Legal framework at ADGM boosts Abu Dhabi’s competitiveness as a financial hub– The top four financial centres in the world rely on the common law, a system ADGM embraced upon its establishment
Since the launch of ADGM in 2013, Abu Dhabi has moved up in a ranking of competitiveness for major global financial centres from number 39 to 26, according to the Global Financial Centres Index. Paris, by comparison, is number 27. There are many good reasons for this, not least the highly attractive legal regime that applies in ADGM. The top four financial centers in the world rely on the common law, a system ADGM embraced upon its establishment in 2013. This was a visionary step for a start-up financial center, enabling it to mature into its current position with over 10,000 people operating within it, along with over 1,200 businesses.
However, embracing the common law system was not the only daring step taken. ADGM and the Financial Services Regulatory Authority (FSRA), its regulator, have also subjected themselves to a level of oversight rarely matched even in longstanding jurisdictions. This occurs through “administrative law”, a system subject to the ordinary jurisdiction of the courts, applying the same procedures and rules of evidence as for any other dispute.
Officials are not institutionally advantaged by such a system; they are simply treated like any defendant. By contrast, in many civil law systems, administrative law issues fall under the jurisdiction of special tribunals, with their own rules and sometimes even a separate supreme court. In a regional context, a robust administrative law route to challenge decisions of officials is not a given, as the concept simply does not exist in many states. To have one as sophisticated as that established in ADGM is a significant step.
The legal regime for ADGM does not impinge on sovereignty and the ability to control. It allows for ADGM and the FSRA to make new rules swiftly to correct any gaps or rectify any departures from preferred policy. The FSRA has extensive powers to ensure businesses are properly managed and behaviors are appropriate, just like any other international regulator. What is so unusual is having the confidence for the system to judge itself and be judged.