Common Law Zones An Illustrated Review

Abstract

Governments  across  the  globe  have  created  special  jurisdictions  offering  common  law  rules  and practices imported from abroad, the better to attract foreign investment and stimulate local economic growth. Four such common law zones have launched in recent years: the United Arab Emirates’ Dubai

International  Financial  Centre,  in  2004;  the  Abu  Dhabi  Global  Market,  also  in the  UAE,  in  2015; Kazakhstan’s Astana International Financial Centre, in 2018; and the first Honduran ZEDE, in 2020. Each of these common law zones has faced the challenge of transplanting foreign rules and practices into  a  jurisdiction  set  apart  from  that  of  its  host  government,  which  instead  follows  some  mix  of

Napoleonic Civil Code, Sharia, and/or Soviet legal traditions. The first three zones have answered that challenge  by  importing  the  common  law  of  England  (and  sometimes  also  Wales)  and  entrusting  its interpretation to courts that, while set apart from the local legal system, remain under the control of government officials.  The ZEDE system takes a different approach. It requires each ZEDE operator to  come  up  with  its  own  detailed  governance  plan,  subject  to  independent  review,  and  carefully insulates  ZEDE  Courts  from  Honduran  politics.    The  first  such  plan  to  win  approval,  that  of  the Próspera ZEDE on the island of Roatán,

collects rules from various private sources in a Common Law Code and subjects most disputes to interpretation by private arbitration services. This report from the

field thus finds two species of common law zone, a burgeoning genus of special jurisdiction. The first species draws its law from foreign sovereigns and leaves its courts exposed to political interference. The more recently evolved species of common law zone, as evidenced by the Próspera, enjoys greater freedom  to  choose  and  interpret  its  own  governing  rules.  In  theory,  that  should  give  ZEDEs  an advantage over competing zones in providing the rule of law.  In practice, the contest between common law zones has only just begun.