Home Business Insights & Advice UAE must prove its reliability to entice British investment

UAE must prove its reliability to entice British investment

by Sponsored Content
9th Feb 21 2:57 pm

The British media is teeming with justifiable outrage after it was revealed that a British woman is being detained in the UAE over the use of a single swear word in a private WhatsApp message with her former flatmate. The woman, who was due to return to the UK to begin a new job and wishes to remain anonymous for fear of losing that appointment, now faces a lengthy wait while the lumbering machinations of the Emirati legal system chew over her case.

The surreal saga is of particular relevance at the moment, given the UAE’s eagerness to become one of the UK’s principal partners in the wake of Brexit. In its efforts to court Western investment and expats, the Gulf nation has reformed a number of its more draconian laws in recent months, including restrictions on the sale of alcohol and the cohabitation of unmarried couples. However, incidents like the WhatsApp furore – and a far higher profile case involving the biggest divorce settlement in British history – suggest that the UAE’s reforms may be too superficial to reassure British investors.

Controversy brings spotlight back to Emirati legal system

The anonymous British woman is facing charges of “electronic defamation”, which could entail a preposterously high penalty of two years in jail or a fine of roughly £100,000. Even if she is acquitted, she will still be forced to stay in the country at her own expense while a forensic report of her phone is conducted, incurring potentially tens of thousands of pounds’ worth in unforeseen costs—an extraordinary price to pay for the use of a single expletive in a heated conversation.

The absurdity of the story recalls a similar scandal from 2019, when a British woman was detained in the Emirates after calling her ex-husband’s new wife a “horse” on social media. Frivolous cases like these would almost be laughable if they didn’t carry such serious repercussions for those implicated in them – and potential far-reaching consequences on relations between the two nations involved.

That’s especially true right now, given that the UAE had been hoping to count itself among the main beneficiaries from the UK’s exit from the EU. The UAE is already Britain’s 12th largest trading partner in the world—and its third-largest outside EU member states—with bilateral trade reaching an estimated £25 billion. There were over 5,000 British businesses operating in the Emirates in 2018, while British investments in the country are valued at £14.9 billion.

With the UK now adrift from the EU, the Emirates are cognisant of the opportunities available and the potential sums at stake. In a bid to ingratiate the country to British investors even further, Emirati authorities have passed a number of secular-leaning reforms, including relaxation of alcohol laws, permitting cohabitation of unmarried couples and deferring to the legislation of the country where a marriage was initiated, even if the divorce takes place in the UAE.

Akhmedov acrimony souring investment atmosphere

That latter ruling on marriage is particularly salient given that a high-profile divorce case has shone a global spotlight on the Emirates’ disregard for British courts and legal principles. The saga dates back to 2016, when a London High Court judge awarded Russian-born British resident Tatiana Akhmedova 41.5% of her ex-husband Farkhad’s considerable fortune, amounting to an estimated £453 million pay-out, the largest in British history.

However, to date Ms Akhmedova has received a mere £5 million of that sum. Her ex-husband dramatically declared that he would rather burn his millions than pay out the court-ordered divorce settlement—while he hasn’t yet resorted to setting fire to his riches, he has seemingly left no other stone unturned in his efforts to keep them out of the hands of his ex-wife, transferring assets into the hands of trusts stretching from Liechtenstein to Bermuda and allegedly using son Temur to shield other pieces of his fortune.

In the face of Farkhad Akhmedov’s defiance, British courts have consistently been supportive of Tatiana’s efforts to recoup the monies owed, issuing a worldwide freezing order on Akhmedov’s assets and ordering him to hand over a £115 million art collection and a £350 million superyacht once belonging to billionaire Roman Abramovich.

Under most court systems, Akhmedov would have been forced to give up the yacht after it was impounded in Dubai pursuant to the London High Court’s freezing order. The oligarch, however, managed to exploit the backwards provisions of the Emirati legal system to keep hold of the luxury vessel. After Dubai’s more Westernized DIFC Court upheld the freezing order on the boat, Akhmedov managed to get the case transferred to a Sharia law court which didn’t have the same respect for the London High Court. Indeed, the sharia judges found that the London ruling was “contrary to Islamic sharia” and therefore unenforceable in Dubai—a move which could undermine the good work done by the UAE’s ostensibly extensive legal reforms and jeopardise the future of trade relations between Britain and the Gulf nation.

Isolated incidents give the lie to Emirati liberalisation

When the Emirates’ recent legal reforms were announced, they were warmly welcomed by industry experts. Prominent voices such as Chris Doyle of the Council for Arab and British Understanding (CAABU) and international law firm Pinsent Masons have speculated that the changes could improve the business climate in the UAE and lure British investment to Emirati shores.

However, the image of Farkhad Akhmedov flouting UK court orders, as well as the spectre of a two-year prison sentence over an expletive-ridden text message for a British national, have raised eyebrows over the idea that the UAE has really changed its spots. If the Emirati authorities are serious about courting British business interests, they will need to eradicate primitive court rulings such as these and convince potential investors that their high-minded rhetoric is far more than mere window dressing.

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