A. LEGISLATION AND RULES
A.1 Legislation
International arbitration in onshore United Arab Emirates (UAE) continues to be governed by UAE Federal Law No. 6 of 2018 (“UAE Arbitration Law“). There have been no amendments to the UAE Arbitration Law since September 2023. International arbitration in the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM) continues to be governed by DIFC Law No. 1 of 2008 (“DIFC Arbitration Law“) and ADGM Arbitration Regulations 2015 – Amendment No. 1 of 2020, respectively.
A.2 Institutions, rules and infrastructure
A.2.1 ArbitrateAD commences operations and arbitrateAD Arbitration Rules published
Abu Dhabi International Arbitration Centre (arbitrateAD) commenced operation on 1 February 2024. arbitrateAD supersedes the Abu Dhabi Commercial and Conciliation Centre (ADCCAC) and acts under the auspices of the Abu Dhabi Chamber of Commerce and Industry. Existing cases registered under the ADCCAC Rules continue to be administered and resolved under the same until all such cases have been terminated or otherwise transitioned to arbitrateAD upon party agreement. From 1 February 2024, any new disputes are referred to and administered by arbitrateAD under the new arbitration rules, and ADCCAC ceased accepting new cases as of 1 February 2024.
The arbitrateAD Arbitration Rules became effective on 1 February 2024 and apply to arbitrations commenced on or after that date. The arbitrateAD Arbitration Rules also apply whenever the parties have agreed to submit disputes to arbitration under the ADCCAC Rules, except for the provisions on emergency arbitrator (article 35) and expedited proceedings (article 36).
The arbitrateAD Arbitration Rules provide for the formation of the Court as an independent administrative body that performs functions such as the appointment and replacement of arbitrators, the resolution of challenges to arbitrators or arbitration agreements, the disposition of requests for joinder and requests for consolidation, and the scrutiny of awards.
Among other things, the arbitrateAD Arbitration Rules include provisions on multiple contracts, joinder, consolidation, expedited proceedings, emergency arbitration and early dismissal of claims. One of the most significant changes is that Abu Dhabi Global Market (ADGM) is now the default seat under the arbitrateAD Arbitration Rules (article 22(2)).
A.2.2 DIAC statistics published
Dubai International Arbitration Center (DIAC) remains one of the region’s main arbitration centers. The Annual Report for 2023 revealed that the DIAC had registered 355 cases (up from 340 in 2022), with 323 as administered arbitrations (as compared to 292 in 2022), one administered mediation and 31 appointing authority cases. Disputes in the construction and real estate sectors remain the majority (59%), with banking and finance being the second (9%), followed by manufacturing and industrial sectors (6%). Parties to the arbitrations originated from 49 different countries, with 28% of parties from countries other than the UAE (the majority of parties being from the UAE). The total amount in dispute in all cases was more than USD 1.497 billion, with an average amount in dispute of USD 4,665,412.
DIAC has also demonstrated continued commitment to diversity by appointing women in 47% of the court’s appointments in 2023.
Notably, out of the cases registered in 2023, 178 (or 55%) of the cases were brought based on a DIAC arbitration agreement; 102 (or 32%) of the cases were brought based on a Dubai International Financial Centre and the London Court of International Arbitration (DIFC-LCIA) arbitration agreement, with such agreements having been subject to particular attention during the period, as will be discussed below.
B. CASES
B.1 DIFC Court of Appeals overturns Sandra Holding
In a recent ruling,[1] the DIFC Court of Appeal reconsidered and overruled the position taken in relation to Worldwide Freezing Orders (WFOs) in September 2023 in “Sandra Holding” decision.[2] The Court of Appeal reconsidered whether the DIFC Courts have jurisdiction to issue WFOs against respondents in anticipation of a foreign judgment against those respondents which would be enforceable in the DIFC, when the DIFC Courts would not otherwise have jurisdiction over the claim on the merits.
In Sandra Holding, the applicants (the claimants in the foreign proceedings) launched claims and proceedings outside of the UAE. The applicants requested the DIFC Courts to issue a WFO to prevent the dissipation of assets pending the determination of the ongoing foreign court proceedings, although the respondents were not licensed in the DIFC, no contracts were performed in the DIFC, and the respondents had no assets in the DIFC. The Court of Appeal concluded that neither rule 25.24 of the Rules of the DIFC Courts (RDC) nor article 24 of the DIFC Law No. 10 of 2004 confers jurisdiction on the DIFC Courts to order WFOs when other jurisdictional gateways of article 5A of the Dubai Judicial Authority Law 12/2004 are not present.
