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  • "A Day in Riyadh": An Exhibition of History, Culture, Modernization & Reformation

    During the last week of September, immediately following the opening of the United Nations (UN) General Assembly in New York, a series of seminars, workshops and interactive displays collectively coined "A Day in Riyadh" was showcased at the UN.  This week-long "Riyadh Day" was sponsored by the High Commission for the Development of Arriyadh (Riyadh), and particularly featured the ongoing work of the Arriyadh (Riyadh) Development Authority (ADA).  As a Representative (Observer) for a Non-Governmental Organization (NGO) to the UN, and an attorney with an office in Saudi Arabia, Mr. Huf, Principal of JHI, was pleased and excited to attend.

    Riyadh (Saudi) Exhibition at the United Nations
    Focused on the capital city of Saudi Arabia (KSA, or the Kingdom) and the governate (province) of Riyadh, the series of presentations covered subjects relevant to the economy, culture, commerce and development of the entire Kingdom, and the Arab and Islamic worlds more generally.

    Of particular interest to those who follow this space will be the planned reformation of Riyadh's transportation system which, if fully executed, may be the single-largest public works project on earth during the period of construction. However, we will list all of the subjects covered by the panel presentations at the UN between September 27 - 30, to provide a broad look at the planned continued development of Riyadh (one of the chief purposes of the conference) which, in turn, may give us a better view of the Kingdom-wide social and economic reforms known as Saudi Arabia's "Vision 2030".

    Eng Khalid Al Hogail, CEO Saudi Public Transport Company  Saudi Nuclear Program  Arriyadh Development Authority

    9/27 "Riyadh:  Planning for People" - the overall City Plan (by 2030) moving forward, including details on Riyadh's new "Smart City" initiative.

    9/28 "Riyadh:  A Sustainable & People-Friendly City" - details concerning the Sustainable Development of Riyadh.

    9/29 "Riyadh:  On the Move" -  The King Abdulaziz Project for Riyadh Public Transport.

    9/30 "Riyadh:  Development of Civilization and Social Partnership" - Plans for the continued social, economic and intellectual development of the city's population in line with Islamic principles and the traditions of Arabia, particularly youth and especially young women, empowering them to take a more active role in the growth of the city and the future of the Kingdom as a whole.

    Dr. Sana H Alorf and Jason Huf
    (Jason Huf and Dr. Sana Alorf.  Dr. Sana is extraordinary, but not unique. She is a medical doctor working in Riyadh who also participates in many charitable and civic endeavors.  She volunteered, along with many other young Saudis, to travel to New York and talk about their culture, heritage and way of life in side bars at the exhibition.  Many ladies are taking up professions [including and increasingly fields such as law, medicine and science], starting businesses and participating in life outside their homes in the Kingdom.  Dr. Sana has a wealth of information that dispells many of the illusions concerning Saudi society and highlights the progress Saudi women have made - and continue to make.)

    The public transortation project, scheduled for completion in 2018, is a massive affair that could revolutionize life in Riyadh.  In addition to a new bus service, the project includes the construction of a commuter railway (Riyadh Metro) with six lines, dozens of stations, a main terminal for each line, and services areas at each stop, including large-scale shopping complexes at each of the main terminals.  Anticipating use by roughly 3.6 million residents daily, over 3,000 transport stands will be constructed to accomodate waiting commuters.

    With billions of Saudi Riyals being invested into the project, and given the rather brief time frame, this will generate a labor boom in the capital for qualified Saudis and expatriates.  Mr. Huf asked Eng. Hassan Al Musa, Deputy Director of the Transport Planning Department of the High Commission for the Development of Riyadh, if resources had been allocated to process what should be a substantial spike in Visa applications.  Potential contractors and subcontractors will be interested to know that the Deputy Director responded that his office is in touch with the Ministry of Labor on a regular basis as they set up for this contingency.  So long as employers comply with their filing requirements, he said, there should be no delays in the project caused by a labor shortage brought about by paperwork backlogs.

    Eng Hassan Al Musa and Jason Huf
    (Eng. Hassan Al Musa and Jason Huf.  Mr. Huf found him to be capable, earnest and modest.  Although entrusted with day-to-day management of a massive public works project that progresses under a tight schedule, he always gives credit to others, refering to his "Army" of dedicated public servants.  "That makes you a General", responded Mr. Huf, who later added, "Eng. Hassan is a nice guy".)

    In addition to the lifestyle transformation and relief of traffic congestion that will take place once this project is complete, young Saudis who are lacking in resources such as cars of their own will be able to much more easily venture beyond the confines of their own neighborhoods to look for satisfying work and important educational opportunities.  And, everyone who lives in Riyadh should enjoy the benefit of cleaner air arising from fewer cars on the highways.

