A written clause referring disputes to the DIFC Courts excludes the Abu Dhabi courts

Abu Dhabi Court of Cassation, Commercial Appeal No. 1367 of 2021, judgment of 18 January 2022

Court
Abu Dhabi Court of Cassationمحكمة النقض - أبوظبي
Case
Abu Dhabi Court of Cassation, Commercial Appeal No. 1367 of 2021, judgment of 18 January 2022
Arabic citation
الطعن رقم 1367 لسنة 2021 تجاري، جلسة 18/1/2022
Topics
DIFC · Courts & arbitration · Free zones
Laws applied
DIFC Judicial Authority Law
The judgment
Read it on adjd.gov.ae ↗ (ADJD judgments service (Abu Dhabi Court of Cassation), Id 56832; principles from ADJD Technical Office, 'مجموعة الأحكام والمبادئ القانونية' 2022, p. 41)
Summary written
31 October 2026
Print

The principle

Under Article 5(2) of Dubai Law No. 12 of 2004, as amended by Law No. 16 of 2011, the DIFC Court of First Instance may hear any civil or commercial claim that the parties agree in writing, before or after the dispute, to bring before it, provided the agreement is a specific, clear and express provision. Such an agreement gives the DIFC Courts jurisdiction to the exclusion of the ordinary courts, which may not hear the dispute; the word 'may' in Article 5(2) means only that the DIFC Courts' jurisdiction becomes valid and binding once the conditions are met.

The case and the decision

Two partners had formed a limited liability company in Abu Dhabi. In November 2018 one sold his 70% stake to the other for AED 6.03 million, payable in sixty instalments, and agreed to the company's conversion into a sole-owner company. Clause 17 of the sale agreement provided that it was governed by DIFC law and that any dispute arising out of or in connection with it, if not settled amicably, would be referred to the DIFC for final settlement. The seller sued the buyer in the Abu Dhabi commercial court for about AED 6.14 million in unpaid instalments. The buyer objected on the basis of the clause, which the parties and the courts below called an arbitration clause. The first-instance court declared the claim inadmissible; the Court of Appeal reversed and sent the case back for a hearing on the merits.

The Court of Cassation allowed the buyer's appeal. Although the ordinary courts have general jurisdiction, jurisdiction may be assigned elsewhere by law. Article 8 of Dubai Law No. 9 of 2004 and Article 3 of Dubai Law No. 12 of 2004 establish the DIFC Courts as independent courts, and Article 5(2) of Law No. 12 of 2004, as amended by Law No. 16 of 2011, allows the DIFC Court of First Instance to hear civil or commercial claims that the parties agree in writing, before or after the dispute, to bring there, provided the agreement is specific, clear and express. Such an agreement removes the dispute from the ordinary courts, and the DIFC Courts' jurisdiction cannot then be taken away and given to another body. Clause 17 was such an agreement. The Court quashed the appeal judgment, decided the appeal itself and confirmed the first-instance ruling that the claim was inadmissible because of the clause.

Why it matters

Commercial parties anywhere in the UAE, including onshore Abu Dhabi companies, can choose the DIFC Courts in writing, and the Abu Dhabi courts will decline to hear a claim brought in breach of a clear DIFC Courts clause. The decision was given under the DIFC court legislation in force in 2022, since replaced by Dubai Law No. 2 of 2025.

Laws applied

Articles 3 and 5(2) of Dubai Law No. 12 of 2004 on the Judicial Authority at the DIFC, as amended by Dubai Law No. 16 of 2011 — text of articles 3, 5
Decided under this law; it has been replaced by DIFC Courts Law 2025.
Article 8 of Dubai Law No. 9 of 2004 establishing the Dubai International Financial Centre

In the court’s words

“بما لا يجوز معه نزع اختصاص محاكم مركز دبي المالي العالمي واسناد مهمة الفصل فيما حدده المشرع من منازعات الى غيرها من الجهات الأخرى”

Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.

Related judgments

A DIFC Courts clause does not oust RAK courts over a RAK free-zone company not registered in the DIFC

RAK Cassation — Labour 5/13 JY · 28 May 2018

The DIFC Courts' jurisdiction depends on the conditions in the DIFC judicial authority law. A company that is not registered in the DIFC is not one of its bodies or estab…

Abu Dhabi courts lack jurisdiction over a claim to which an ADGM-registered company is a party

Abu Dhabi Cassation — Commercial 63/2022 · 11 April 2022

Jurisdiction ratione materiae is a matter of public order that the court must raise of its own motion. The ADGM Courts are a judicial authority separate from the Abu Dhab…

After Reem Island joined ADGM, a claim by a Reem Island company belongs to the ADGM Courts

Abu Dhabi Cassation — Commercial 512/2024 · 6 June 2024

New laws do not apply retroactively, but rules of public order take immediate effect on existing situations, and rules on jurisdiction ratione materiae are mandatory and …

The RAK Free Zone arbitration scheme does not take away the courts' jurisdiction over free-zone disputes

RAK Cassation — Labour 9/6 JY · 8 May 2011

Arbitration in UAE civil and commercial matters rests on the parties' free agreement, which defines its scope and removes the dispute from the courts. The Ras Al Khaimah …

A final civil award made in criminal proceedings survives the accused's later acquittal on the criminal charge

Abu Dhabi Cassation — General Assembly 2/2013 · 22 January 2014

A judgment has res judicata effect only if it is final (قطعي) and issued by a court with jurisdiction, and only on a question that is fundamental, unchanged, argued betwe…

Al Ain appellants get the ten-day distance period for cassation appeals; non-compete limited by place

Abu Dhabi Cassation — General Assembly 1/2013 · 22 January 2014

The 60-day period for a cassation appeal (Article 176 of the former Civil Procedure Law) is extended by the ten-day distance period under Article 12 for an appellant whos…

Source. Summary written by Polaris from the judgment published by the Abu Dhabi Court of Cassation on adjd.gov.ae (ADJD judgments service (Abu Dhabi Court of Cassation), Id 56832; principles from ADJD Technical Office, 'مجموعة الأحكام والمبادئ القانونية' 2022, p. 41), read on 31 October 2026. Party names are anonymised in the court’s publication.
Published for general information by Polaris Corporate Services FZ-LLC. It is not legal advice. This page is a summary written by Polaris; it is not the judgment and is not an official translation. Read the judgment on the court’s official service before relying on it. A judgment decides the dispute before the court; its weight in a later case depends on the court, the facts and any later change in the law or in the court’s own case law.

Begin a Conversation

Whether you are establishing a new venture, restructuring an existing enterprise, or exploring residency pathways — we are here to advise.

Arrange a Consultation →