The Gazette 1976

GAZETTE

March 1976

Ltd. v. British Soda

Co.

— (1972) Ch.D., the defen-

dants, though not acting maliciously, were held liable,

when they liquified the solid support beneath plaintiff's

land, and then drew out the resulting liquid so as to

cause subsidence.

The great advantage of this new edition is that each

chapter is written separately by an expert, mostly by

one of the six editors. This ensures that each separate

topic, such as Negligence or Defamation, is treated

expertly. A tort, which has relatively recently sprung

into prominence, namely procuring a breach of con-

tract, which leads to intimidation, is fully treated, as

is that of negligence relating to foreseeability. There

are even chapters at the end relating to franchises,

Lindsell on any aspect of the law of Torts, already

assured, has been heightened by the excellence of this

edition. The publishers are to be congratulated on the

lay-out, and, in the circumstances now prevailing, the

high price is inevitable.

Introduction to Business

Law

in the Middle East.

Edited by Brian Russell, Oyez Publishing, 1975;

d + l 18, £5.00.

This little collection of essays with a grand title and

a price to match it (the latter being a reflection of the

times, as indeed the title also is) comprises brief dis-

cussions of areas of law and practice ranging from

Islamic law through tax considerations and the legal

environment for negotiatng contracts, to the role of

governments in such matters. Each essay in a tran-

script of a lecture, followed by questions raised when

the original lecture was given, and the answers.

The introductory essay (by David Suratgar, a direc-

tor of Morgan Grenfell Ltd.) is devoted to the nature

of Islamic law and the impact of the civil law on it. It

could well serve as an introduction to a larger work

on the subject. The theme running through the whole

collection of lectures is pointed by the first question

which follows. In the questioner's experience, Arab

governments "do breach their contracts". The question

was, "Is there an Islamic religious excuse for this?"

The answer boils down to, "there is a considerable

body of Islamic law on the subject of the binding

nature of contracts".

The next essay deals with practical considerations

of doing business in Arab countries, by Dr. Jamal

Nasir, a former Minister of Justice of Jordan. The

keynote of his lecture is set by his statement that

they "are going to be dealing with people who are

more or less their equals", and that Arab businessmen

f e "shrewd, know exactly what they want and pre-

cisely how much they would like to get out of the

party who is going to do business with them!" Later,

discussing finance, Dr. Nasir repeats, "the Arabs are

shrewd". Commercial representatives are exhorted to

"avoid at all times the temptation to meddle or take

an active interest in political discussion". Indeed, in

a later lecture we learn that persons in charge of

foreign investment projects in Saudi Arabia are

actually prohibited from concerning themselves in any

way with the religious or political affairs of that

country.

The reader is told that "in almost all cases, the law

of the country concerned would require that any

contract with a foreign company should be governed

by local law. This is a question of prestige". While

Dr. Nasir favours the inclusion of arbitration clauses,

the previous writer, when referring to the Saudi

Arabia/Aramco arbitral award (which was against

Saudi Arabia), said that there "has been an increas-

ing reluctance on the part of the Saudi Arabians to

submit disputes to international arbitration again".

Dr. Nasir makes the important statement that a con-

tract should be prepared

ah initio

both in English and

an agreed Arab text. The latter governs the contract.

Touching on the subject of agency, it appears that

the law in some Arab states protects agents to a much

greater extent than in Western systems; so that the

contract of agency can be determined, usually, only at

considerable loss to the principal. There is little

elaboration of this topic.

The following lecture, on tax, mentions a most

interesting and advanced aspect in Egypt — the

requirement to distribute 25% of profits to employees.

The contributor, Mr. Julian Lee, draws the important

distinction between doing business

a Middle

Eastern country (which gives rise to local taxation)

and doing business

with

such a country (which does

not). Take for example an EEEC company contracting

to deliver and instal equipment in Jordan. The fact

that it is installing the equipment (doing business

the country) renders the company liable to Jordanian

tax.

There are numerous incentives for labour-intensive,

export-orientated business in the tax area. However,

Mr. Lee (an accountant who specialises in inter-

national taxation) concludes on the dispiriting note

that, on the one hand few of the tax laws are really

inviolable, and on the other "no foreigner can be

really aware of the detailed provisions in these

countries".

A peculiarity of Saudi company law is worth men-

tioning. Article 127 of its Companies Act states that

the proportion of net profit to be distributed is to be

stated in the Articles. Therefore, a company in Saudi

Arabia does not declare a dividend, but decides

whether to distribute or not. The only way of varying

the amount of distribution is by amending the

Articles. This is an esoteric development which must

give rise to problems in practice, but it could also be

envisaged as being a protection against oppression

of a minority, and against defrauding creditors.

A novel role suggested by Nigel Spinks, solicitor

and consultant in international trade, is that of the

foreign lawyer being a commercial public relations

figure. He ought to be responsible for the "cosmetic"

preparation of plans and proposals to licensing

authorities and planning boards of government

authorities. This will not come as a surprise to prac-

titioners who have dealt with semi-state agencies or

departments of the EEC.

Mr. Samil El-Falahi's contibution (on the legal

environment of the Middle East) commences by

stating that attention must be paid to the "historical

development of the area as a whole". Mr. El-Falahi

was asked for information concerning the "Ar ab boy-

cott rule". The answer given is simply that lists of

companies boycotted are available. No mention is

made anywhere of the regulation requiring a baptismal

certificate as a prerequise for a non-Mohammedan to

obtain a visa to enter almost all the Arab countries.

Were it not for the total omission of Israel one could

say that this little book is a first step towards gaining

an understanding of the legal environment in general

in the Middle East.

G. M. Golding.