    The entire program provided a window through which one could sample Saudi Arabia's Vision 2030, the rapid modernization and other wide-ranging reforms ordered by King Salman and spearheaded by Deputy Crown Prince Mohammed bin Salman, with the aim of guiding a modern but authentically Islamic Saudi Arabia that remains true to its people's history and traditions into a future "Post-Oil" economy.

    These reforms include the KSA's Sustainable Development program, which closely follows the UN's Sustainable Development Goals while keeping in conformity with Kingdom's Islamic principles; increased opportunities for youth & women; and, Saudi Arabia's nuclear power program.

    At JHI, we have offered our own modest suggestions for the shaping of such sweeping reforms, with an emphasis on attracting increased Foreign Direct Investment in the Saudi market.

    With an incoming US Administration that seems keen on utilizing America's energy resources; and, (if feasible) working with Russia to defeat ISIS (which, in addition to commiting henious atrocities, has been fighting forces led directly or indirectly by the Iranians), some may see such investment from the West as slow in coming, and the KSA's reception of it to be less-than-enthusiastic.

    Seen by some as signalling potential push-back against the further development of US energy resources and other recent or possible future policy changes, Prince Alaweed bin Talal of Kingdom Holding Company (Saudi Arabia's soverign investment apparatus) suggested selling holdings previously classified "not sellable" (such as shares in Citi Group and US Treasury bonds), which would be a divorce from Saudi Arabia's long-standing policy of having "buy-ins" in important American economic institutions and, thus, the American economy - effectively giving the US a stake in the KSA's existence and continued success.

    Noises concerning such potential push-back seem unlikely to stem the increased exploitation of US energy resources (another dip in the price of oil, for example, would seem more likely to give pause to an increase in US production).  And, the US-Saudi alliance of over seven decades, while fraying a bit over the last several years, should remain rather tightly tethered:  after ISIS is destroyed, a check on Iranian ambition will have been eliminated, and the US and the KSA will more clearly and simply share strong interests in containing Iran and managing increasingly complicated relationships with Russia.

    In fact, the strong relationships the KSA enjoys with the West, the interest Western countries have in seeing the continued modernization of Arab states, and Western companies' keen eye to continue - and, possibly increase - their investments in the Gulf region were reinforced recently by UK Prime Minister Theresa May in her mid-December visit to the Gulf Cooperation Council summit in Bahrain.

    Overview City Plan Riyadh 2030
    Pending changes to the Kingdom's commercial and corporate laws, which continue to be rolled out, and given at least one or two geopolitical uncertainties, JHI presently and on the whole views it likely that the environment for Foreign Investors will become even more attractive as the Vision 2030 reforms are implemented in the KSA.  As to the Great Social & Economic Reformation of the Kingdom known as "Saudi Arabia's Vision 2030", Mr. Huf doesn't think its on par with the Maji Restoration (the radical transformation experienced in Japan during the late 19th century), but he does see it as the most significant series of reforms in the history of the KSA since the reign of King Faisal (perhaps in the Kingdom's entire history - we'll see) and the most positive collection of developments to take place in the Arab world thus far in this new, turbulent 21st century - and, he certainly viewed the exhibition at the UN positively.

  • Huf Witnesses Major Changes at the UN

    During 2016, Mr. Huf had the opportunity to meet with both the Secretary-General of the United Nations (UN) and the President of the UN General Assembly for the 2015-16 term.  As a Representative (Observer) to the UN on behalf of the New York County Lawyers' Association (NYCLA), a recognized Non-Governmental Organization (NGO), Mr. Huf took a keen interest in what they had to say.

    HE Ban Ki-Moon, UN Secretary-General; and Jason Huf (JHI)
    (Left to Right: H.E. Ban Ki-moon, Secretary-General of the United Nations; and, Jason Huf)

    Nearing the end of his second term, UN Secretary-General Ban Ki-moon has been very earnest in showcasing and attempting to make effective his crowning accomplishment: the UN Sustainable Development Treaty (the Treaty), which garnered a record number of member states joining as signatories.

    In April, the Secretary-General reached out to the private sector, in particular the US Legal Community in New York City, to see what they could do to help promote and ensure the success of the UN's Sustainable Development Goals (SDGs), which are embodied in the Treaty (for more on the SDGs specifically, we invite you to peruse www.un.org).

    While the underlying purpose of the SDGs is noble (after all, who doesn't like clean air & water, equal rights, rule of law and the like), as lawyers we are limited to providing our corporate clients with legal advice, not business or public relations advice.  We can only advise our clients on how to be compliant with the laws and regulations of the relevant jurisdiction(s).  If a client were to invest in, say, Saudi Arabia (KSA) in such a manner that it promotes gender equality in that market, it may be a terrific selling point - but, that's a PR decision, not a legal requirement.