In 2024, the DIFC Court of Appeal reconsidered this position, where the applicant asserted that the respondent had misappropriated the claimant’s funds and transferred part of those funds to two accounts held at Emirates NBD in onshore Dubai (ENBD). After careful analysis of Sandra Holding on the law and the facts, the Court of Appeal concluded that article 24 of the DIFC Law No. 10 of 2004, which provides for the jurisdiction of the DIFC Courts to recognize and enforce foreign court judgments, also confers jurisdiction on the DIFC Courts to take the measures necessary to prevent the dissipation of assets, such as WFOs. The Court of Appeal emphasized that this power is discretionary and must be exercised cautiously.
The ruling is an important development as it revises the previously adopted restrictive approach to the availability of interim remedies, including WFOs, in the DIFC in support of foreign court proceedings. Although the Court of Appeal emphasized that this power should be exercised cautiously, the ruling provides an important tool to facilitate the effective enforcement of foreign courts’ judgments in the UAE.
B.2 Dubai Court of Cassation rules asymmetric optional arbitration clauses are not binding
The Dubai Court of Cassation in Appeal No. 735/2024 refused to enforce a unilateral optional arbitration agreement and decided that arbitration agreements of this type were not binding on the parties. The dispute arose out of two construction subcontracts that contained arbitration agreements providing that disputes should be referred either to (a) arbitration at the Dubai Chamber of Commerce, or (b) to the local court in the United Arab Emirates, with the choice of forum to be used to be decided by the contractor. The subcontractor submitted a claim to Dubai state courts, in spite of the arbitration agreement, and the contractor claimed that the matter should be referred to arbitration.
The court disagreed with the contractor and accepted jurisdiction on the basis that an arbitration agreement should be based on the consent of the parties, comprised of two identical wills of the parties to refer disputes to arbitration and to agree that state courts should not have jurisdiction to consider claims. Accordingly, the court concluded that the clause in question could not be considered a binding agreement to arbitration.
The ruling may have far-reaching consequences, especially for industries where unilateral and optional clauses are often used for valid business reasons. For example, in the banking industry, where the lender is often granted an option to choose between arbitration and litigation to maximize the possibility of recovery in case of the borrower’s default.
Further effects of the ruling are to be seen as, for example, a question remains on whether Dubai courts will recognize and enforce arbitral awards rendered based on asymmetrical optional agreements, or they will consider such clauses to be unenforceable altogether.
Notably, in an earlier 2024 ruling,[3] the DIFC Court of Appeal upheld the validity of an asymmetric jurisdiction agreement in a case where a customer of a bank sought to advance claims against the bank in the DIFC Courts where the dispute resolution clause provided for the jurisdiction of the DIFC Courts over the bank’s claims against the client, and not vice versa. The Court of Appeal found that there was no reason not to uphold a clause of this nature. The court noted that while the clause served to “reflect the imbalance between the comparative market power of banks as contrasted with their customers … such clauses are familiar as a matter of international banking practice and, in part at least, serve a legitimate commercial purpose.” Given that no other jurisdictional gateway existed in the matter in question to bring the client’s claims against the bank within the jurisdiction of the DIFC Court, the Court of Appeal found that the agreement could not be interpreted to provide for a reciprocal agreement by the bank permitting the client to bring her claims against the bank in the DIFC Courts.
B.3 DIFC Courts reconfirm enforceability of awards on interim measures
The DIFC Court of Appeal confirmed in a recent judgment[4] that the DIFC Courts have jurisdiction to enforce interim measures where the seat of the arbitration is not the DIFC, when those interim measures take the form of an award. The case concerned a provisional award rendered by an arbitral tribunal seated in London, where the relevant arbitration agreement provided for disputes to be referred to arbitration under the now defunct DIFC-LCIA Rules.
