredoo at a glance (1) Revenue Diversity Solid Revenue Growth (US$bn) Fixed 12% Mobile 88% Integrated telecom group - not a conglomerate Wide range of services, serving both consumer and business markets Growing fixed business Oman Tunisia 6% 8% Algeria 10% Iraq 20% Others 3% Kuwait 9% Qatar 18% Indones ia 26% Mix of developed and emerging markets Strong position in all major markets of operations Stable EBITDA Margin (US$bn) % 47% 46% 47% Customer Diversity Continuous Investment (Capex - US$bn) Tunisia 8% Algeria 10% Kuwait 2% Oman 2% Iraq 11% Others 1% Qatar 3% Indonesi a 63% >92 million customers Premium customers to newly connected Note: (1) As of December 31, 2012, 1 USD = 3.64 QAR

4 Fastest growing telco group (1) Overview Results Review Strategy Review Operations Review Additional Information Tunisia Palestine Iraq Qatar Pakistan Algeria Saudi Arabia Kuwait Laos Oman Cambodia Philippines Maldives Singapore Indonesia 2006 Record Growth 2012 Markets 2 15 CAGR Customers <2mn >92mn 90% Employees 2,200 17,000 41% Revenue US$ 1.2bn US$ 9.3bn 41% EBITDA US$ 726mn US$ 4.3bn 35% Note: (1) Revenue CAGR

5 Overview Driven by a successful track record of execution Results Review Strategy Review Operations Review Additional Information Wataniya Palestine IPO ISE US$3bn Bond Program Wataniya Group stake increased to 92.1% Ooredoo brand launch New mobile license Myanmar US$3.8bn Wataniya Group acquisition Successful US$1.25bn bid for Asiacell Indosat stake increased to 65% Nawras IPO LSE US$5bn Bond Program Initial Indosat stake increase to 40.8% 2010 Launch of Nawras NavLink partnership Launch of Wataniya Palestine Asiacell IPO and stake increased to 64.1% Ooredoo established 1987 Listing on Qatar Exchange Investment in StarHub (AMH) 2007 Obtained investment grade ratings Launch of wi-tribe Pakistan Launch of wi-tribe Philippines Total Group stake now 90% Source: Ooredoo

6 From the GCC In-house Perspective Any key differences? Differences in substantive law civil v. common law Sensitivity to disputes mediation and arbitration in the GCC Legal formalities Similarities? Seeking best practices for a multinational law department Seeking latest Tools and talent to achieve this Balancing the need for outside counsel

7 Choice of Law The law of each of the GCC countries are based on civil law Source of law generally Egyptian law, which is based on the French civil code Company law face a greater number of formalities than under Delaware law (as is the case with company law in civil law countries) Preference for French and English law as an alternative to GCC law, combined with international arbitration clause

8 Differences Common vs Civil Law NDAs both allow for injunctive relief no major substantive difference! Liquidated damages under common law, penalties under civil law English law generally a deference for the intent of the parties, especially if disputes are submitted to arbitration Company law greater number of formalities which need to be respected Publishing agenda in the local gazette Minimum stated capital for companies (together with civil and criminal penalties for failure to meet minimum capital) Publishing agenda for annual shareholders meeting Providing annual results to commercial registrar (available to the public)

9 Key Issues under GCC laws Definition of GCC Bahrain, Kuwait, Oman, Qatar, KSA, UAE Possible Future additions Iraq, Yemen Mandatory local ownership of local Companies (often set at 51% local partner) GCC common market (elimination of tarifs within the GCC) since Jan 2008 Greater formalism generally (need for consular stamps/confirmation of authorized signatures, conformity of documents to originals, etc.) Sukuk Financings Important to look at relatively new legal regimes to promote trade and investment (Dubai International Finance Center, Qatar Financial Center, etc.) Regulations designed to promote investment Special tax rules Separate employment laws and regulations Dedicated arbitral organizations, rules and regulations

10 Arbitration from a GCC perspective Parties to the UN Convention (exception Iraq) Riadh convention DIFC/LCIA joint venture Arbitration in Qatar via QFC Bahrain Center for Dispute Resolution in partnership with the American Arbitration Association (BCDR-AAA) ICC Arbitration also very common The importance of Seat of arbitration- as distinct from the location of arbitral proceedings

11 Local Arbitral Institutions DIFC LCIA Arbitration Centre strategic partnership Bahrain Chamber for Dispute Resolution Qatar International Court and Dispute Resolution Centre under the auspices of the Qatar Financial Center Gulf Co-operation Council Commercial Arbitration Centre (GCCAC) based also in Bahrain

12 Ethics from a GCC perspective Shariah compliant companies Will question the need to certify compliance with other ethical standards Companies from other jurisdictions must be prepared to respect GCC ethical requirements when doing business in the region