    We will discuss gender equality and other relevant issues in the KSA when providing JHI's write-up on Mr. Huf's attendance at and observations of the week-long "Riyadh Day" presentations at the UN.  As to the promotion and enforcement of the SDG's, it really is up to the signatories to pass executing legislation before attorneys can advise on how to comply with such provisions.   And let's face it, only government can concentrate the resources and power necessary to execute such sweeping and extensive changes.

    The odds of that happening really have to be measured on a state-by-state basis.  As to the Western states, Mr. Huf points out that in politics there is an ebb and flow, with a pendulum that swings right and left, and the present trend appears to be one wherein Western countries are electing more conservative, business-friendly governments.  If Mr. Huf is correct, then issues such as combating "climate change", for example, will (for the time being at least) take a back seat to pro-energy policies that are likely to be adopted by such governments.

    Irrespective of what one thinks of the feasibility of accomplishing the SDGs by the target date of 2030, no one should doubt the Secretary-General's sincerity in wanting these goals to be accomplished, or what he views as the UN's power to shepherd such change.  Mr. Huf found His Excellency's sincerity, passion and enthusiasm to be obvious in that he wears it on his sleeve.  He also thinks it obvious that the Secretary-General is highly intelligent, exceedingly accomplished, and a very nice man.

    Its a remarkable life story, really. From UN Refugee to UN Secretary-General:  finding himself to be a UN refugee at age 6 with the outbreak of the Korean War, to becoming an advocate for lasting peace as the Republic of Korea's (South Korea's) Foreign Minister, to being Secretary-General of the international body that once shielded him and his family as young refugee, he proudly says "I am a UN Boy".

    Mogens Lykketoft (Denmark) & Jason Huf (JHI)
    (Left to Right: Morgens Lykketoft (Denmark), then-President of the United Nations General Assembly; and, Jason Huf)

    On the subject of choosing his successor as Secretary-General, Mr. Huf had the pleasure of meeting Mr. Morgens Lykketoft, formerly the Finance Minister of Denmark who, until this September, served as President of the UN General Assembly.

    Mr. Lykketoft provided an overview of changes to the selection process.  Perhaps the most fundamental innovation is the vetting of candidates by member states that occurs prior to the vote taken by the Security Council members.

    Whereas in past years the entire process of selecting a Secretary-General was dominated by the "Big Five" (the permanent Security Council members: the United States, Russia, China, the United Kingdom & France), candidates for their consideration are now first reviewed, narrowed down and subsequently voted upon by the General Assembly. 

    The Security Council is not bound by any recommendation made or preference expressed by the General Assembly; however, to elect a candidate that was not considered favorably by the General Assembly would be to risk a divide between the Secretariat (the executive wing and permanent bureaucracy of the UN, which the Secretary-General heads) and the member states themselves (upon which the very legitimacy of the UN relies).

    On the other hand, this increased, more hands-on role by the member states and the General Assembly as a whole could provide for greater transparency in the selection process and, when heeded by the Security Council, may lead to greater consensus between the General Assemby and Secretariat.

    This year, the revised process produced the election of Antonio Guterres, former Prime Minister of Portugal who once served as the UN High Commissioner for Refugees.  He will take over the office of Secretary-General in January of 2017.

    In addition to achieving the SDG's, Mr. Guterres's efforts are promised to be focused on continued reform of the UN bureaucracy; continued streamlining, expansion and enhancement of refugee assistance; and, very prominently, an aggressive new "surge" in diplomacy for peace - an intensification in seeking resolution to the wide proliferation of conflicts around the world, especially those conflicts that have led to several severe refugee crises currently plaguing humankind globally.

    JHI congratulates Mr. Guterres on his election after a months-long campaign that included a rigorous review process resulting in consensus in both the General Assembly and (somewhat remarkably) the Security Council as well; and, cautions: careful what you wish for, sir - because now you've got it.

    The retiring Secretary-General Ban Ki-moon, even after all of his success in his position at an institution he has loved and revered since childhood, nonetheless seems very happy to return home to Seoul after 10 rewarding - but long - years.  JHI congratulates him as well, and thanks him for his service.  We hope His Excellency enjoys a well-earned retirement after a long, but safe, journey home. 
  • Continuing Legal Education (CLE) in 2016

    In April of 2016, Mr. Huf was honored to serve as Moderator of two different panel programs offered by the New York County Lawyers' Association (NYCLA).  The first program was a Continuing Legal Education (CLE) course concerning the Foreign Corrupt Practices Act (FCPA/ the Act), the second offered Ethics Credit and concerned Attorney "Branding" & conforming with the Rules of Professional Responsibility.

    The CLE panel on the FCPA discussed the increasingly broad and robust enforcement of the Act, and the implications for Corporations that do business internationally, as well as its responsible officers and the potential for individual liability/ culpability.  The panelists not only discussed what to do in the event of an FCPA problem, but their thoughts on how to avoid such problems in the first place - now and in the future as the law evolves.