The DIFC Court of Appeal concluded that there is nothing in articles 42 and 43 of the DIFC Arbitration Law that distinguishes between final and partial awards, on the one hand, and interim and provisional awards, on the other. The Court of Appeal further reasoned that it is not the finality of the award that is crucial, but its binding nature, and interim and provisional awards are binding. On this basis, the DIFC Court of Appeal concluded that there was no good reason for not enforcing an award, whether it be an award for interim measures or otherwise, subject to the possible challenges under article 44 of the DIFC Arbitration Law.
The ruling is a welcome endorsement of the earlier development, as it confirms the existence of an additional option for the parties to arbitrations seated outside of the DIFC to enforce tribunals’ awards on interim measures. This opportunity is additional to the possibility to request interim measures directly from DIFC Courts under article 15 of the DIFC Arbitration Law.
B.4 Courts hold DIFC-LCIA arbitration clauses to be enforceable
Further developments emerged regarding clauses providing for DIFC-LCIA arbitration agreements. As previously reported, in September 2021, the DIFC-LCIA center was abolished, and all the respective assets, liabilities, rights, and obligations of these institutions were transferred to the newly established DIAC by way of Decree No. 34 (“Decree“). The consequences of the Decree for the arbitration agreements in favor of the defunct DIFC-LCIA center have attracted attention on various occasions since then.
Specifically, in November 2023[5], the United States District Court for the Eastern District of Louisiana refused to compel a claimant to DIAC arbitration when the arbitration agreement provided for DIFC-LCIA arbitration. The court explained that relevant precedent dictated that arbitration could not be compelled when the agreed arbitral institution is unavailable or no longer in existence. The decision has since then been reversed by the appellate court and remanded for reconsideration.[6] The appellate court decided that the arbitration agreement in that case should be construed as the agreement to arbitrate disputes under specific rules, rather than at a specific forum, and, even if it was an agreement to a specific forum, it was not exclusive. The appellate court decision has confirmed that DIFC-LCIA arbitration agreements are enforceable as a matter of principle at least in cases when the parties agreed to arbitrate disputes under DIFC-LCIA rules, rather than to refer their disputes to the DIFC-LCIA as a forum, or if they did not designate DIFC-LCIA as an exclusive forum to the exclusion of any other, but rather the dominant purpose of the parties was to arbitrate generally.
In 2024, the Singapore High Court[7] dealt with the issue as well: although it allowed enforcement of a provisional award issued in an arbitration under the DIAC Arbitration Rules, it did so on the basis that the respondent had demonstrated intention to submit to the tribunal’s jurisdiction. It nevertheless concluded that “it was a stretch to say that the parties intended, at the time they signed the Settlement Agreement, to accept arbitration administered by any institute in Dubai (whether then existing or not) regardless of the rules under which the arbitration would be conducted.” On this basis, the Singapore High Court found that the DIFC-LCIA arbitration clause may not apply.
In the UAE, the Abu Dhabi Court of First Instance, Commercial Division, in Case No. 1046/2023 and the Abu Dhabi Court of Appeal in Case No. 449/2024 were faced with a claim submitted to them despite the presence of a DIFC-LCIA arbitration agreement in the contract between the parties and concluded that the abolishment of the arbitral institution by itself does not make the arbitration agreement incapable of being performed or invalidate the intent of the parties to arbitrate, as long as there is an explicit agreement to arbitrate. On this basis, the courts enforced the “negative effect” of the arbitration agreement, i.e., that the parties cannot resort to state courts instead.
The DIFC Court of First Instance was also faced with a similar issue when it had to consider an application for an anti-suit injunction in a case where the arbitration agreement between the parties again provided for DIFC-LCIA arbitration.[8] One of the arguments advanced by the defendant was that it could not be forced to arbitration in a forum that it did not choose.
The court analyzed the matter under DIFC law and concluded that it was bound by the Decree and that, even if it had not been bound by it, it would have adopted the reasoning of the Abu Dhabi decisions. Notably, it found that the Decree preserves the parties’ bargain and if the parties had not wished their arbitration after the effective date of the Decree to have been administered by DIAC, it was open to the parties to have agreed that another institution was appointed in its place.
The DIFC Court’s interpretation considered that it is not only the “negative effect” of the arbitration agreement that it preserved, but also the “positive” one – the Decree supplements the arbitration agreement.
