DIFC Court Claims Jurisdiction in Indian Bank LawsuitDIFC_arti_carlos

For Immediate Release. DUBAI, Nov. 3, 2014 – In a judgment issued on October 30, 2014 by the Dubai International Financial Centre (DIFC) Court of First Instance, the court confirmed its jurisdiction over a lawsuit by an expatriate investor, resident in Dubai, United Arab Emirates, against the Indian-based, ICICI Bank, registered in the DIFC.

In May, Indian citizen Kishanchand Gangaram Bhatia filed suit in the DIFC Court of First Instance alleging that ICICI Bank induced him to invest in an unsuitable fund and had not disclosed material information relating to the fund despite documented requests. The defendant bank then filed a June application to challenge the DIFC court’s jurisdiction over the suit. The defendant bank’s application was primarily made on three grounds: (1) that the claim is time-barred; (2) that the claim does not disclose a valid or viable claim or action; and (3) that the parties had contractually opted out of the DIFC jurisdiction and had executed a jurisdiction agreement for the laws and courts of Singapore.

Justice Roger Giles considered all three grounds raised by the defendant bank and upon hearing counsels for the parties, concluded that the Defendant’s application to challenge the DIFC court’s jurisdiction should be dismissed.

“That the court dismissed the defendant bank’s application despite contractual documents that contained opt-out provisions has significance beyond Diaz-Reus-Partners-_-arti-sangar---carlos-gonzalezour case,” said Arti Sangar, Diaz Reus (Dubai) partner and lead attorney for Bhatia. “This decision should encourage investors to initiate lawsuits against banks registered in the DIFC if they suffer losses on their investments due to negligent advice or misrepresentations made by such financial institutions.”

“Since its establishment in 2004 the DIFC has steadily grown in stature,” said Carlos F. Gonzalez, Diaz Reus partner. “Its growing reputation enhances Dubai’s standing as a global hub in trade, finance and commerce.”

About Diaz Reus:

Diaz, Reus & Targ, LLP is a full-service international law firm offering comprehensive legal services, including international banking and financial matters, to international and U.S.-based clients from offices strategically located in 14 dynamic business centers, including the U.S., Latin America, the Middle East, Asia, and Europe. For more information, visit www.diazreus.com

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Mexico is the second largest economy in Latin America, while the United Arab Emirates (UAE) is the second largest economy on the Gulf peninsula. Mexico and the UAE share common attributes, two of which are a dry climate and a strategic location for business trade. In the past several years, both countries have increased their efforts to pursue treaties to open new markets for their businesses and investors. In line with that trend, in 2012 the UAE and Mexico signed a double taxation avoidance treaty and an agreement on reciprocal protection for investment is in the process of being finalized. These treaties are expected to have a tremendous economic impact and strengthen mutual trade relations between the two countries.

Practical Steps to Better Manage Legal Risks Overseas

Companies in the two countries are expected to work immediately to identify key products and services that are, or could be, traded, as well as specific regulatory policies, standards, or practices that affect the cross-border trade. Yet, with all of the potential upside of doing trade deals, there are also key risks. That is why, when doing cross-border trade, all parties must understand and closely manage the potential legal risks to determine their best approach.

One | Select The Right Local Partner

Choosing the right local partner can mean the difference between having a significant asset or a major liability. The goal of vetting and selecting is to ensure that a partner can not only meet quality and delivery requirements but also comply with regulatory standards. Careful vetting and selecting is even more important in emerging markets as it can be difficult to verify issues like ownership, financial solvency and criminal histories. To overcome these challenges, one should ask potential suppliers and partners whether they have previously done similar work and get references to verify the quality of their work. As a starting point, prospective local partners should be interviewed to get a sense of how they operate and whether they have the capacity to handle the volume and complexity of cross border business procedures.

Two | Be Careful With Contracts

Sometimes parties lock themselves into exclusive relationships to save on price but it is a mistake to give an overseas distributor or partner exclusivity without a real need to do so. The ideal approach is to start small and scale slowly. Most importantly, be aware of the basic ways in which one can manage risk through appropriate contract provisions. A contract provides an opportunity to manage that exposure by limiting the liability that a party would have to the other party under the contract. For example, in a sales contract, a seller may limit its liability to the sale price of the product sold rather than become exposed to much larger damages. Among other things, parties should consider very carefully how disputes under the contract would be resolved—by litigation or arbitration—where they would be resolved and in what forum.

