The Dubai International Financial Centre (DIFC) is a financial-free zone established by Federal Decree No. 35 of 2004. DIFC has independent Courts that apply the DIFC Laws supplemented by common law principles. DIFC Courts serve a crucial function in Dubai’s legal landscape by providing a reliable, efficient, and internationally acknowledged platform for resolving disputes.
The DIFC Courts provide a platform for businesses in need of effective dispute resolution. DIFC Courts are well-regarded for their effectiveness in managing commercial disputes. Judges in the DIFC Courts have specialized expertise in commercial issues, enabling them to make well-informed and effective decisions on intricate disputes.
DIFC Courts consist of the Court of First Instance, Court of Appeal, and Small Claims Tribunal.
Broadly speaking, the Court of First Instance has exclusive jurisdiction to hear and determine civil and commercial cases wherein the parties opt into the jurisdiction of DIFC Courts in the contract, where the dispute involves a DIFC-established party, or if the dispute has occurred in DIFC.
The Court of Appeal has exclusive jurisdiction to hear and determine appeals filed against Judgments/decisions made by the Court of First Instance as well as requests for interpretation of DIFC laws and regulations made by any of the DIFC’s bodies or establishments.
The DIFC Small Claims Tribunal has jurisdiction to hear and determine civil and commercial disputes within the jurisdiction of the DIFC Courts in the following cases:
(i) If the value of the claim does not exceed AED 500,000
(ii) If the value of the claim exceeds the aforementioned amount but is less than AED 1,000,000 and for which the parties elected in writing that the SCT would hear it
(iii) If the claim relates to employment or former employment and for which the parties elected in writing, the SCT would hear it.
In this regard, it should be noted that the DIFC laws allow for any institution operating within the DIFC to select a legal jurisdiction of its choice other than the DIFC when entering into contracts. However, if parties do not do so, the DIFC laws will be applicable by default, and they can file a case in the DIFC Courts.
Commercial Litigation
The DIFC Courts handle various contractual and corporate matters, including those related to breach of contract, corporate governance, shareholder disputes, and other business-related conflicts.
Employment Law Matters Under the DIFC Legal Framework
DIFC Courts handle employment-related issues such as wrongful termination, discrimination, breach of employment contract, unpaid wages, etc.
Arbitration-Friendly Jurisdiction and Optional Opt-In Clauses for Non-DIFC Disputes
The DIFC Courts have jurisdiction over civil and commercial disputes involving the DIFC or its entities, as well as cases where the parties agree in writing to file such a claim or action with the DIFC Courts (whether before or after the dispute arises). Such agreement should be made pursuant to specific, clear and express provisions.
Independence and Accessibility
DIFC Courts are governed by their own set of laws and regulations, separate from those applicable to other courts in Dubai or the UAE. The DIFC Courts carry out their functions in an independent manner, in accordance with the provisions of the DIFC laws and regulations. The proceedings in DIFC Courts take place in English language, unlike other Dubai mainland courts whose official language is Arabic.
Common Law Framework in DIFC Courts
The DIFC Courts function within a common law framework, which is separate from the civil law system that dominates the wider UAE legal landscape. This distinctive legal setting enables the DIFC to implement common law principles effectively.
DIFC has recently announced the enactment of key amendments to the Law on the Application of Civil and Commercial Laws in the DIFC (DIFC Law no. 3 of 2004). The purpose of these amendments is to provide clear statutory guidance regarding the sources and interpretation of DIFC Law, confirming that the DIFC statutes are supplemented by English common law as well as the common law of other jurisdictions.
The amendments confirm that DIFC Law is primarily determined by reference to DIFC statutes and the Judgments of the DIFC Courts that interpret and apply these statutes.
Furthermore, since DIFC Law is not designed to be strictly statutory, the amendments specify that it is supplemented by common law principles (including the principles and rules of equity). In interpreting common law for the DIFC, the Courts may refer to the common law of England and Wales as well as other common law jurisdictions.
Technology and Accessibility in DIFC Courts
E-filing Systems for Seamless Case Management
The DIFC Courts have an e-filing system designed to facilitate the electronic submission of legal documents and claims. Users can submit various legal documents, including bundles, directly through the DIFC Courts’ portal without needing to visit the court physically.
The e-filing system helps in streamlining court processes and enables judges, lawyers, and court staff to access case information through the portal.
Virtual Hearings for Global Accessibility
Virtual hearings have become increasingly prevalent in DIFC Courts. In 2023, the DIFC Courts issued a Virtual Hearing and Bundling Protocol to standardize virtual court proceedings. The Protocol applies to civil and commercial proceedings conducted as Virtual Hearings under the jurisdiction of the Small Claims Tribunal, the Court of First Instance and the Court of Appeal.