13 Arbitration References

14 Thank-you

15 Cultural and Legal Dynamics of Contracting and Resolving Disputes in GCC Dr. Saud Al-Ammari, Chair, Saudi Arabia and Bahrain. Blake, Cassels & Graydon LLP in association with Dr. Saud Al-Ammari Law Firm

16 GCC: Opportunities & Challenges GCC countries will experience 36% population growth over next decade from 36.4 million to 49.4 million people GCC countries will invest more than $1 trillion in more than 177 infrastructure projects by 2030 Saudi Arabia alone has confirmed $375 billion worth of construction projects, including seven new economic cities Many of these projects will be financed by Shari ah compliant Islamic finance and their contracts governed by local law, which is based on Shari ah There are significant business opportunities in GCC But there are also significant challenges for international companies managing contracts and disputes in the region

17 Dynamics in GCC GCC countries are the same but different They are the same in that they are Arab and Islamic However, application is different in each country and how they apply them in their business dealings International companies therefore need to be aware of these business and legal differences to be successful in region Leading GCC business families are familiar with Western business and legal practices However, business is conducted differently in the GCC You need to have on-the-ground presence, strong local ties and must take time to build relations and trust You will also need to be more willing to accept local law and dispute fora to win future business, especially with governments

18 Local Knowledge Depending on the jurisdiction, you may legally require local partner But you may need local partner anyway to acquire local knowledge It is therefore important to conduct proper due diligence on potential partners because it is always easier to get into a partnership than out of one Equally important, it is important to have local counsel who: Understands both Western & Middle Eastern legal practice Knows how to properly navigate local laws and government Can advise on local business culture Provides Western quality service with local knowledge There are different cultural and legal dynamics in the GCC and good local counsel can make a difference in how you successfully manage your contracts and disputes in such dynamics

19 Governing Law GCC Countries are developing and modernising their laws They are referencing Western laws and localizing them with new statutes and regulations to address evolving business areas Some jurisdictions look like civil law systems Nevertheless, they are all based on Shari ah Saudi Arabia is most conservative Some GCC jurisdictions, such as Dubai and Qatar, have established separate legal regimes in International Finance Centres However, you inevitably must go into local courts to enforce judgments or arbitration awards against parties that have their assets in those GCC countries You must therefore ensure that your contracts and dispute awards are Shari ah compliant, particularly Saudi Arabia, in order for them to be enforceable

20 Dispute Resolution Fora Many local courts do not publish their judgments nor do they rely upon stare decisis It is therefore difficult to predict outcome of litigation in local courts Arbitration is now becoming dispute resolution mechanism of choice Arbitration has been used in GCC countries for hundreds of years It received a bad name from some international arbitration cases that went against GCC countries in 1950 s to 1980 s But that is changing with establishment of modern arbitration institutions and issuance of new arbitration laws in region Companies can increase their ability to enforce their contracts and manage their disputes by using regional arbitration institutions and laws since local courts are more comfortable with them You therefore need to familiarize yourself with these fora & laws

21 Cultural and legal dynamics of contracting and resolving disputes in the GCC Darryl Coulter Senior Legal Counsel US and EMEA Hitachi Consulting

22 Decide upon your territory There is no single country called the Middle East Being legally able to provide services in one GCC jurisdiction does not entitle you to do so in another This even applies between Emirates within the UAE Opening in the GCC is a significant investment, which entails forming key relationships locally, from which it will not be easy to extricate yourself This is not a place where buyers decide quickly Decide where to locate your business based upon a realistic and reliable long-term business plan

23 Select your business structure Your appetite for local ownership? e.g. Qatar - 51% local ownership, which must be real ; or Oman: 30% local ownership + shareholder agreement Other vehicles? e.g. Dubai (UAE) Free zone entity, with limitations; or Abu Dhabi (UAE) Branch, with access to mainland and public sector etc. Newer vehicles? e.g. Qatar Financial Center, recent Dubai / UKTI initiative

24 Identify your key relationship locally National Agent (e.g. UAE): Entry point agent initially? Will you find someone more sector specific? Exclusivity, at what price? Local ownership Identifying your local shareholder? Will their identity facilitate or limit business? Ending the relationship: between you and them; more widely within the jurisdiction; further afield within the GCC (e.g. Oman / Saudi Arabia)?

25 Compliance Much subject matter which we take for granted in the US and Europe is still evolving in the region for example, IP protection, Data Protection etc. However, some laws established outside the GCC may have direct reach into your transactions there The UK Bribery Act 2010: s.5: any local custom or practice is to be disregarded s.7: new offence - failure to prevent bribery, new defence - having adequate procedures in place