Practical Law

A new judicial tribunal has been set up in Dubai to bridge conflicts arising between the jurisdiction of the local Dubai courts and the Dubai International Financial Centre (DIFC) courts.

The new tribunal has the power to issue binding decisions on which court should hear a particular dispute when there is a conflict between the two. Any underlying proceedings will be put on hold until the tribunal makes a decision.

Where judgments have been handed down by both courts, the tribunal can decide which is to be enforced.

The court system in Dubai

There are effectively two court systems in Dubai: the local courts and the DIFC courts. The DIFC is a financial free zone in Dubai, and its courts can hear cases:

• That relate to the DIFC.
• Where the contract in question specifies that the DIFC courts have jurisdiction.
• Where both parties agree to use DIFC courts to resolve a dispute that has already arisen.

The two courts generally recognise the other’s judgments.

“Jurisdiction creep”

Over the past few years, the DIFC courts have been proactive in accepting jurisdiction in matters with a connection to Dubai outside of the DIFC (“onshore” Dubai), but not to the DIFC itself, particularly in relation to the enforcement of foreign judgments and arbitral awards, effectively acting as a conduit for enforcement before the Dubai courts.

Some have seen this as “jurisdiction creep” on the part of the DIFC courts. This has led to concern as to how the Dubai courts would respond to the DIFC courts’ jurisprudence on its jurisdiction, particularly in cases where the centre of gravity of the matter was more closely connected to onshore Dubai.

The tribunal has been set up to let parties identify the appropriate forum from the start of a dispute, and should also reduce the risk of a party using the dual court system vexatiously to stall claims or take unfair procedural advantage.

New judicial tribunal

Deliberations by the tribunal will be held in private and decisions will require a majority, failing which the chairman has a deciding vote. The decisions of the tribunal will be issued within 30 days of an application being made and will be final, with no permission to appeal.

The tribunal can also issue rules and guidance where there is conflict of jurisdiction between the courts, and will give opinions on co-operation between the two systems. The extent to which this will affect the relationship between the Dubai courts and the DIFC courts remains to be seen.

The tribunal will have seven members:

• The president of the Dubai Court of Cassation, who will act as chairman.
• The president of the Dubai Court of Appeal.
• The president of the Dubai Court of First Instance.
• The secretary-general of the Dubai Judicial Council.
• The chief justice of the DIFC courts.
• One judge from the DIFC Court of Appeal.
• One judge from the DIFC Court of First Instance.

The judges will be nominated by the chief justice.

Dividing line

The dividing line between the jurisdictions of the two court systems can be difficult to define and the establishment of the tribunal is welcome. However, the decree under which it was set up only gives a broad framework for the tribunal’s role and does not go into detail about its procedural functions.

Presumably, the fact that the tribunal will make its decisions within 30 days means that parties other than the applicant will have very limited, if any, opportunity to make representations.

Further rules and guidance are likely to be published in due course to clarify the workings of the tribunal. In the meantime, it will be interesting to see how the new tribunal will approach its role, particularly where there are issues as to the correct jurisdiction. Ideally this will bring more time- and cost-effective outcomes for parties, and will reduce the number of challenges to the enforcement of judgments on jurisdictional grounds.