Procedure

Specialist courts

Do you have a specialist court or other arrangements for the hearing of financial services disputes in your jurisdiction? Are there specialist judges for financial cases?

In onshore United Arab Emirates, there is no specific body or specialist court that deals with financial services disputes.

In Dubai, the following disputes must be mandatorily referred to the Centre for Amicable Settlement of Disputes (the Centre):

  • disputes where the parties have agreed to refer the matter to the Centre;
  • disputes involving debts up to a maximum of 100,000 dirhams; and
  • disputes relating to commonly owned property.

 

Although disputes involving banks previously had to be mandatorily referred to the Centre, this is no longer the case. Where claims have not been settled, the claimant may file a claim before the commercial division of the Court of First Instance, subject to the provisions of Federal Law No. 11 of 1992 (the Civil Procedure Code). Cases are generally not heard by a specialist judge; however, the parties and the judge may be assisted by a court-appointed legal banking expert, in accordance with the regulations appointing legal banking experts introduced by a memorandum of understanding between the UAE central bank and the UAE Banks Federation signed with the Dubai courts in 2013. The legal experts may be asked by the judge to provide an expert report on technical aspects of the financial dispute.

The Dubai International Financial Centre (DIFC) courts have their own civil procedure rules based on the equivalent rules in England. The DIFC courts are staffed with internationally recognised judges from common law jurisdictions who have experience in civil litigation matters as well as Emirati judges.

In the DIFC, the Financial Markets Tribunal (FMT) has jurisdiction to hear regulatory proceedings relating to the laws and rules administered by the Dubai Financial Services Authority (DFSA). An affected person has the right to refer a decision of the DFSA’s Decision Making Committee (a committee made up of DFSA officers) to the FMT for its review. The FMT is required to conduct a full-merits review of the DFSA’s decision. Such proceedings will be subject to the FMT’s Rules of Procedure (the FMT Code) and will be overseen by appointed members experienced in the regulatory aspects of financial services and related activities. It is only possible to appeal a decision of the FMT to the DIFC courts on points of law.

Procedural rules

Do any specific procedural rules apply to financial services litigation?

No. Any civil claim relating to financial services brought in onshore United Arab Emirates or the DIFC will be subject to the civil procedure rules under the Civil Procedure Code or the Rules of the DIFC Courts 2014 (the DIFC Civil Procedure Rules) as applicable.

The only exception to the above will be regulatory matters, which fall within the jurisdiction of the FMT. Such regulatory proceedings will be subject to the FMT Code.

Arbitration

May parties agree to submit financial services disputes to arbitration?

Generally, yes. In the United Arab Emirates, a new arbitration law (Federal Law No. 6 of 2018) came into force on 15 May 2018 and is based on the Model Law of the United Nations Commission on International Trade Law. For the arbitration agreement under the Arbitration Law to be valid, it must be in writing and must be signed by someone with the capacity to do so.

Changes to the UAE Civil Procedure Code brought in at the start of 2019 have increased certainty around enforcement of foreign arbitral awards in the United Arab Emirates.

In the DIFC, DIFC Law No. 1 of 2008 (the Arbitration Law) provides a framework for arbitration. Article 12(2) of the Arbitration Law provides that an arbitration agreement or clause in a consumer contract (including an agreement between a financial services provider and its client where the client is acting outside of his or her trade, business or profession) may only be enforced where the consumer has:

  • given written consent, after the dispute has arisen;
  • submitted to the arbitration proceedings under the arbitration agreement; or
  • the DIFC court has made an order disapplying article 12(2) of the DIFC Arbitration Law.
Out-of-court settlements

Must parties initially seek to settle out of court or refer financial services disputes for alternative dispute resolution?

In the United Arab Emirates, there is no mandatory requirement to use alternative dispute resolution (ADR). Although efforts have been made to encourage the use of ADR, it is still relatively uncommon in the context of financial services litigation in the United Arab Emirates.

In the DIFC, the DIFC Civil Procedure Code encourages parties to consider the use of ADR in resolving disputes. While this is not a mandatory requirement and the parties, therefore, retain discretion in respect of whether to pursue ADR proceedings, the DIFC Civil Procedure Rules state that the court has the power to:

  • adjourn court proceedings for a specified time to encourage or enable the parties to use ADR;
  • make an ADR order; and
  • take into account the efforts of the parties to resolve the dispute through ADR when assessing costs.
Pre-action considerations

Are there any pre-action considerations specific to financial services litigation that the parties should take into account in your jurisdiction?

There are no pre-action considerations specific to financial services litigation other than the fact that in the DIFC, the FMT has jurisdiction to hear regulatory proceedings relating to the laws and rules administered by the DFSA.

Unilateral jurisdiction clauses

Does your jurisdiction recognise unilateral jurisdiction clauses?

The enforceability of unilateral jurisdiction clauses onshore in the United Arab Emirates has yet to be tested. There is a risk that the UAE courts may not enforce such clauses on public policy grounds (eg, the customer was in an unfair bargaining position at the time of the contract or the contract is inconsistent with the principle of good faith). The UAE courts may be guided by other civil law jurisdictions (such as France) that have declined to recognise unilateral jurisdiction clauses on public policy grounds.

The DIFC courts have recognised unilateral jurisdiction clauses.