Federal Supreme Court (Federal and Local Judicial Principles Unification Authority), Request No. 2 of 2023, decision of 21 December 2023
Under Article 104 of the Constitution, each emirate's local judicial authority handles all judicial matters not entrusted to the federal judiciary, within the borders of that emirate. Each local judiciary is therefore a judicial authority independent of the federal courts and of the other emirates' courts. Because this distribution derives from the Constitution, it is a matter of public order that the court applies of its own motion, and parties to a civil or commercial dispute cannot agree to confer jurisdiction on a court belonging to a different judicial authority. Article 33(5) of the Civil Procedure Law, which permits agreements on territorial jurisdiction, operates only within that limit.
The Federal Attorney General asked the Authority to resolve conflicting principles on whether parties may agree to depart from the jurisdiction of the courts of an independent judicial authority. In a 2017 judgment (appeal 213 of 2017) the Dubai Court of Cassation held Dubai's courts competent over a subcontract formed in Dubai, although the parties had agreed on the Abu Dhabi courts, because Dubai's judiciary is independent and its jurisdiction cannot be displaced by agreement. The Federal Supreme Court, in 2007 (appeal 670 of judicial year 27), had instead upheld a clause in a partnership contract referring partners' disputes to the Dubai courts, so that a claim filed in Al Ain was dismissed. In 2023 the Ras Al Khaimah Court of Cassation (appeal 16 of 2023) held that the Ras Al Khaimah courts lacked jurisdiction over a claim concerning a company registered in a Ras Al Khaimah free zone, giving effect to a clause choosing the DIFC Courts and to the defendant's seat in Dubai. The Authority held the request admissible under Articles 15 and 16 of Federal Law No. 10 of 2019. On the merits it reasoned that Article 104 of the Constitution gives each emirate its own judiciary for matters not assigned to the federal courts, confined to that emirate's territory. A distribution derived from the Constitution is public order: it cannot be varied by agreement, and the court applies it of its own motion. Allowing parties to contract out of it would draw litigants before courts lacking jurisdiction, disturb the constitutional distribution of judicial work between the emirates and burden courts with cases outside their remit. Article 33(5) of Federal Decree-Law No. 42 of 2022 (formerly Article 31 of the 1992 Code) allows agreements on territorial jurisdiction, but only subject to that rule. The Authority departed from the principles of the Federal Supreme Court and the Ras Al Khaimah Court of Cassation and adopted the Dubai principle: in civil and commercial matters, there can be no agreement to depart from the jurisdiction of courts belonging to a judicial authority independent of the federal judiciary.
Many UAE contracts name the courts of a particular emirate. Under this decision, such a clause cannot move a civil or commercial dispute between the federal courts and an independent local judiciary, or between local judiciaries, where the chosen court would otherwise lack jurisdiction; courts will apply the statutory connecting factors of their own motion. The Ras Al Khaimah ruling the Authority departed from had given effect to a DIFC Courts clause. The decision does not deal with arbitration agreements.
| Article 104 of the Constitution of the United Arab Emirates |
| Article 33(5) of Federal Decree-Law No. 42 of 2022 (Civil Procedure Law) — text of article 33 |
| Article 31 of Federal Law No. 11 of 1992 (former Civil Procedure Law) Decided under this law; it has been replaced by Civil Procedure Code. |
| Articles 15 and 16 of Federal Law No. 10 of 2019 on the Regulation of Judicial Relations between Federal and Local Judicial Authorities |
“ما دامت المادة موضوع النزاع مادة مدنية أو تجارية فلا يجوز الاتفاق على مخالفة الاختصاص الولائي للمحاكم التي تخضع لجهة قضائية مستقلة عن القضاء الاتحادي”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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