The above decisions clarify the position of UAE courts in respect of the effect of the Decree and confirm that the UAE courts would treat the DIFC-LCIA arbitration agreements as binding, valid and capable of being performed. However, this does not exclude the risk of different approaches in foreign courts, which may decide otherwise when faced with claims covered by such arbitration agreements – especially when a party entertains an objection to DIAC tribunal’s jurisdiction on the basis of the Decree.
As such, it remains advisable to align the “old” arbitration agreements providing for DIFC-LCIA arbitration and expressly agree to DIAC (or another) arbitration to avoid jurisdictional disputes, enforcement issues, as well as claims submitted to state courts outside of the UAE.
B.5 Dubai Court of Cassation expands recoverability of arbitration costs
In a landmark decision,[9] the Dubai Court of Cassation changed the approach to determining the jurisdiction of tribunals to award legal costs. In an earlier ruling in February 2024[10], the Dubai Court of Cassation concluded that article 38 of the ICC Arbitration Rules was not broad enough to grant tribunals the power to award parties’ legal and expert fees, and accordingly, absent an express agreement of the parties, a tribunal had no jurisdiction to award one of the parties the recovery of legal fees paid to its counsel in connection with the arbitration.
In a highly welcome move, the Dubai Court of Cassation changed this position in another case decided in November 2024 and concluded that, although article 38 of the ICC Arbitration Rules does not directly mention legal representatives’ fees, such fees represent reasonable costs incurred by the parties to the arbitration. On this basis, the court concluded that such fees are deemed arbitration expenses that may be awarded under article 38 of the ICC Arbitration Rules. The court relied on the ICC practice, including the Secretariat’s Guide to ICC Arbitration, which lists fees and expenses of the parties’ lawyers in the list of recoverable costs.
The decision is a highly positive development that brings Dubai in line with the international arbitration practice and corrects the previous, unnecessarily restrictive approach to the jurisdiction of tribunals to award legal costs.
B.6 Onshore Dubai Courts rule without prejudice communications are not admissible
The Dubai Court of Appeal and the Dubai Court of Cassation issued rulings[11] recognizing the concept of “without prejudice” negotiations under UAE Law. In a commercial case involving a cryptocurrency dispute, the claimant sought to rely on the statements made by the respondent during settlement negotiations, which – in the claimant’s opinion – contained acknowledgement of the debt. The Court of Appeal rejected the appeal and concluded that statements made during amicable settlement negotiations, if not leading to settlement, cannot be admissible as evidence, as they are made without prejudice and enjoy immunity from being considered as evidence in court. The Dubai Court of Cassation upheld the ruling.
The position expressed by the courts is revolutionary as onshore UAE courts have traditionally been reluctant to recognize the concept of negotiations on a without prejudice basis. While it remains to be seen whether courts will follow this approach (the onshore UAE legal system is not based on precedents), these rulings may indicate a trend towards offering protection to “without prejudice” communications in the onshore UAE legal context. This is a welcome development as it promotes settlement of disputes by providing the parties with a safe space for communication during their negotiations.
[1] Carmon Reestrutura-engenharia E Serviços Técnios Especiais, (Su) LDA v. Antonio Joao Catete Lopes Cuenda [2024] DIFC CA 003.
[2] (1) Sandra Holding Ltd (2) Nuri Musaed Al Saleh v. (1) Fawzi Musaed Al Saleh (2) Ahmed Fawzi Al Saleh (3) Yasmine Fawzi Al Saleh (4) Farah El Merabi [2023] DIFC CA 003.
[3] Lara Basem Musa Khoury v. Mashreq Bank PSC [2022] DIFC CA 007.
[4] Neal v. Nadir [2024] DIFC A 001.
[5] Baker Hughes Saudi Arabia Co. v. Dynamic Industries, Inc., Civ. A. No. 2:23-cv-1396 (E.D. La. 6 November 2023).
[6] Baker Hughes v. Dynamic Industries, No. 23-30827 (5th Cir. 2025).
[7] [2024] SGHC 71.
[8] Narciso v. Nash (ARB 009/2024).
[9] Dubai Court of Cassation in Case No. 756/2024.
[10] Dubai Court of Cassation in Case No. 821/2023.
[11] Dubai Court of Appeals in Case No. 31/2024, upheld by the Dubai Court of Cassation in Case No. 486/2024.
