Finding company information in the MEA region: a 5-step guide
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Resolving disputes – whether they involve unpaid debts, unsettled judgments or contractual claims – is a time-consuming, complex and, unfortunately, a necessary part of business. When a dispute escalates to a legal matter, the primary concern becomes whether the investment of time, money and effort will be justified by the potential outcome. This ultimately hinges on one key factor: the counterparty’s ability to pay.
In many well-established business jurisdictions, assessing a counterparty’s payment capacity is often straightforward. Company accounts are audited and readily accessible, making this task the work of a competent accountant. However, in many parts of the Middle East and Africa, a more nuanced approach is necessary.
A counterparty’s payment capacity is determined by their access to cash and ownership of assets that could potentially be liquidated to settle debts. However, in many Middle Eastern and African jurisdictions, this information is not easily obtainable. Only a fraction of companies publish audited accounts, leaving the task of due diligence far more challenging. This can understandably leave the potential claimant feeling overwhelmed. So, what can be done?
How to manage your business dispute
When navigating a business dispute and managing recovery risk, we offer three pieces of advice to help minimise complications and maximise your chances of success.
1. Start early
When facing a business dispute, it is always better to enter with a plan, even if it needs to be adapted along the way.
That means consulting with both legal and investigative specialists – and, crucially, ensuring these advisers work in tandem. The risk of investing time in a legal strategy only to discover six months later that your counterparty is insolvent – or, worse, conducting an exhaustive payment capacity assessment, only to be told that the case is weak – is real. But it is also avoidable with early planning.
By engaging credible legal and investigative advisors from the start, you will be better protected against longer term difficulties.
2.Follow your head, not your heart
Business disputes are often emotionally charged. However, approaching your dispute with an objective, dispassionate mindset (with the help of your advisors) increases your chances of making sound commercial decisions.
Before moving forward, make sure that your legal and investigative teams are aligned on strategy – and that commercial decisions are taken within the framework of the amount you anticipate recovering.
Pursuing a grudge can be costly and exhausting. While the urge to “make an example” of the counterparty may be strong, be prepared to accept that achieving your moment in court may not be worth the financial or emotional cost.
3 Go local
The Middle East and Africa are vast regions with diverse and often rapidly evolving regulatory frameworks for corporate information disclosure. These varying frameworks can make it easier for counterparty companies to conceal assets through complex and opaque ownership structures and keep its financials in the dark.
One common thread, however, may be a sensitivity to investigations into private companies and individuals, even in the context of a legitimate legal dispute. Gathering information on banking relationships and the ownership of assets like shares, property and vehicles requires both knowing where such information is held and building trust through cultural awareness, and – crucially – fluency in local dialects.
When conducting due diligence on a dispute, ensure that your investigative – and legal – advisors are true regional specialists with jurisdiction-specific expertise.
Best practices for any dispute
When managing a business dispute in the Middle East and Africa, the same principles apply across all stages of the process – from assessing payment capacity to tracing assets. To ensure success, always plan early, make strategic, commercial informed decisions, and seek advice from partners who understand the local regulations, culture and nuances of the region. Work with professionals who have a strong track record in dispute-focused intelligence and who can manage the entire dispute process—from preliminary diligence through to final enforcement.
How Diligencia can help
Since 2008, Diligencia has been providing corporate intelligence and due diligence solutions for emerging markets across Africa and the wider Middle East. Our mission is to deliver clarity, inform strategic decisions and empower clients to make well-informed choices in regions where reliable public domain information is often scarce.
Our team of expert business analysts specialise in supporting lawyers and other advisors working on disputes and litigation cases. We conduct thorough public record research, trace assets and gather crucial business intelligence to help you navigate complex legal and financial challenges with confidence.
