Abu Dhabi Global Market (ADGM) is a beacon of economic dynamism and innovation in the United Arab Emirates (UAE). Among its numerous distinctions, one feature that makes ADGM stand out as an international prominence is its embrace of English common law as the foundational element of its legal framework. Unlike jurisdictions that have sought to codify common law, ADGM has boldly integrated the entirety of original English common law into its legal system, thus bringing in a sophisticated legal regime. This read embarks on an exploration of the implications, significance, and contributions of this distinct approach, unraveling how it ensures ADGM’s stature as a leading global financial center.
The English Common Law Framework in ADGM
The cornerstone of ADGM’s legal structure lies in the English Law Regulations 2015. This comprehensive framework encompasses a diverse array of legal principles, including the equitable realm, which permeates numerous domains such as contracts, torts, equitable remedies, unjust enrichment, damages, conflicts of laws, security, and personal property. Notably, certain English statutes that modify or replace fragments of common law are adapted into the ADGM context, while real property matters are addressed distinctly in the Real Property Regulations 2015. ADGM English common law framework and several English statutes (implemented locally and consistently with the English form) and ADGM enactments which have been primarily drafted from English statutory precedents and, partly, from those of other commercially respected common law jurisdictions provide many advantages to legal practitioners and business operating in the ADGM.
The Common Law in ADGM Courts
Article 1 of the Application Regulations establishes that English common law, along with equity principles, holds direct precedents in ADGM courts. The Application Regulations enable ADGM courts to continually refer to English common law as an “evergreen” basis, reflecting the evolving English case law. ADGM courts are granted authority to make necessary adjustments to suit ADGM’s specific circumstances. This approach ensures that the dynamic and updated body of English common law case law serves as a valuable precedent for ADGM, providing legal predictability.
Adaptation and Flexibility
Although it is unlikely that any two cases will be identical, this body of precedent contributes to the stability of the law. ADGM’s courts will consult relevant precedents and utilize them to deduce the application of the law to the given circumstances. In cases where ADGM’s unique context demands it, the courts have the power to depart from common law precedents. However, such departures are expected to be infrequent due to the commercial nature of most disputes and the sparse application of similar provisions in other jurisdictions that adopted similar carve-outs.
Contrary Provisions and Applicable Abu Dhabi Law
Nonetheless, the common law, as adopted through the Application Regulations, remains subject to any contrary provisions of ADGM enactments or Applicable Abu Dhabi Law. The concept of “Applicable Abu Dhabi Law” encompasses various legal sources such as the UAE Constitution, federal laws applicable to ADGM, and other relevant regulations.
ADGM’s Distinct Approach
The ADGM has intentionally chosen to adopt an all-encompassing and evergreen approach to English common law precedents within its legal system. This approach, shared with other jurisdictions that historically or currently receive English law, offers distinct advantages to ADGM and its business and legal community.
The benefits of ADGM English Law include:
1. Familiarity and Flexibility.
English common law’s reputation as a sophisticated framework for commercial arrangements makes it a preferred choice for commerce globally. Its adaptable nature is particularly suited to business transactions, especially in a financial context. This aligns with ADGM’s purpose of establishing a financial center in Abu Dhabi. Notably, major financial centers like London, New York, Singapore, and Hong Kong all follow the common law system.
2. Certainty and Cost Reduction.
ADGM’s approach reduces upfront legal costs and the likelihood of litigation. English common law already covers a wide spectrum of scenarios, guiding commercial transactions where detailed case law is crucial. The Application Regulations ensure that all of this case law holds automatic precedential value in ADGM.
3. Dynamic Common Law Developments.
ADGM’s attribution of direct precedential status to English common law circumvents the need for a unique locally codified version. This approach is based on an exhaustive examination of diverse situations, organized into rules and principles while remaining adaptable to changing circumstances. ADGM maintains continuous access to English common law scholarship, ensuring guidance on applying existing principles to current scenarios.
4. Case Law Volumes.
ADGM’s alignment with common law developments in established jurisdictions benefits a comparatively smaller center like ADGM. It directly benefits from cases that test and apply common law principles in English courts, as well as persuasive judgments from other significant common law jurisdictions.
5. Evergreen Approach and Adaptation.
The evergreen application of English common law ensures that common law developments automatically apply in ADGM. However, the Application Regulations grant ADGM courts the flexibility to adjust the common law to better suit ADGM’s context if necessary. This ensures that ADGM maintains a legal system that is both robust and responsive to its evolving needs.
MS – Your Guide to ADGM’s Common Law Jurisdiction.
The ADGM has intentionally chosen to directly incorporate English common law precedents on an ongoing basis in its legal framework, similar to other jurisdictions that receive or historically received English law. This approach is advantageous for several reasons.
At MS, we are committed to helping our clients understand the Abu Dhabi Global Market’s (ADGM) common law jurisdiction. With our expert knowledge and tailored services, we ensure that you can make the most of the benefits offered by ADGM’s robust legal framework.