Business families in the Gulf need modern laws of inheritance

Take the Kuwaiti brothers Bassam and Kutayba Alghanim. The pair were embroiled in a succession dispute over their family’s huge conglomerate that lasted for years. At first the brothers sought to divide the business up amicably. But accusations and recriminations ensued, causing bad blood among the extended family. Kuwait’s rulers even stepped in to try to sort it all out.

Such family disputes in the Gulf may be getting commoner. The firms’ reputations often suffer, decision-making can be paralysed and businesses can sometimes implode altogether. Fadi Hammadeh, who advises the Family Business Council-Gulf, an outfit based in Dubai that seeks to help family firms cross generations, says that dozens of rows within such businesses are being expensively adjudicated in the courts of the United Arab Emirates .

This particularly affects succession and inheritance. Extended families can be enormous, since some rich Arabs still have a string of wives and many children. So family businesses may have a multiplicity of shareholders. Unless there is careful planning, the rules tend to make it hard to arrange for the most able or meritorious of the descendants to take over. The original owners can make bequests and transfers in their lifetime, but many do not.

Courts in the Gulf have generally been ill-equipped to deal with such matters. But governments are beginning to improve the laws. When Majid al-Futtaim, founder of a retail empire headquartered in Dubai worth more than $16bn, died in December 2021, Dubai’s leadership appointed a “special judicial committee” to help resolve disputes that arose between his ten immediate heirs: three wives, a son and six daughters.issued a family-companies law that spells out arbitration methods.

Walid Chiniara, author of “Dynastic Planning”, who advises Saudi families, says more of his clients see the need for urgency. “I hear them say ‘I saw my friends fighting—I don’t want this to happen to my family’.”This article appeared in the Middle East & Africa section of the print edition under the headline"Make it clearer"

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