    Jason Huf, Jay Safer, Glenn Jones, James McGovern, Clara Flebus
    (Left to Right: Jason Huf; Jay G. Safer, Wollmuth, Maher & Deutsch; Glenn Jones, Law Offices of Glenn M. Jones; James McGovern, Hogan Lovells; Clara Flebus, Co-Chair, NYCLA Foreign & International Law Committee)

    The Branding panel provided an overview of marketing methods and the why and how of establishing a "Brand" - the "dos and the don'ts".  (Mr. Huf notes that he still has to establish a Youtube page for his firm, JHI!)  The panel also discussed how to plan and execute a marketing program that does not run afoul of the Rules of Professional Responsibility and agreed that, in addition to being every attorney's responsibility, being Ethical should, in fact, be a fundamental part of an attorney's Brand.

    The Rules of Professional Responsibility tend to follow changes in technology, and developing technologies are an important driver in the evolution of legal marketing programs.  Accordingly, the panel also discussed trends and the direction the Rules of Ethics might possibly take, including recent recommendations by NYCLA, as rule-makers chase after these rapidly-developing technologies and the ethical implications of their use.

    Clara Flebus, Penn Dodson, Rick Brownell, James Walker, Steve Perih, Jason Huf
    (Left to Right: Clara Flebus; Penn Dodson, AndersonDodson; Richard Brownell; James Q. Walker, Richards, Kibbe & Orbe, and Chairman of NYCLA's Committee on Professional Ethics; Stephen Perih, TransPerfect; Jason Huf)

    As Co-Chairman of NYCLA's Foreign & International Law Committee, Mr. Huf proudly notes that NYCLA constantly offers interesting, relevant and forward-looking CLE programs and other valuable forums for continued learning on a regular basis; and, states that consumers of such programs can look forward to the steady provision of additional thoughtful and cost-effective programs now and in the future.  For more information on NYCLA's CLE offerings, please visit www.nycla.org

    Mr. Huf will, of course, continue to advise friends and colleagues of CLE programs and other speaking engagements wherein he is a participant in 2017 as the new year approaches.
  • N. Mandela and How the "Soprano State" Doesn't Work in Africa, Either

    On the evening of September 22, 2016, Mr. Huf attended an event featuring Ndaba Mandela, Chairman & Co-Founder of the "Africa Rising" Foundation, and grandson of late South African President Nelson Mandela.  Mr. Mandela was in New York during the Convening of the United Nations (UN) General Assembly and spoke at the New York City Bar Association on the Sustainable Development Goals (SDGs) vis-a-vis African states, particularly Goal # 16 (concerning Good Governance, Anti-Corruption and Rule of Law).


    Ndaba Mandela, Africa Rising Foundation & R. Jason Huf, Huf International (JHI, pc)
    (Left to Right: Mr. Ndaba Mandela, Chairman & Co-Founder of the "Africa Rising" Foundation; and, Jason Huf)

    Mr. Huf grew up in New Jersey, and has lived there for roughly half the sum total of his life thus far.  He knows, first-hand, the economically and socially corrosive effects of political corruption, and the crippling effect a government that serves only to facilitate corruption can have on a state and the people who live in such a place.

    That said, Mr. Huf limited himself to listening.  After all, while lawyers may be at the bottom rung of the ladder among the governing class, lawyers are still part of the governing class.  Mr. Huf thought it best to listen to - and learn from - someone who speaks for some of the people of the developing world who have been poorly served (and, often, downright exploited and oppressed) by those who govern their countries:  "Far be it from me to tell him what he should want.  He knows what he wants!", Mr. Huf later said of his interraction with Mr. Mandela.

    More judges, better educational opportunities, and the like were offered up as being helpful tools in pursuit of SDG # 16.  But, Mr. Mandela most strongly asserted that it was up to the people themselves, not judges appointed by corrupt dictators and oligarchs, to assert themselves and demand access to the clean water, medical treatment and other resources which are rightfully theirs.

    He has a point - who would simply sit there watching their child die of a perfectly preventable disease and patiently wait for a UN team to swing by and, after some years, convince the multi-millionare colonel/ President of their otherwise poor country to suddenly have a change of heart and appoint honest judges and fly in doctors, food, agriculture & water treatment specialists instead of buying that third villa in Switzerland?

    And, he makes that point with evident sincerity and passion, as one might expect given the heavy legacy he inherits from his iconic grandfather.  The SDGs are ambitious and, if only because of that ambition, useful.  But, absent people demanding responsibility for, and power over, their own futures, the progress that can be made toward the SDGs is likely somewhat limited.

