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Deal by Deal Investments

This article elucidates the general meaning, concept, and scope of the legal doctrine of force majeure. It addresses the application and impact of the 'catch-all' phrases used to define force majeure in many prevailing agreements, which are the subject matter of disputes today.

Direct Equity Investments

UAE investors have long embraced the practice of directly investing corporate funds into private companies. They do so through joint venture agreements and the acquisition of equity stakes.

A group of investors pool their money and thus create a fund.

Private equity firms namely, the fund managers then invest funds from that pool into private companies that represent an opportunity for high returns.  Private equity firms make money by charging management and performance fees from investors.

Private equity firms make money by charging management and performance fees from investors


This principle was recently relied on in the case of Maralex Resources Incorporation v. Gilbreath (2003) whereby the Supreme Court of New Mexico stated that .. “applying this doctrine, we look to the specific terms employed and seek the common characteristics among them, excluding anything that does not share those characteristics”.

This means that if the list specifies events such as natural disasters, wars, government decisions followed by a catch-all phrase stating ‘any other event beyond the reasonable control‘, it would be interpreted to have meant analogous events similar in characteristics and interpreted in the light of specific list of events. Therefore, it is pertinent for the draftsmen to attain the right balance between specificity and broadness of the force majeure clause.

Force-Majeure Clauses and Catch-All Phrase

A force-majeure clause is purely a creation of a contract, thereby entailing an application of the general principles of contractual interpretation.

A typical definition of a force-majeure clause contains catch-all phrases to extend the exemption of liability. Examples of such catch-all phrases are “including but not limited to” and “any other event beyond the reasonable control of parties“. As appealing as these phrases seem to a party relying on it, it is ultimately an example of poor drafting by lawyers for the reasons mentioned below. Courts require specificity in the list of events if they ought to exempt the parties from the liability.

Pursuant to the doctrine of ejusdem generis which literally means ‘of the same class’, in some circumstances the use of catch-all phrases might actually prevent a party from relying on an event which in the absence of the ‘catch-all’ phrase could have successfully amounted to a force-majeure event.

If the force majeure clause specifically covers the relying event, then the parties have a better chance to excuse themselves of further obligations as they have explicitly agreed in the contract to this condition. A court would uphold the sanctity of the contract and the freedom of the parties to define the parameters of their obligations as they see fit. The court cannot go contrary to explicit clauses in order to make the contractual bargain fairer. A court would only go contrary to a clause should it contain an illegality, in which case the illegal clause can be severed from the contract.

Having worked with clients in the GCC and MENA jurisdictions over the years, I have found it interesting to see certain practices that are not commonly undertaken in others. It is not to say that these practices are subpar, on the contrary, these are outright ingenious and resourceful.

One such structure, which in recent years has been termed “deal by deal” is when clients have wanted to set up a dedicated vehicle created for purposes of making an investment in a single target opportunity (or single portfolio of target opportunities).

In the early stages of my career, driven by logic and concepts, I knew what I was doing was for all intents and purposes a private equity transaction. After all, the transaction was creating an investor’s ownership or interest in an entity that is privately owned. But with private equity being used interchangeably with private equity funds that it distorted by conceptual appreciation.

UAE has always been the playing field for investors who want to invest directly in private companies. They have long preferred structures that allow investors to participate entirely on a deal-by-deal basis. My personal observation says that private equity deal structures are influenced by culture.

The traditional private equity fund model uses the general partner/limited partner arrangement, which epitomizes the full delegation model of investment in private markets, with investors playing the role of pure passive providers of capital. In our part of the world, we like to delegate but we do not like to be uninformed. We want to be passive investors but not aloof investors. I doubt that family offices and HNWI individuals in the UAE can just rely on passively committing capital to private equity funds.

A relatively recent paper published by Boston Consulting Group accumulated data from 2009 (post-crises) to 2018 showed that in the MENA region solo investments are the default deal type. BCG reported that “MENA funds stick out in terms of the preference afforded to direct solo investments, accounting for more than half of deals.”


direct equity investing

direct investment partnership,

co-invests with a strategic partner (such as a
venture fund, or infrastructure or real estate operator) or with other like-minded

Investment platforms

strategic partners to form investment platforms, namely funds or joint ventures operating with a specific focus or
mandate. P

this structure is used to invest in a single deal

In the context of the deal-by-deal approach, investors will need to perform their own diligence on investments prior to deciding whether or not to invest,

There is a less well-defined set of “market standard” terms and approaches for deal-by-deal and pledge funds compared to the traditional private equity fund model. As a consequence, there is scope for a broader variation of economic and governance-related terms and more flexibility as to the terms offered by any one manager