The Middle East is rapidly emerging as one of the most dynamic and promising regions in the global legal funding landscape. With maturing legal systems, growing international arbitration hubs and increased awareness of third-party funding (TPF), funders are finding the Gulf Cooperation Council (GCC) jurisdictions—particularly the UAE, Saudi Arabia, Qatar and Oman—ripe with opportunity. Yet, the region’s unique legal, cultural and regulatory landscape poses specific challenges that distinguish it from the more established markets.
This article explores the key differentiators in litigation funding across the GCC, focusing on sourcing and due diligence, asset tracing, regulatory hurdles and case durations, using insights from industry practitioners.
Sourcing and Due Diligence: The Unique Factors in Origination and Underwriting
Origination
Legal funding in the GCC is shaped by a confluence of legal traditions (civil, common, Sharia), jurisdictional variation and commercial sensitivities. These factors make origination significantly different from jurisdictions like the UK, US or Australia.
- Types of Cases – Bias?
Funders often encounter informal or systemic bias in certain jurisdictions or sectors. For example, claims against government entities or entities with political ties may face hurdles regardless of merit, impacting their fundability. Funders must carefully assess not just the legal merits but also the identity of parties and political context.
- Jurisdiction – Arbitration vs Litigation
The GCC features a unique mix of onshore courts and offshore common law jurisdictions such as the DIFC (Dubai International Financial Centre) and ADGM (Abu Dhabi Global Market). Offshore courts are generally more attractive to funders due to international enforcement mechanisms, transparency, and predictability. Meanwhile, onshore courts (particularly in Saudi Arabia or Qatar) can pose challenges due to procedural delays, lack of precedent and evolving practices.
- GCC Country Nuances
Each GCC country presents different dynamics. For instance:- UAE: Offers both civil law onshore courts and robust common law offshore centres (DIFC, ADGM).
- Saudi Arabia: Undergoing significant reform but still opaque and challenging for funders unfamiliar with local procedures.
- Qatar: Home to the QFC (Qatar Financial Centre) and QICDRC (Qatar International Court and Dispute Resolution Centre), which operate under common law and are potentially funder friendly.
- Budgets and Quantum
Many Middle Eastern claimants are relatively new to funding and may underestimate the cost of international disputes. Funders must educate parties on realistic budgets and cost structures. Disputes under USD 5 million are often too small to justify commercial funding, while high-value infrastructure, oil & gas and construction claims are more suitable.
- Awareness of the Asset Class
Despite growing interest, many clients and even law firms remain unfamiliar with litigation funding. Education remains key to unlocking deal flow.
- Local vs International Firms
International law firms often understand how to prepare a case for funding and present robust financial models. Local firms may be less familiar with funder expectations, requiring greater funder involvement in the diligence process.
- GCC Jurisdictional Distinctions
Legal funding risk varies substantially between jurisdictions. For example, the UAE’s DIFC/ADGM is more transparent and internationally oriented than Oman’s or Saudi Arabia’s court systems. Understanding these jurisdictional nuances is critical for funders.
Underwriting
Once a case is sourced, underwriting poses its own complexities in the GCC:
- Ownership and Transparency
Many businesses in the region are privately owned, with opaque corporate structures. Establishing the true ownership of a claim and confirming authority to proceed often requires in-depth corporate and registry investigations.
- Collection and Investigations
Even with a strong claim, enforcing an award or judgment can be difficult. Funders must analyse the enforceability and recovery strategy from the outset, often relying on local assistance.
- Authority – Power of Attorney
In several GCC countries, civil law jurisdictions, executing funding agreements or arbitration clauses may require notarised powers of attorney. The lack of clear authority can delay or invalidate agreements.
- Language Barriers
Many original case documents may be in Arabic, requiring translation. Additionally, Arabic legal pleadings may not align with international funder expectations in terms of format or evidentiary presentation.
Asset Tracing and Recovery: When is a Win Really a Win?
A successful award or judgment does not guarantee a monetary return, wherever it is from. In the Middle East, recovery often proves more challenging than obtaining liability:
- Collection and Investigations
Collecting on awards, especially against local debtors or sovereign entities, requires thorough asset tracing. Funders need to plan for possible restructuring, offshore assets, and enforcement proceedings.
- Local Court Recognition
For offshore arbitration awards to be enforced in onshore GCC courts, exequatur proceedings are required. While UAE courts now routinely recognise DIFC/ADGM awards, issues still arise around public policy exceptions or lack of reciprocity with certain jurisdictions.
- Court Attachments and Enforcement Orders
Obtaining local attachment orders (precautionary measures) can help secure assets pending enforcement. However, the processes are jurisdiction specific and often require a high burden of proof. Funders must budget time and legal spend accordingly.
Regulatory Hurdles: What to Be Aware Of, and What Not to Worry About
The regulatory landscape for legal funding in the GCC is underdeveloped but evolving.
- Sharia Law Concerns
In some jurisdictions, there is residual uncertainty about whether litigation funding is compliant with Sharia principles. However, leading scholars and practitioners increasingly accept non-recourse funding as permissible if structured carefully (e.g., avoiding interest-based terms or champerty concerns).
- Offshore Practice Notes
The DIFC and ADGM have published guidance that permits third-party funding, including disclosure requirements. These frameworks provide legal certainty and are modelled on common law and English CPR principles, offering comfort to international funders.
- Onshore Ambiguity
Unlike the offshore centres, onshore courts across the GCC generally lack express regulations on funding. While not prohibited, the absence of familiarity can raise enforcement risks and complications around disclosure.
Case Durations and Deal Structures: How Timing Impacts IRR and MOIC
- Maturity and Pricing
The GCC’s maturing legal infrastructure and the increasing presence of international firms is driving more consistent pricing of funding arrangements. Although legal budgets can remain inflated in certain sectors, the competitive landscape is becoming more sophisticated.
- Market Appetite
Investor appetite for GCC-based legal risk is growing, especially in sectors like construction, energy, and banking. As the regional economy continues to diversify and globalise, funders are beginning to see long-term potential.
Conclusion
Litigation funding in the Middle East represents a frontier opportunity: a mix of high-stakes commercial disputes, complex enforcement environments and evolving legal systems. While challenges in origination, underwriting, and enforcement remain, these are balanced by the region’s rapid development, supportive offshore jurisdictions, and increasing acceptance of funding structures.
For funders willing to navigate the local intricacies, the Middle East is not just an emerging market—it’s an essential component of the future global litigation finance map.
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