    Specifically, it does not seem possible to accomplish any of the SDGs without first making serious advances on SDG # 16, given the destructive and stifling effect bad governance and political corruption consistently have on  factors necessary to achieve the other Sustainable Development Goals.  Rule of Law is, quite simply, a must for any civilization to achieve real success, whether it be Sierra Leone, Nigeria, the Republic of South Africa, or New Jersey.  And SDG # 16 is unlikely to be accomplished without the engagement of an affected population.

    Mr. Huf expressed genuine pleasure over meeting Mr. Mandela and looks forward to similar opportunities as he tracks the progress of the SDGs at the UN as Representative (Observer) of a Non-Governmental Organization (NGO), particularly as and when such may impact the "corporate responsibilities" of companies doing business internationally.

    The evening with Mr. Mandela was organized by the New York City Bar Association's UN Committee, which invited the New York County Lawyers' Association's (NYCLA) Foreign & International Law Committee to co-sponsor the event.  As Co-Chairman of NYCLA's Foreign & International Law Committee, Mr. Huf hopes the success of this event provides the basis for establishing a model of cooperation between committees of different bar associations on synergetic issues of importance to the legal community and society more broadly.
  • Qatar's International Commercial Court

    As Co-Chairman of the New York County Lawyers' Association's (NYCLA) Foreign & International Law Committee, Mr. Huf enjoys the occassional pleasure of hosting some rather interesting guests.

    Just this past March, the Foreign & International Law Committee welcomed the Honorable Gerald Lebovits, Justice of the New York Supreme Court in Manhattan and Adjunct Professor of Law at Columbia, Fordham and NYU.  Justice Lebovits provided a presentation covering the Qatar International Court and the time he spent in Doha teaching local attorneys there.

    JHI has briefly covered Qatar's Bifurcated Legal System in an earlier piece and we refer you to it for some of the bare bones basics.

    Justice Lebovits, in addition to describing his teaching experience in Doha, discussed the history of Qatar's International Court (the Court) for hearing commercial disputes, the caliber of its personnel, its procedures and costs.  He also discussed some of the decisions already rendered by the Court, where he participated as one of its distinguished Judges.

    Clara Flebus, Gerald Lebovits, Jason Huf
    (Left to right: Clara Flebus, Co-Chair, NYCLA Foreign & International Law Committee; Hon. Justice Gerald Lebovits; and, Jason Huf)

    Justice Lebovits pointed out, at length, what he viewed to be the efficiency of the Court relative to Arbitration facilities elsewhere in the Gulf region. The speed, cost and fairness of the proceedings made the Court, from his perspective, an ideal solution for Dispute Resolution and wondered aloud why parties did not avail themselves of the use of the Court more often in the dispute resolution clauses of their agreements.

    Mr. Huf agrees that, on paper and based on performance thus far, the Court is an attractive facility. However, the Court was founded relatively recently (2009), and as an active international practitioner who focuses on the region, Mr. Huf made the point that attorneys might be more receptive to the idea of recommending the use of the Court to their clients after more data is at hand (that is to say, after the Court has adjudicated more disputes). Of course, with attorneys perhaps hesitating to suggest that their client be something of a new legal system's "guinea pig", it may take some time before such additional data is generated.

    That said, you would be hard-pressed to find a lawyer in New York City who is as knowledgeable of the inner workings of the Court and the procedures it employs than Justice Lebovits.  His entire presentation – including his positive view of the Court's cost and time-effectiveness – was well-informed and compelling.

    JHI invites you to research the Qatar International Commercial Court and Dispute Resolution Centre and draw your own conclusions:

    www.qicdrc.com.qa


    After all, as very good lawyers, aren't we always in search of the next "better idea"?

  • Saudi Arabia's Vision 2030 & "Riyadh Day" at the UN

    You are about to see a rapid-fire (for this space, anyway) succession of as yet unpublished updates covering a period from Spring 2016 to present.  We will start with an initial discussion of Saudi Arabia’s “Vision 2030”, touted as the most sweeping series of reforms in the Kingdom’s history.
     
    In a nutshell, Saudi Arabia’s Vision 2030 is a collection of planned economic and social reforms designed to construct a “Post-Oil” Saudi Arabia, in line with globally-held concepts of Sustainable Development. King Salman has invested his son, Deputy Crown Prince Mohammed bin Salman, with broad, sweeping powers to enable him, his advisors and other subordinates to design and execute these reforms between now and the target date of 2030.
     
    Within the stated goals of weaning the Kingdom (KSA) off of being an Oil-based economy and becoming an industrialized state, with greater Foreign Direct Investment (FDI), full employment for working-aged males, improved access to high-quality education, greater rights for women and a more liberal social structure generally, two items are immediately obvious:  we are seeing Riyadh’s intent to finalize the end the era wherein OPEC, the powerful cartel of oil-producing states, has been the world’s definitive maker of oil policy; and, a rapid and intense military build-up intended to strengthen a block of states that includes the KSA, Egypt and the smaller Gulf States determined to withstand growing Iranian and Russian influence in the Gulf region following continued declining US influence and interest there and in the greater Middle East.
     
