Top lawyers have suggested that all correspondence with partners and stakeholders should be documented in these troubled times in order to avoid disputes.
"Avoid communicating only by telephone – it is vital that you keep a good proper trails of communications with the other party. Memories fade, and documents recording what is happening are the most powerful source of evidence when a dispute takes place. Confirm important matters by e-mail or fax and make sure your records are not lost or destroyed," McNair Chambers, a Doha-based law consultancy, said in an advice to its clients.
Without citing particular instances, the firm said it released the advisory because "high profile examples" of businesses terminating or suspension of contracts have taken place in a way that suggests "that proper legal advice was not taken beforehand".
Even though numbers pertaining to cases ending in disputes or claims of fraud are not available for the GCC countries, the figures available on a global scale are depressing.
According to Navigant Consulting, a Chicago-based industries and trade advisor, the total number of cases claiming fraud in the first nine months of 2008 were double the number of cases received in all of 2007. Examples include the balance sheet fraud at Hyderabad, India-based Satyam Computer.
McNair Chambers said: "Never write any letter or e-mail or say anything to the other party which concerns the agreement (of contract between parties) and could be used to argue that you are not performing your side of the agreement without having consulted your in-house counsel or an external lawyer.
"Businesses are increasingly being forced to assess whether contractual commitments are commercially viable in the present economic climate," it said.
Companies should avoid immediate resort to litigation if there is a perceived breach of agreement. This can be both time consuming and a waste of money, said McNair Chambers which has expertise in commercial law and contracts, international arbitration, energy law and public international law.
"If there is a breach of agreement or a risk of a breach, consider very carefully whether the other party has any available assets – can you try to obtain an order to freeze the assets?" the Chambers' advisory said.
"There is little point in trying to litigate if the other party has no funds which can meet a damages claim."
McNair Chambers called for the use of "without prejudice" communication before approaching a court. "If it is properly invoked, [this] creates an immunity for all communications made to settle a dispute – whatever is said cannot be used later on in the dispute before a Court or Arbitral Tribunal to show that a party has admitted liability," the advisory said.
If litigation emerges as the only solution, the parties should try and opt for a mediation by a third party or ad hoc arbitration, the firm said. "It will often be in the interests of the 'weaker' party to create delay and resist anything that leads to a faster outcome."
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