What is it about the nature of distressed projects - and specifically the disputes that arise as a result - that inflames the animal spirits and the resultant balkanization of all stakeholders?
Even as property prices having risen, attention to the stalled project phenomena has captured the zeitgeist for the first time since the advent of freehold ownership in 2002. We cannot possibly know precisely what our ancestors saw when they collaborated with each other.
What we do know is that the phenomenon of such collaboration has always revolved around three inter-dependent forces: conscious or unconscious fear, which in turn is counterbalanced by some combination of trust and greed.
The fears are always endless; fear of loss, of survival, lack of security and even that of lack of existence. The positive dynamics have been the ones that have propelled progress and yet, when things break down, hindsight always seems to reveal the glaring flaws that were always inherent in the deal making.
The legal profession then jumps in and paints conflicting stories where battlelines get hardened and the spirit of the transaction gets lost in a blizzard of paperwork.
Take the recent flurry of press attention that has been focused on the Marina 101 project. A true landmark in the Dubai skyline has been stymied right at the cusp of the finish-line for a number of years. Traditional finance techniques are now being repainted and reclassified as nefarious and sinister as various parties take contrary positions.
Carrying the burden of delays
Meantime, the stakeholders suffer the consequences of extended delays precisely because fear has overtaken the collaborative approach that led to the various stakeholders converging in the first place. Even as talks were underway for a “white knight” to revive the project to take it over the finish-line, thereby infusing value and relief to all the parties concerned, a “vulture” mentality has taken root, where conflicting incentives strive to keep the parties apart for as long as possible.
Agreements made, both oral and written, get endlessly repudiated and reinterpreted as parties vie for their individual self-interest under a business environment where incentives have changed. Fear then feeds on itself as cases pile on, and secured as well as unsecured claimants wait their turn for outcomes that increasingly steer away from “pareto optimum” levels.
Adding to the turmoil
That is, even as different parties try to divide and reduce value through auction processes that further increase anxiety as it does not adhere to the spirit of a holistic solution. A civilization of structure should flee doubt and yet, time and again, we see the exact opposite.
There are countless examples that can be highlighted, yet the success stories never get spoken of, because it does not have enough spice to be worthy of attention. In the age of reason, trust and collaboration have become mundane.
With time, the relationship between fear, trust and greed has changed as we have become more urban. But doubt and anxiety over the most obscure of fears have grown in importance. What has been lost in the process is the collaborative spirit, and even as value has re-emerged in the marketplace, the ability to go back to the position where trust can be restored has been lost.
This happens because society canonized structure and the manipulation of it.
A civil dialogue, please
In Dubai, the arbitration methods of reconciliation that have increasingly gained a prominent role as a way of resolving disputes offer the simplest way out of increasingly complex problems. However, what needs to happen is the capturing of the “spirit”; both of the transaction, as well as that of the law.
Then, when passions are inflamed, there is a counterbalance that can fight away the dark forces of fear, time, ignorance and doubt, thereby leading to the avoidance of the classical prisoner’s dilemma. This is the only way that a general concern in the decline of ethics can be addressed logically and calmly.
The spirit of our ancestors (that was second nature to them), and which defined the growth of cities like Dubai needs to be infused into the dispute resolution process such that the decision-making returns to the practices of the past.