    While JHI is not a policy think tank, we feel it is important to know the backdrop and overall purpose of any upcoming reforms.
     
    Our principle concern is FDI, and the impact any reforms may have on the attractiveness of FDI in the KSA. This program is still young, so specific laws and regulations impacting FDI are not yet in effect. For the time being, there is nothing set in concrete that a law firm can dissect for the benefit of its clients.
     
    Therefore, in our typical less-than-modest fashion, JHI offers some suggestions on how to make FDI in the KSA more attractive to potential investors:
     
    1.  The Corporate Income Tax should continue to be (gradually) lowered, and personal income tax should remain zero.  Although declining oil revenues and their impact on the national government’s budget needs to be addressed, increasing the number of companies investing in the KSA, rather than increasing the tax existing companies pay, seems the best way to address the current budget shortfalls giving rise to the KSA’s national debt.
     
    2.  Saudization is seen, by and large, as a form of tax by potential foreign investors. The best way to address the employment crisis in the KSA is not by compelling investors to hire Saudi nationals, but by making the hiring of them more attractive.  Foreign investors ordinarily love to avail themselves of a local workforce – after all, importing staff and finding housing for them is pretty darned expensive!  Many such imported workers do not know the language or withstand the culture shock very well.  Unfortunately, fairly or unfairly, the idea of hiring Saudis is generally considered unattractive, thus the current Saudization requirements.  Rather than increase these requirements, education should be improved and made more accessible, and a sense of work ethic (rather than entitlement) needs to be instilled in the Kingdom’s youth.  And, the world needs to actually KNOW of the existence of such an educated, hard-working labor pool – numbering in the millions, and proud of real accomplishment at the workplace.  Do this, and Saudization will no longer be necessary at all.
     
    3.  Make the process of obtaining a business license less burdensome and more efficient.  Telling clients that it could take a minimum of six (6) months to obtain the necessary documentation before proceeding with business activity tends to be something of a turn-off for them.  Additional agencies designed to steer and otherwise regulate foreign investment eases nothing and are simply additional "layers” of bureaucracy.  Streamlining, rather than adding to, the process of licensing incoming businesses would be a productive step.
     
    4.  Women’s rights, and human rights generally, should be broadened – and, can be without offending the Kingdom’s religious sensibilities or its historical traditions.  It is much easier, on multiple levels, for a company to invest in a country whose culture is not the focus of controversial discussions centered around notions of equality and individual human dignity.  Additionally, it is essential that people throughout the Kingdom feel some sense of “ownership” in their country and their respective futures (see, 2. above).  They need to feel that their rights are being protected by their government, not denied.  This isn’t a call for the overnight imposition of Jeffersonian democracy.  Quite the contrary:  JHI asserts that the keys to unlocking a more liberal social structure (without rocking the stability of the KSA) lay within the old tribal and other cultural traditions of the modern Kingdom.
     
    5.  The labor market, and the regulation of such, should be loosened, and greater rights should be provided to foreign “unskilled” laborers and household staff.  As above (see, 4.), this is a matter of conscious for many potential investors, as well as foreign professional staff who visit the KSA.
     
    6.  Banking reform is a must.  The KSA is one of the most – if not the most – “underbanked” markets on the face of the earth.  While new banks and fresh capital and competition need to be allowed in, stronger regulation and monitoring needs to be in place, giving rise to stronger internal compliance programs.  While banking needs to be more readily available in the KSA, companies and governments around the world also need to have more confidence in the country’s banks.
     
    7.  For local and foreign companies alike, receivables can be something of a headache in the KSA.  Its no secret that debt, and the collection of debt, can be problematic there.  As the Kingdom undertakes judicial reform, it should continue to consider the importance of the confidence a company can have in the investment it makes in Saudi Arabia.
     
    8.  One of the most crucial assets in play when investing in any country is a company’s intellectual property. Intellectual property protections and anti-piracy measures need to be greatly strengthened, and quickly.  It is important for any company (say, you sell shampoo and find yourself competing with a counterfeit knock-off of your product – that’s not good), but when looking to attract high-tech industries, especially, it is absolutely fundamental that such companies have confidence that intellectual property worth hundreds of millions, perhaps billions, of US dollars will not be stolen from them and effectively rendered next to worthless overnight.
     
    These are eight basic principle points upon which JHI would like to see the building of any reform package affecting FDI in the KSA.
     
    JHI will track any concrete steps within this subject, and Mr. Huf hopes to learn more when “Riyadh Day” (its actually a week of symposiums, workshops and other such meetings), sponsored by the KSA’s High Commission for the Development of Riyadh, is held at the United Nations in New York at the end of September.
  • Bankruptcy Protection -- in the UAE... ???