AI In Judicial Systems for Enhanced Efficiency
DIFC has recently issued guidelines regarding the use of Artificial Intelligence tools such as Large Language Models (LLMs) and Generative Content Generators (GCGs) (e.g., ChatGPT) during the proceedings.
We provide a brief overview of the guidelines herein below:
- Parties should declare at the earliest possible opportunity if they have used or intend to use AI-generated content during any part of proceedings. Any issues or concerns expressed by either party in respect of the use of AI should be resolved no later than the Case Management Conference stage.
- Parties should not rely on AI-generated content without first verifying its accuracy. This should be done using independent sources such as case law, statutes, and credible legal commentary (for example, practitioners’ texts).
- When using AI-generated content, practitioners should always be mindful of their obligations under the Mandatory Code of Conduct for Legal Practitioners in the DIFC Courts (DIFC Courts’ Order No. 4 of 2019). Parties should ensure they do not breach any relevant laws, including the Data Protection Law 2020 (DIFC Law No. 5 of 2020) and the Intellectual Property Law 2019 (DIFC Law No. 4 of 2019) (as amended).
- Parties should not become overly reliant on GCGs and LLMs to produce their documents for proceedings. Such technology should only be used to assist parties in putting forward submissions.
- Practitioners should keep their clients properly informed and seek their consent to use GCG material in making submissions during proceedings before the DIFC Courts. If confidential information must be provided to a GCG, practitioners should ensure they have their client’s consent first.
- Parties should ensure they review the GCG they intend to use to understand if it can complete the required task. Parties should avoid using free conversational GCGs (i.e., tools that provide you with answers to questions). These are often not fit for purpose as they will not necessarily have access to all relevant legal data (such as case law and statutes).
Global Recognition and Judgment Enforcement
The DIFC Courts have signed Memoranda of Guidance (MOGs) with various international judicial bodies such as the Commercial Court of England and Wales, the Supreme Court of New South Wales, the Federal Courts of Australia, the High Court of Kenya (Commercial & Admiralty Division), the Supreme Court of Singapore, the United States District Court for the Southern District of New York (SDNY).
Although these Memoranda have no binding legal effect in that they do not constitute treaties or legislation and do not have the effect of superseding any existing laws, judicial decisions or court rules, they set out a mutual understanding of the applicable laws and judicial processes governing the reciprocal enforcement of final money judgments under the common law.
Enforcement of a DIFC Court Judgment Through Dubai Courts
A DIFC Court Judgment can be enforced through the Dubai Courts if the following conditions are met:
- The Judgment has become final and executory
- The Judgment has been certified by the DIFC Courts for execution
- The Judgment has been legally translated into Arabic.
The party seeking enforcement must first obtain an execution letter from the DIFC Courts. Thereafter, the party must submit an application for enforcement to the Execution Judge at the Dubai Courts, accompanied by the execution letter and an Arabic translation of the Judgment.
On receipt of the application, the Dubai Courts must enforce the Judgment following the Federal Civil Procedure Law.
Enforcement of a DIFC Court Judgment Outside The UAE
Where a relevant treaty (such as the GCC Convention or Riyadh Convention) exists between the UAE and the target jurisdiction, enforcement will be governed by the terms of that treaty.
Where no treaty is in place, enforcement will depend on the state’s laws in which the Judgment creditor seeks to enforce the Judgment.
Advantages of Using DIFC Courts
DIFC serves as a neutral jurisdiction and is created as an autonomous legal framework within the UAE. The DIFC Courts function under their own civil and commercial laws, which differ from the broader UAE legal system. This autonomy is essential for businesses searching for a dependable and unbiased venue for dispute resolution.
The DIFC’s dedication to fostering a flexible legal framework that meets global standards establishes it as a premier hub for international finance. Its strong regulatory structure, autonomous judicial system, and proactive stance on legal reforms ensure that it caters to the varied requirements of global enterprises while promoting economic development.
Get Expert Legal Advice on DIFC Courts with SK Legal
The DIFC Courts’ unique blend of independence, common law principles, and global recognition makes them a critical institution for resolving commercial disputes. Whether you’re a multinational corporation or a local business, understanding and leveraging the DIFC legal framework is essential.
SK Legal offers specialised legal services for all your DIFC Court needs. Our expertise includes:
- Comprehensive Legal Consultancy: Personalised advice tailored to navigating the DIFC legal structure and protecting your interests.
- Policy Review and Implementation: Expertise in aligning your contracts, policies, and procedures with DIFC employment law and compliance standards.
- Representation and Dispute Resolution: Skilled representation in arbitration-friendly courts in UAE, including arbitration, mediation, and litigation proceedings.
For expert legal guidance on the DIFC Courts, contact us today at [email protected]
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Disclaimer
This publication does not provide any legal advice and it is for information purposes only. You should not rely upon the material or information in this publication as a basis for making any business, legal or other decisions. Therefore, any reliance on such material is strictly at your own risk.
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Sameer A Khan
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