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Jurisdiction of the DIFC Courts

The issue of territorial jurisdiction relates to public order and impacts all disputes as courts must address this issue even if neither of the parties raise it.

The provisions in Article 30 of Law No. 3 of 2002 regarding the establishment of the Dubai International Financial Centre (DIFC), Article 3/3 of DIFC Law No. 14 of 2011, and Article 8 of Law No. 7 of 2011, as amended by Law No. 16 of 2011, concerning judicial jurisdiction, collectively indicate that within the Dubai International Financial Centre (DIFC), there exists an independent judicial authority which operates autonomously in its functions.

As the onshore courts have general jurisdiction over all disputes unless otherwise stipulated in the constitution or any other law or exception, Article 8 of Law No. 9/2004, stipulates:

“The Centre’s Courts shall have separate legal personality and shall have a Chief Justice appointed by a decree issued by the Ruler, and it shall carry out its duties in an independent manner in accordance with the Centre’s Laws and the Centre’s Regulations.” 

Similarly, Article 3 of Law No. 12 of 2004 concerning the judicial authority in the DIFC states:

“The Courts of the Centre are hereby established and shall carry out their functions in an independent manner, in accordance with the provisions of this Law and the provisions of the other Centre’s Laws and Regulations. The Courts shall be of two ranks; The Court of First Instance and the Court of Appeal.”

Article 5 of Law No. 16 of 2011 amended some provisions of Law No. 12 of 2004 regarding the DIFC Courts and stated:

A. Court of First Instance:

1. The Court of First Instance shall have exclusive jurisdiction to hear and determine: a. Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party; b. Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalized or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract; c. Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities. d. Appeals against decisions or procedures made by the DIFC Bodies where DIFC Laws and DIFC Regulations permit such appeals. e. Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.

2- The Court of First Instance may hear and adjudicate any civil or commercial claims or actions where the parties agree in writing to file such claim or action with it whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.”

These provisions determine that the legislator granted the DIFC Courts exclusive jurisdiction over any civil or commercial dispute, in addition to also grating it jurisdiction where there is agreement between the parties on the jurisdiction of the DIFC Courts unless the matter is governed by Dubai onshore law. This agreement must be in writing, whether before or after the dispute, and it must be based on a specific, clear, and explicit provision.

This arrangement removes jurisdiction from other courts and allows the DIFC Courts to hear and decide these disputes, providing it does not conflict with the explicit territorial jurisdiction granted to other courts by the legislator. This is in accordance with the second paragraph of Article 5 of Law No. 16 of 2011, which states that "the Court of First Instance may hear and adjudicate." This provision confirms that the claim is deemed valid and binding if a dispute is brought before the DIFC Courts and the conditions outlined in the previous provisions of Article 5 are met.

Based on several provisions of different laws including Article 8 of Law No. 9 of 2004, Article 3 of Law No. 12 of 2004 and Article 5 of Law No. 16 of 2011 (which was replaced by Law No. 5 of 2017) the DIFC courts have been granted "exclusively" the jurisdiction to consider cases that fall within certain parameters as stipulated in those articles.

The DIFC Courts are therefore exclusively competent to consider and adjudicate: 

• Civil, commercial or labor applications and claims to which the DIFC or any of its bodies or institutions is a party;
• Those related to a contract or a promise of a contract, whether it was concluded, completed, executed, will be actually executed or is supposed to be executed at the DIFC under explicit or implicit conditions stipulated in the contract; and
• A transaction conducted in whole or in part at the DIFC, or an incident that occurred at the DIFC related to its activities.

In addition, and similar to arbitration, DIFC Courts have jurisdiction over disputes where the parties agree on the jurisdiction of the DIFC Courts provided that this does not contradict any laws.

It is worth noting that the DIFC Courts judgments are executed through the Dubai onshore courts unless the assets being executed against are located within the DIFC.

This article was written by litigation lawyers Abdullah Ishnaneh and Saad Younes, and focuses on Jurisdiction in the DIFC Courts. 

BSA is a regional Law Firm in the Middle East with offices in the UAE, Oman and Saudi Arabia. As a full-service law firm our practice areas include litigation, arbitration and corporate services, including M&A, banking & finance, Intellectual Property, TMT, Fintech, employment and insurance.

Published on 5 October, 2023.

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