    In a somewhat pioneering step, the United Arab Emirates (UAE) is close to finalizing an Insolvency Law modeled after Chapter 11 of the United States Bankruptcy Law.

    The devil will be in the details, but here is what we've heard thus far:

    Under the supervision of a UAE court, a distressed company that successfully files for such protection will be able to restructure its debt with outstanding creditors;

    The law may include some degree of decriminalization of issuing dishonored, or "bounced", checks (cheques, for our British friends); and,

    The overarching goal of this legislation is to improve the business environment by removing (or, at least, mitigating) some of the uncertainty of risk that may arise when investing in a country which may be rich with disposable income, but which is still "developing" - where the economy, laws and political system are still rapidly evolving.

    Dubai, UAE, Emirates, Arab, Bankruptcy, Insolvency, Law, Business, Commercial, Corporate, Firm, Chapter 11

    The extent to which such protections would be available to companies with some element of foreign ownership remains unclear.  However, if it is well done, this new Insolvency Law could prove to be a significant long-term development for the economy of the UAE, and (perhaps) the Gulf Cooperation Council region more generally.

    With the election of a new Federal National Council, one might anticipate final passage of the new Insolvency Law soon.  Perhaps.  Inshallah.  More to come...

    UAE, Arab, Emirates, Dubai, Abu Dhabi, GCC, Gulf, Bankruptcy, Insolvency, Development, Economy, Law, Legal, Firm, Company, Business, Commercial, Corporate, Banking, New York, NYC

  • Saudi Banking Market to Open Up?

    During King Salman's recent visit to Washington, DC, members of the Saudi delegation issued several announcements concerning planned commercial reforms and other developments that could prove significant to Foreign Direct Investment (FDI) in Saudi Arabia (KSA) as the Kingdom looks to broaden its economy at a time when low oil prices are projected to be the norm for the medium term.  We will highlight some of the more significant announcements in this and subsequent notes.

    While Saudi Arabia remains committed to continuing its current record-setting output of light sweet crude (one of the major factors contributing to low oil prices), the KSA is now facing projections of massive budget deficits and rapidly depleting cash reserves.  Increased FDI, particularly from the United States, appears to be critical to the KSA's strategy for coping with the downsides of consistently low oil prices. 

    Reforms in the Arab world often begin with teasers that function as "trial balloons".  This note will reference such a trial balloon floated by a Saudi official associated with the Deputy Crown Prince.  In a closed door meeting with business leaders in DC, this official announced that the Kingdom is considering opening the Saudi banking market to permit entry of additional foreign banks - especially American ones - wishing to do business in the Kingdom.  In additional to financing major projects, it is hoped that such banks would also cater to small businesses and individual depositors.

    Even with the recent entry of a branch of a bank based in fellow Gulf Cooperation Council (GCC) Member State Qatar, Saudi Arabia is still seen as, perhaps, the most "under-banked" market in the world.  To attract additional FDI, which has been in slight decline in recent years, some see the entry of additional Foreign banks and the capital they bring as critical.  Entry by foreign banks based elsewhere in the GCC has been helpful, but it will take the power of additional American and other western banks to take a more broad-based growth to the next level.

    Not stated, but understood, in this announcement is Saudi Arabia's desire that western powers continue to see that they have a stake in the stability of the Kindgom vis-a-vis its continuing conflict with Iran and, increasingly, Russia.

    Of course, the devil is in the details: What will be required to gain entry? And, once in the market, how secure is a bank's investment in the Kingom and how will such a bank be regulated and taxed?  How might such a venture impact an investing bank's legal and regulatory position at home?

    JHI will continue to track the flight path of this trial balloon and let you know where it lands...
  • A Deal's a Deal. Right?

    In the Middle East, the old joke among Western lawyers goes something like this:  “First you negotiate the contract, then you close the contract. And then, you renegotiate the contract… ”

    All good jokes are rooted in the truth.  While there certainly are some local parties in the Middle East who are committed to keeping their word and sticking to the deal they negotiated, there does exist this unfortunately common dynamic wherein the local party will test, stretch and even flat-out ignore the terms of an agreement they just executed.  One might even lose money betting against a breach occurring before the ink dries.

    And yet, throughout the Gulf Cooperation Council (GCC) region, billions of (US) dollars worth of business is successfully transacted each and every year by and between foreign and local parties.  How does that work?

    It starts with understanding what local businessmen already know:  going to court, dumping your local agent (or, colloquially speaking, your “sponsor”), etc, are usually your last best options.  You can see your company effectively frozen out of the market if you make such a move without an almost perfect sense of deftness.  And, even if eventually successful, should your company go this route, you have embarked on a long, aggravating and expensive disruption of business that will give rise to discussions that start with, “Why don’t we just pull out of there?”

