Not long ago, a photo shoot was held at the Gate Building in the Dubai International Financial Centre (DIFC) involving high-ranking Arabs, looking relaxed in their flowing ceremonial robes, and a group of pin-striped, buttoned-up Britons.

Such events are becoming increasingly frequent in Dubai. At the front of the group were the DIFC’s governor, Omar bin Sulaiman, and Jan Paulsson, president of the London Court of International Arbitration (LCIA). As the cameras flashed the two men clinched a deal to form a new regional arbitration centre.

As the centrepiece of the DIFC, the Gate complex is reminiscent of London’s Canary Wharf 20 years ago. Unfinished and apparently sparsely populated, it has an air of expectation. Only three-and-a-half years old, it forms the heart of efforts to turn Dubai into a regional economic hub. The tax-free zone aims eventually to house 10,000 workers in the banking, capital markets, asset and fund management sectors, in addition to the Dubai International Financial Exchange. So far 600 institutions are registered there.

But when the deal makers fall out, they need a consistent and trustworthy mechanism for resolving disputes. Hence all the fuss over the tie-up between the DIFC and LCIA.

Is Dubai overlawyered?

Law firms have been scrambling to set up in the Middle East, but all that glisters may not turn out to be gold

The deal is a milestone for both parties: for the London Court, it marks the first time it has ventured beyond the UK. For the DIFC, it means access to an international network of arbitrators that will allow it to appoint high-calibre tribunals, a facility that has arguably been lacking in the region before now. Crucial to the DIFC’s attractiveness as a business centre is that it will be governed by English common law rather than the civil code that applies elsewhere in the Gulf.

The rising cost of conventional, court-based litigation has meant alternative dispute resolution has become increasingly popular over the past two decades. London, New York and Paris are already entrenched as the leading venues, with Singapore making the running in the Far East. Can Dubai realistically expect to compete with the more established global centres?

Convinced that it can, foreign law firms and barristers have descended upon the emirate in the past few years. Patrick Bourke, a partner in the Dubai office of Norton Rose, the London-based law firm, says: “There is a need for a regional centre. At the moment you are either heading back towards Europe or towards Singapore or Hong Kong.”

Alec Emmerson, a partner at Clyde & Co, expects there will be a lot of disputes arising from the apparently ceaseless property and construction boom. But it will not stop there: he also predicts disputes arising from investments, shipping, telecom and other consultancy and management contracts.

Some lawyers believe Dubai could even start to take work away from London. Peter Flint, the head of international arbitration at Barlow Lyde & Gilbert, says: “A substantial amount of work is migrating away from London to venues that are more convenient. For parties based in Central Asia, the Middle East and North Africa, the Gulf is an obvious destination.”

But Dubai faces competition not only from London, New York and Paris, but from within the Gulf itself. Nipping at its heels are the Abu Dhabi Commercial Conciliation and Arbitration Centre, established in 1993, and the Qatar Centre for Reconciliation and the Qatar Financial Centre. Flint says: “Certainly Dubai is ahead of the game in terms of infrastructure, but its neighbours may well challenge that position in time.”

At the end of March, Khawar Qureshi, QC, one of the top arbitration silks in the UK, announced the launch of McNair Chambers in the Middle East. He opted not for the glitz of Dubai but for the relative obscurity of Doha, the capital of Qatar. William Frain-Bell, of Terra Firma Chambers, the Edinburgh set, makes a case for Abu Dhabi, the capital of the United Arab Emirates, 90 miles to the south of Dubai.

Frain-Bell says Dubai is too popular and crowded to be a practical and convenient arbitration centre. “There are plenty of hotels and facilities,” he says, “but getting into a hotel at short notice for a reasonable price can be difficult, especially if your arbitration coincides with a major conference.”

Abu Dhabi, on the other hand, has excellent infrastructure and the advantage of being the home of leading organisations, such as the UAE Central Bank, that are likely to generate a rich seam of regulatory work.

Regardless of which centre emerges as dominant, there is a consensus that the Middle East needs a world-class arbitration facility if it is to attract the sort of international business it covets. Bourke says: “Given the historic difficulties in enforcing foreign judgments and awards in Middle East jurisdictions, the moves to position Dubai as a regional centre of excellence for arbitration are welcome.”

Jonathan Ames is the editor of The Brief, a monthly legal magazine based in Dubai

Explore Law

• Columnists

• Law Panel

• Law Reports

• Student Law

Times Recommends

• BGC 'set aside £40m to lure Tullett brokers'
• Legal aid review to ensure value
• Fears as 21 magistrates' courts face closure