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On 3 March 2025, HH Sheikh Mohammed bin Rashid Al Maktoum in his capacity as Ruler of Dubai signed Law No. 2 of 2025 (“Law No. 2”) concerning the Dubai International Financial Centre (“DIFC”) Courts (the “DIFC Courts”).
Law No. 2 supersedes Laws No. 10 and 12 of 2004 regarding the DIFC Courts. It has already been officially published in the Dubai Government Official Gazette No 705/59 of 14 March 2025 and entered into force.
Law No. 2 regulates the judicial and administrative aspects of the DIFC Courts. It also outlines the jurisdictional mandate of the DIFC Courts and provides for establishment of a Mediation Centre to resolve disputes with the aid of the DIFC Courts’ registered mediators.
This development is of crucial importance to anyone who operates at the DIFC, engages with the DIFC, or wishes to resolve its disputes before the DIFC Courts or enforce arbitral awards or judgments in the DIFC. In addition, Law No. 2 is expected to increase legal certainty and streamline dispute resolution at the DIFC, one of the world’s major international business centres. We provide below an outline of key changes.
Clear Subject-Matter Jurisdiction
Unlike its predecessors, Law No. 2 now contains a general provision dealing with subject-matter jurisdiction that applies to all Courts in the DIFC (the Small Claims Tribunal, Courts of First Instance, and the Court of Appeal) and that encompasses civil, commercial, and employment claims. This makes it easier to identify matters that fall within the jurisdiction of the DIFC Courts and to distinguish such matters from those that fall under the jurisdiction of Dubai’s onshore courts.
This provision is contained in Article 14 of Law No. 2. Under this Article, among other claims and applications, the DIFC Courts have “exclusive jurisdiction to hear and determine” any civil, commercial, or employment claims and applications that:
- involve the different bodies of the DIFC, and businesses and entities established or licensed to carry out activities in the DIFC;
- arise from, or relate to, all contracts “concluded, contemplated, or performed,” wholly or partially, within the DIFC; or
- arise from, or relate to, any incident or transaction that pertains to the different bodies of the DIFC, and businesses and entities established or licensed to carry out activities in the DIFC.
In addition, the DIFC Courts have exclusive jurisdiction to hear all claims and applications related to the ratification or recognition of arbitral awards (domestic and foreign) in accordance with the DIFC Arbitration Law.
Article 14 extends the DIFC Courts’ exclusive jurisdiction to all claims and applications that arise from any arbitration in any of the following cases:
- if the seat (legal place) of such arbitration is the DIFC;
- if that arbitration takes place within the DIFC, provided the parties have not agreed a seat of their arbitration; or
- if the parties agreed to resort to the DIFC Courts for disputes arising out of their arbitration.
Furthermore, the DIFC Courts have jurisdiction in all cases in which the parties have agreed in writing to submit to the exclusive jurisdiction of the DIFC Courts, whether such agreement was before or after their dispute, provided the parties’ agreement is “specific, clear and express.”
A Discretion to Decline Jurisdiction
In addition to clearly identifying matters that fall within the DIFC Court’s jurisdiction, Article 14 grants Courts the discretion to decline jurisdiction over cases in which the parties have agreed to resort to another court, even if the DIFC Courts would otherwise have jurisdiction over such cases.
The DIFC Courts may also decline jurisdiction in cases in which a competent court issued a final judgment that can be enforced in the DIFC.
Wide Mandate to Order Interim Measures
Article 15 of Law No. 2 gives the DIFC Courts a broad mandate regarding interim and conservatory measures, granting them jurisdiction to determine interim measures applications in all cases falling within their jurisdiction.
In addition, the same Article grants the DIFC Courts jurisdiction to decide applications seeking interim or precautionary measures related to the following:
- the disclosure of the true identity of defendants or potential defendants against whom a claim may be brought in the DIFC Courts; and
- the disclosure of funds and assets owned by the defendant or applicant in applications and claims that fall within the DIFC Courts’ jurisdiction.
Importantly, Article 15 now grants the DIFC Courts jurisdiction to issue interim measures in aid of current or future arbitrations brought outside the DIFC if the requested measure must be taken within the DIFC.
Broad Powers of the DIFC Courts
In addition to the above, Article 24 of Law No. 2 affirms the DIFC Courts’ broad powers regarding matters that fall within their jurisdiction.
Under this Article, the DIFC Courts may appoint:
- assessors (one or more), who are required to be independent and qualified, to “assist the DIFC Court in the determination of any of the issues arising in a proceeding before the DIFC Courts”; and/or
- receivers and provisional liquidators at any stage of the proceeding.
In addition, the DIFC Courts have the power to make orders regarding the conduct of proceedings pending before them, including the power to summon a person to appear as a witness and restrict the publication of evidence or any part of a proceeding.
Finally, the DIFC Courts can require a party to provide security for costs on the terms, and subject to the conditions, they deem appropriate.
Establishment of the DIFC Courts Mediation Centre
Finally, Article 13 of Law No. 2 provides for the creation of a “Mediation Centre” at the DIFC Courts, which would be empowered to consider and resolve disputes amicably.
The Centre’s specific functions and procedures have yet to be determined. Nevertheless, the Centre promises to be a valuable tool for resolving commercial and civil claims in an efficient and cost-effective manner.
This development is in line with the existing approach of the DIFC Courts to encourage mediation. While it remains to be seen whether, and how frequently, the DIFC Courts would direct parties to seek mediation before hearing their claims, the availability of the Mediation Centre could prove especially important in complex cases, where the dispute may be more effectively resolved by professional mediators.