    We will talk about arbitration clauses (and, the enforceability of them in GCC jurisdictions) in a subsequent posting.  For now, you also need to understand that the local sponsor, or other local parties with whom your company does business, who busies himself with stretching the terms of your agreement is primarily (if not entirely) in the business of sponsoring foreign enterprises (or otherwise makes his money conducting business with foreign parties).  Maintaining sponsorships or other replationships with foreign investors (and, protecting their reputations and pride) tend to be the top priorities of local companies.  So, when such companies appear to breach their agreements, what do they hope to gain by playing around?

    Usually, more money.  And, usually, not much more.  More often than not, you can settle the matter by amending a couple of terms and (slightly) goosing up their sponsorship “fee” (or, whatever other payment, profit or compensation they may be receiving).

    What about the law of contracts?  Why can’t I look for a new sponsor and/ or seek judicial recourse?

    Remember that the laws requiring you to obtain a sponsor in the first place are protectionist in nature.  On an unofficial level, shopping around for more pliant for cooperative sponsors isn’t designed to be easy.

    Also, while consideration, reliance and other concepts are necessary to show a promise made in contract is enforceable under the laws of the United Arab Emirates (UAE), such is not the case to show the existence of an enforceable contract in Saudi Arabia (KSA).  In the KSA, if you make a promise, you’re stuck with it.

    Isn’t the other side stuck with it, too???

    Well, in the Middle East, there is the law the way it is written, and the law the way its enforced.  And, to further complicate things, that which is enforced is not always written, and that which is written is not always enforced.  If you wind up in a KSA court, you may have a judge whose primary concern is sending a signal to his government, more than adjudicating a dispute between the parties before him.  In the UAE, much may depend on whether the judge enjoyed his breakfast, or if he is miserable from a belly ache, as he reads your company’s brief… (And, keep in mind, the UAE imports its judges from other countries – those judges tend to be mindful of who gave them their jobs.)

    As to getting another sponsor, while the UAE and the individual Emirates therein may not employ “black lists” per se (as does the KSA), you should nonetheless do your best to avoid running afoul of bureaucrats at relevant ministries and other governmental offices who may have a cousin, friend, or other acquaintance who may just happen to be your soon-to-be former sponsor or other business partner/ associate.  Business licenses have to be renewed every year, and your specific business may well depend on successfully bidding on government tenders; and, while Abu Dhabi and Dubai, for example, may look like big cities, they still very much operate as “small towns” on many different levels.

    That’s not to say successfully changing your sponsor and/ or winning a contractual dispute with a local party in the Middle East is impossible.  Such has been known to happen in Abu Dhabi, and even in Jeddah (where arbitration clauses are less likely to be deemed enforceable by local courts, even though the KSA is a party to the New York Convention).  Accordingly, you should protect yourself in the governing documentation the way you would in any other international agreement.

    Have the standard choice of law, venue, and language clauses, as well an arbitration clause (which can be something of a contract unto itself) and, especially, a (carefully written) termination clause.  If an American-based company (or, even if you are based in another Western country but have operations in the US), make sure the documentation includes language concerning your refusal to violate the provisions of the US Foreign Corrupt Practices Act (over the last several years, the trend has been increasingly robust enforcement of the FCPA).  American companies might also think to include a so-called “anti-boycott” clause in the agreement, given the on again/ off again enforcement of boycotts against Israel by some Arab states.

    Although the general mood in the GCC seems to favor a direction wherein the laws are being changed to relax the hold local parties (especially those deemed “sponsors”) have over foreign direct investment in their respective markets/ jurisdictions, it is usually best to try to renegotiate when a breach occurs.  Such renegotiation should, generally speaking, settle upon a slight increase in the amount of earnings the local party derives from the deal.

  • Mr. Huf Appointed Co-Chairman of Foreign & International Law Committee

    JHI is pleased to announce that the Firm's Founder and Principal has been awarded the honor of serving as Co-Chairman of the New York County Lawyers' Association's (NYCLA) Foreign & International Law Committee, effective June 1, 2014.

    "This is an exciting time for the Foreign & International Law Committee, and NYCLA generally.  Jay (Safer) and Jacqueline (Wolff) have done a terrific job as Co-Chairs of the Committee over the last several years, and we have some pretty big shoes to fill.  It is an honor to follow them, and I will do my level best."

    Continuing the tradition of hosting excellent guest speakers, and working with NYCLA to explore the offering of CLE programs designed for international practitioners, will be at the top of Mr. Huf's agenda.

    Mr. Huf assumes the Co-Chairmanship of NYCLA's Foreign & International Law Committee with his distinguished colleague, Ms. Clara Flebus.  They will serve together for the 2014-17 term.