Jurisdiction of DIFC Courts Explained

In September 2004, the seven Emirates created the legal structures necessary for international financial centers under the Federal legislation of the UAE. Consequently, a law was enacted by the then Ruler of Dubai, Sheikh Maktoum Bin Rashid Al Maktoum, called Dubai Law No.9 of 2004(Dubai Law no.9) by which His Highness Sheikh Mohammed Bin Rashid Al Maktoum (then Crown Prince of Dubai) was appointed as President of the DIFC. 

The above mentioned law provided that Dubai International Financial Center (DIFC) will have three constituent bodies. 

First, the DIFC Authority (DIFCA); second, the Dubai Financial Services Authority (DFSA) and third, the DIFC Judicial Authority (DIFC Courts). 


The DIFC Courts’ jurisdiction extends over to civil and commercial matters having the cause of action within the DIFC (alongside their international jurisdiction). This infers that where the DIFC courts have jurisdiction, it will be exclusive courts’ jurisdiction. However, under article 5(2), parties have the liberty to agree to choose any other court’s jurisdiction apart from the DIFC courts. It is important to note that the DIFC Courts do not have jurisdiction over criminal matters; hence, all criminal matters continue to be referred to the Dubai Police. Also, The DIFC Courts cannot decide family or matrimonial matters as they do not have jurisdiction. The law and regulations of DIFC are developed and formulated by the DIFC Authority (DIFCA) and the Dubai Financial Services Authority (DFSA). 

The laws and regulations that govern the non-financial activities in DIFC, for example, employment law, company law, and real estate law, etc., are created by the DIFCA, while the DFSA looks after the laws and regulations governing all financial and ancillary services within the DIFC. The jurisdiction of The DIFC Courts covers and caters to the DIFC’s laws and regulations unless the parties explicitly and agree that another law must govern their dispute, whenever it arises. 

As per Law no. 9, DIFC Courts only have jurisdiction over matters that directly connect to DIFC, or the subject matter of dispute is connected to DIFC or the location of the parties is DIFC or the transaction is concluded in DIFC. But recently, there has been an expansive change as far as the DIFC courts’ jurisdiction is concerned. Law No. 9, which as amended by Law No. 16, opened the gates to potential cases without such a jurisdictional connection or gateway. Despite the jurisdictional limits of the resolution of only commercial and civil disputes, DIFC courts are becoming more popular as they use English as their first language and apply common law rules. Nowadays, most contracts have two clauses that are prominently visible. Firstly, governing law and secondly, the jurisdiction clause. While the first decided the legal framework that will govern the contract, the latter will mention that the cases of dispute will be heard. It is important to note that DIFC Courts are also entitled to hear cases when the subject contract specifically mentions pre-dispute jurisdiction as DIFC Courts’ jurisdiction or when both parties elect to use DIFC Courts as post- dispute jurisdiction to resolve a dispute which has already arisen. This is called an ‘opt-in’ jurisdiction. Hence, a new concept called Conduit Jurisdiction has evolved to recognize and enforce foreign and domestic awards passed by arbitration centers locally or internationally. Lately, while deciding the case of Sindbad Marine, the court held that the party’s willingness and the ability to use DIFC courts as conduit jurisdiction depends on the facts of the case and the area of law. 

Also, a Judicial Tribunal was established as per the Decree no.19 of 2016 to look into all the jurisdictional conflicts between DIFC and Dubai Courts. For instance, in a case that was appealed to the Judicial Tribunal for nullification of the award passed by the Dubai Courts, the Judicial tribunal held that the DIFC courts did have the competency for recognizing the award. 


Similarly, in the case of Daman Real Capital Partners Co. LLC vs. Oger, the Judicial Tribunal had to decide upon the recognition and enforcement of an award made by an arbitration seat in Dubai. While resolving this jurisdictional dispute, the judicial tribunal concluded that the Dubai courts are competent in determining the validity of the awards of the arbitration centers. The DIFC courts have the power to pass orders, judgments, and awards along with directions with regards to the conduct of any proceeding before it, including contempt orders, interim or interlocutory orders, injunctions, orders made in the interests of justice, and orders prescribed by any legislation under the DIFC law. 


DIFC courts can also refer the matter to the attorney general of Dubai. The DIFC courts are composed of the Small Claims Tribunal, Court of First Instance, and Court of Appeal. 


Small Claims Tribunal– 

This tribunal was set up to enable and ensure speedy justice swiftly and efficiently is one of its kind in the region. Any case in connection to DIFC, where the claim amount or the claim value of the subject matter does not exceed AED100,000 or AED200,000 or for employment and non-employment cases where the claim amount or the value of the subject-matter of the claim does not exceed AED500,000 can be heard by the Small Claim Tribunal. Also, if the parties to a contract elect that the disputes will be heard by the Small Claim tribunal in writing, then in case of dispute, it will be heard by the Small Claim Tribunal only. 


Court of First Instance (CFI)- 

This court is entitled to hear all the cases where the amount in dispute is more than AED100,000. CFI has exclusive jurisdiction over civil and commercial cases of DIFC. Only one judge presides over the Court of First Instance. The judge’s judgment or the decision of the CFI is appealable, and the aggrieved party can appeal to the Court of Appeal. 


Court of appeal (CA)- 

Being the highest court in DIFC, the CA enjoys exclusive jurisdiction over Appeals filed against judgments and awards made by the CFI and article interpretation of the DIFC’s laws if requested by any of the DIFC’s establishments. It is pertinent to mention that no appeal shall arise from a decision of the court of appeal. It is presided over by three judges, including the Chief justice. Interestingly the first Pro Bono program of the Middle East was implemented by the DIFC Courts in 2009. This program included court services like advice, case management, and representation for individuals who are eligible for the program. The program was implemented to ensure that professional legal advice is available to all, especially those who cannot afford a private lawyer or legal representation. 


Consequently, more than 160 lawyers have helped provide legal support to more than 600 less fortunate people as per this pro-Bono program. Moreover, DIFC has a Will service center, which was established in 2014 under the Dubai Law no. 15. It is an initiative of the Government of Dubai and the DIFC Court. Through this service, non-Muslims who are investing and living in the UAE are granted the liberty to pass on their assets in accordance with the instructions in their Will. Recently, the Wills’ geographical limitations were removed, which enabled the registrants to have complete control over deciding what assets, in the UAE and abroad, to include in the wills. 

In 2019, in view of strengthening the judicial system through technology, the DIFC Courts and  Dubai Future Foundation (DFF) signed an agreement to launch the world’s first Court Tech Lab; the Court Tech Lab aims to unite individuals and companies to help in launching the advancement of legal technology, such as Blockchain-powered initiatives, AI-enabled programmes, etc. As per the statistics, DIFC Courts in 2020 released its annual figures of 952 cases, which were registered across all divisions, revealing a 43% increase year-on-year. The trend is clear. More corporates and individuals are opting for DIFC courts because of their speediness and flexibility. So the near future may witness some more jurisdictional changes.