Middle East law firms are being inundated with litigation work as the global financial crisis triggers a flood of disputes between cash-strapped property clients in the region. 

The weakening state of the region's once thriving real-estate sector has resulted in a number of actions being launched by clients in the construction and property sectors, on issues relating to non-payment, cancelled projects and declining asset values.

Clyde & Co Middle East-based partners Ashley Painter and Peter Hodgins, speaking at a summit in Dubai, said that the firm is dealing with "dozens" of these cases.

"The level of litigation we are seeing, especially in the construction sector, suggests that there are bills that are not being paid," said Hodgins

"We are dealing with numbers of them, dozens," said Painter.

Similarly, Al Tamimi & Co said that there has been a "huge upturn" in litigation and arbitration work. "In addition [to litigation] we are experiencing a significant rise in arbitration work across a variety of sectors. Presently we are dealing with a range of claims worth from hundreds of millions of dirhams to hundreds of millions of US dollars," said senior associate Raza Mithani.  "We are dealing with a number of truly massive claims which we believe to probably be some of the largest ever arbitrated in the UAE."

Hadef & Partners has also noticed the shipping industry among the affected sectors. "[The increase in litigation] since October last year, is not just in real estate and construction, but also in shipping litigation and general litigation," said partner Richard Briggs.

Lack of liquidity is forcing the cancellation of property projects that were launched prior to advent of the GFC. Among the most prominent cases is Dubai-based Arabtec Holding and Malaysia-based firm WCT Bhf in dispute with developers Meydan over the cancellation of a deal to build a racecourse in Dubai.

The declining value of assets is also another cause for the rise in work.  "A number of companies that, particularly last year, invested in corporate targets or the real estate sector have seen the value of their investments drop significantly in the global financial crisis," said DLA Piper partner Tom Canning. "There is, therefore, an obvious incentive to look for ways - perfectly proper ways - of reversing their way out of the deal."

In response, firms have been bolstering their construction litigation practices in the region. Denton Wilde Sapte in Dubai recruited arbitration specialist, Peter Shaw earlier in May.