Three | Be Mindful Of Employment Matters

If you hire an employee in a foreign land, it will become subject to the foreign labor laws. This is a complicated area even for domestic companies and any employer needs to understand the basic labor laws applicable to employment issues as hiring, management, incentives and discharge of employees. Unfortunately, this may be a particular risk for companies that have smaller overseas offices since they cannot generally afford the sort of human resources professionals that larger companies have. Smaller offices managed by executives sent from overseas may have the highest risk of making mistakes in this area, where the resulting potential liability can be huge.

Four | Educate And Train Employees

Selecting the right employee to send to the overseas office may be the most important risk- management step. In many cases, legal problems could be directly attributed to employees who were simply not suitable for the job they were sent to the overseas office to do. It makes sense to select employees who are well-suited for the environment in which they will be working and to give such employees the basic training they will need to help them deal with the risks that they can encounter. That will obviously require a considerable investment of time and money.

Five | Engage Experienced Legal Counsel

Finally, when establishing overseas operations it is crucial to have the advice of local counsel experienced with the laws of the foreign country. Licensed legal counsel in the foreign jurisdiction can help you to identify specific risks and offer appropriate counsel on how best to manage those risks even before problems arise.

Diaz Reus has an active cross-border transaction team with offices in both the UAE and Mexico, as well as offices in the U.S., South America, Europe and Asia. Corporate Intl Magazine recently selected founding and global managing partner, Michael Diaz Jr., to receive their Global Award for 2014, ‘Cross Border Attorney of the Year in Florida.’ Should you need counsel or assistance, please call us for more information.



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St. Regis Bal Harbour, a luxury high-rise hotel and condominium residences, sits majestically on the edge of the Atlantic oceanfront in the desirable county of Miami-Dade, Florida. Just two years after its grand opening, the luxury hotel—which is estimated to have cost $1 billion to develop—under the Starwood Resorts & Hotels flag was sold to a Qatar-based firm for $213 million. That firm owns more than 25 hotels in the Middle East, Africa, Europe, and North America.

Purchasing a hotel can be exceptionally attractive. And now may arguably be one of the best times in the recent past to do so. But buying a hotel is not a simple real estate transaction. Even with previous experience, the process is likely to be as unique as each property under consideration. For example, beyond the bricks and mortar, a hotel purchase requires careful due diligence—extensive research and preparation—as it involves the transfer of additional business assets such as the goodwill, inventory, stock, and perhaps most importantly, its employees. Therefore, both pros and novices alike should begin with a collation of such documentation and information well in advance. This will undoubtedly identify concerns, eliminate mistakes, get the negotiations off to a proper start, and result in a successful transaction.

Preparing to Purchase A Hotel

These steps, among others, are often key when preparing due diligence in a hotel purchase:

