Existing Jurisdiction of DIFC Courts
Article 5 of Dubai Law No. 12 of 2004 provides the DIFC Court of First Instance with exclusive jurisdiction over:
(a) civil or commercial cases and disputes involving the DIFC or any of its bodies or any entity or business established or carrying on business in the DIFC;
(b) civil or commercial cases and disputes arising from or related to a contract that has been executed or a transaction that has been concluded, in whole or in part, in the DIFC or an incident that has occurred in the DIFC; and
(c) any application over which the DIFC Courts have jurisdiction in accordance with the DIFC’s Laws and Regulations.
The jurisdiction of the DIFC Courts has been the subject of much debate, leading prominent commentators such as Michael Hwang, SC, Chief Justice of the DIFC Courts, to recommend taking certain steps to ensure that any disputes arising from a contract fell within the jurisdiction of the DIFC Courts, including ensuring that the contract was executed within the geographical confines of the DIFC or that part of a transaction was “concluded” within the geographical confines of the DIFC.
Extended Jurisdiction of DIFC Courts
Law No. 16 significantly expands the jurisdiction of the DIFC Courts. Article 5 of Law No. 16 has been revised to extend the scope of the DIFC Courts’ jurisdiction in respect of transactions or disputes arising within the DIFC. Article 5(2) of Law No. 16 has introduced the following key changes to the existing jurisdiction of the DIFC Courts:
- At the time of entering into an agreement, parties may expressly agree in writing to submit to the jurisdiction of the DIFC Court of First Instance.
- For disputes that have already arisen, parties may expressly agree in writing to have such disputes determined by the DIFC Court of First Instance.
Article 5(4) provides that the DIFC Court of First Instance shall not be permitted to consider or issue a verdict on a civil or commercial case for which a final judgment has already been issued by another court.
Thus parties no longer need to have a nexus to the DIFC in order to have their disputes heard before the DIFC Courts. The new law permits parties to elect an English language, common law based court system for the resolution of disputes, rather than the emirate level court system in the UAE. Parties will be able to take advantage of a court system that is largely modeled on the English commercial courts using civil procedure rules based on the English rules and will have the benefit of a widely recognized and experienced panel of judges who have been drawn from an international arena. Other advantages of the DIFC Courts include a binding system of case law precedent and cost recovery for the successful parties. As all proceedings are conducted in English before the DIFC Courts, parties with documentation in English will be able to avoid the considerable time, expense and interpretation issues of translating those documents into Arabic.
Uncertainty remains regarding the impact Law No. 16 will have on the working relationship between the Dubai Courts and DIFC Courts. The Dubai Courts will still be required to approve judgments of the DIFC Courts in order to ensure that they are enforceable throughout the UAE and in other jurisdictions under potentially relevant treaties. Dr. Ahmed bin Hazeem, Director General of the Dubai Courts, has commented on the new law by saying that: “The DIFC Courts and Dubai Courts share a commitment to justice and the rule of law, and have always worked together for the benefit of the community. This is a very positive development for justice…we believe it provides the business community, which Dubai has so successfully developed, with even greater choice as they seek swift and effective resolution to commercial disputes.” This is a positive sign that the DIFC and Dubai Courts intend to work together to foster cooperation and to provide a progressive framework for dispute resolution in the UAE.