In for a penny, in for a(n English) pound: the growing influence of English law on financings in MENA
English Law Focus
Matthew HeatonPartner, Head of Office - QatarBanking & Finance
Disclaimer: This Article expresses the opinions of the author and should not be viewed as a substitute for tailored legal advice
The Middle East and North Africa (MENA) region, characterised by its vibrant economies and expanding financial markets, has increasingly adopted English law in its financing and investment activities. This trend has significantly reshaped the financial landscape of the MENA region, affecting transaction structures, dispute resolution mechanisms and the region's appeal to global investors. The prominence of English law is rooted in its historical connections, commercial practicality and its status as a global legal standard for international business.
The relationship between English law and the MENA region can be traced back to the colonial and trade activities of the 19th and early 20th centuries. During this era, English merchants, financial institutions and the British Empire played a pivotal role in the region's economies.This historical influence persists today, with English law being integral to many regional financial and commercial transactions. The establishment of major financial hubs, such as Dubai, further reinforces this influence.
The Dubai International Financial Centre (DIFC), established in 2004, exemplifies a financial zone that heavily relies on English common law, serving as an international business centre where English law governs various contracts, including financing agreements.
English law is synonymous with sophisticated and predictable legal structures, which are essential in financing transactions that demand clarity, transparency and enforceability. In the MENA region, where business practices can vary widely between countries, English law provides a stable, widely understood framework for structuring financial transactions. It is often preferred in international syndicated loans, project financing and securitisations due to its established legal precedents and the predictability it offers in resolving legal issues. The robust set of rules governing the rights and obligations of parties in financial agreements under English law provides certainty, making it an attractive choice for local and international lenders, investors and borrowers in the region. International investors, in particular, are often more comfortable with English law due to their familiarity with its principles, developed through centuries of case law. Additionally, English law's well-established principles regarding security interests and the enforcement of guarantees make it a preferred choice for lenders.
Another key factor contributing to the prominence of English law in MENA financings is the reputation of English courts and arbitration centres. English law provides a well-established and respected judicial system for resolving disputes, with many international contracts governed by English law stipulating arbitration in London. London hosts some of the world's most renowned arbitration institutions, such as the London Court of International Arbitration (LCIA), which handle numerous international disputes, including those from the MENA region. Arbitration under English law is particularly important in the MENA region due to the preference for resolving commercial disputes outside local jurisdictions. The perceived impartiality of English courts, the quality of the legal profession, and the neutrality associated with London as a global financial centre give investors confidence that their legal rights will be upheld. Moreover, the New York Convention, to which most MENA countries are signatories, facilitates the enforcement in local courts of arbitration awards made under English law, making it an attractive legal choice for international financings.
The influence of English law in MENA financings is substantial and growing. As the region continues to develop as a global economic hub, English law will remain a cornerstone of international finance, offering clarity, consistency and credibility.
In recent years, the MENA region has undergone significant economic transformation, with many countries striving to diversify their economies away from dependency on hydrocarbons. This shift has created a demand for financial services, particularly in project financing, infrastructure and large-scale investments. English law has played a crucial role in this process by providing a standardised legal framework that allows foreign investors to participate more easily in these projects. For instance, English law is commonly used in Islamic finance transactions, despite many MENA countries having legal systems rooted in the principles of Shari’a. English law is often employed as a hybrid in these transactions to ensure compatibility with both Islamic finance principles and the commercial needs of international investors. This ability to incorporate elements of both systems has made English law highly attractive in structuring complex, cross-border Islamic finance transactions.
The adoption of English law has significantly influenced the development of legal and regulatory frameworks in MENA countries. As regional financial centres like Dubai, Abu Dhabi, Doha and Bahrain adopt English law principles for their financial services, these jurisdictions align more closely with international commercial law standards. This alignment encourages greater foreign direct investment and helps integrate the MENA region into the global financial system. Additionally, the increasing reliance on English law has spurred reforms within local legal systems. In some MENA countries, governments have sought to modernise their laws and regulations by adopting elements of English common law. This trend reflects the growing recognition that English law offers a sophisticated, reliable and neutral platform for conducting international business. For example, the DIFC Courts in Dubai, based on English common law, offer a jurisdiction for disputes governed by DIFC laws or English law. The establishment of such courts signals the importance of maintaining legal systems that appeal to international investors. Similarly, other MENA jurisdictions, such as Qatar and Bahrain, have established legal frameworks incorporating aspects of English law, particularly in commercial dispute resolution and corporate governance.
Despite its numerous advantages, the use of English law in MENA financings presents challenges. One primary concern is the lack of familiarity with English law in some parts of the region. In countries with civil law systems, adopting English law can create confusion, especially when it conflicts with local legal principles. Additionally, enforcing English law judgments can sometimes be complicated by political and cultural factors in the region. While international arbitration awards are generally enforceable under the New York Convention, there remain barriers to enforcing judgments of English courts in several MENA jurisdictions.
The influence of English law in MENA financings is substantial and growing. As the region continues to develop as a global economic hub, English law will remain a cornerstone of international finance, offering clarity, consistency and credibility. Its historical legacy, practical advantages and reliable dispute resolution mechanisms make it a preferred choice for financiers, investors and legal professionals. As MENA countries continue to integrate more with global financial markets, the role of English law in facilitating investment and ensuring the smooth functioning of financing transactions will remain indispensable, supporting the region's broader economic ambitions.
For further information,please contact Matthew Heaton.
Published in May 2025