  1.  Assemble a Due Diligence Team. In any hotel acquisition deal, proper due diligence cannot be stressed enough. In fact, it is the due diligence process that will often take up most of the hotel buyer’s time. Indeed, it is not unusual for due diligence questionnaires to be dozens of pages long. A good place to start is to make a list of all documents that need to be reviewed. The key is to have your due diligence team (hotel consultant, construction/engineer consultant, zoning consultant, and legal counsel) walk through what is needed in each respective area. For example, a zoning specialist is essential to review the hotel entitlements and to confirm that the hotel assets comply with all environmental and zoning laws. Accordingly, each team member should conduct a thorough investigation of that which applies to their respective area of expertise to ensure that the buyer acquires a clean, transparent and well-organized company.
  2. Review Statutory Books and Corporate Documents. Are the hotel’s statutory books in good order? A buyer should ensure that they are complete and up to date, including the registers of members, transfers, allotments, charges, directors, and secretaries. It is equally important to review the hotel’s bank accounts and borrowings. A buyer should no doubt also see copies of all the insurance policies. It is important to check that all relevant permits are in order to ensure that the seller has complied with all relevant statutory requirements. It should also be ensured that the hotel has current licenses for all its activities.
  3. Intellectual Property and Brand Issues. Intellectual property rights are always important assets of hotel companies. Does the hotel have a registered trademark? If so, the buyer should ensure the registration has not expired and that the buyer has a copy of the registration certificate. If the hotel has a website, it should be known who operates it and who owns the domain name and the rights in the web design. Do these need to be transferred to the buyer prior to its sale? A buyer should also obtain details of the computer system, including the hardware and software components. It is advisable to compile a list of all computers, servers and related hardware and software programs used by the hotel.
  4. Employee Matters. A buyer should thoroughly review the complete list of all employees and the employee records. Employee records should include the name, date of birth, and start date, salary, job title, and full or part-time status of each employee. A seller should be asked to provide copies of employment contracts, any staff handbooks, details of all benefits offered to employees, and of any bonus schemes and details of any pension scheme operated by the hotel. Failure to manage this process correctly could result in claims being brought against either the seller or the buyer. Careful legal advice should therefore be sought.
  5. Survey of the Property. The buyer should ensure that a full survey of the hotel premises is undertaken in order to ascertain, to the extent possible, its state and condition. The buyer should also investigate title to any property owned or used by the hotel. It would be helpful to draw up a schedule of properties stating whether the properties are freehold or leasehold and, if they are leasehold, details of the number of years outstanding on the lease and the name of the landlord.
  6. Seller Warranties and Representations. More often than not, buyers do not spend enough time focusing on seller representations and warranties which would be a mistake. The seller of the hotel will have knowledge of the assets and securing representations and warranties from the seller regarding the assets will provide the buyer with some additional information, as well as comfort that the information the buyer already has is accurate. The proper drafting of seller representations and warranties is therefore critical. Needless to say, these areas of the purchase agreement should be reviewed and drafted with great care. Having a set of properly drafted representations and warranties by experienced local counsel can significantly help flush out critical issues.


Truth be told, there are many more than the above key considerations for buying a hotel. With experienced professionals and seasoned legal counsel paying close attention to any that might be unique to the property under consideration, the likelihood of success increases exponentially. Finding professionals with the proper experience to assist in the transaction will assure the buyer that they are fully informed as to how the issues at hand will impact the hotel acquisition.

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Middle East Investment in Latin America: Key Legal Issues

by Arti Sangar February 13, 2014

Latin America offers vast opportunities for Middle East investors looking to expand their presence in the region. As a result, Middle East investors are increasingly looking to Latin America for both yield and diversification. For example, in 2009, Abu Dhabi Investment Authority undertook construction of two towers in Rio de Janeiro and the United Arab […]

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What you need to know about IP laws in the GCC

by Arti Sangar December 5, 2013

Protecting and monitoring intellectual property (IP) is challenging almost anywhere in the world, but it is particularly challenging within the Gulf Cooperation Council (GCC) countries. Currently, a patchwork of laws attempts to address technological advances and the differing needs of producers, owners and users of intellectual property. Yet, despite a host of IP laws in […]

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Data Protection In The Era Of Snowden And Manning

by Arti Sangar August 17, 2013

Recent headlines featuring unauthorized data leaks of state secrets by wannabe whistleblowers—U.S. citizens Edward Snowden and Bradley Manning—have demonstrated how significant the ramifications can be when employees who have access to classified information leak it publicly. In this day and age, any employer can face a similar situation—and potential liability—should an employee disclose confidential information […]

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Venezuela’s Black Currency Exchange Market: Reasons and Risks

by Arti Sangar July 9, 2013

The Venezuelan financial system is completely isolated from the rest of the world. The exchange control system in Venezuela prohibits making any kind of payment between a bank account abroad and one inside the country, or to use local credit cards abroad or online without the approval from the Commission of Foreign Exchange Administration. As […]

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Emerging Crime Trends In Currency Exchange Industry

by Arti Sangar June 16, 2013

U.S. prosecutors have recently filed an indictment against the operators of the Costa Rica-based currency exchange, Liberty Reserve, accusing it of helping criminals around the world to launder more than US$ 6 billion. The laundered funds have been linked to everything from child pornography to software for hacking into banks. Any currency exchange business risks […]

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