A Detailed Look at the DIFC Courts System

The Dubai International Financial Centre (DIFC Courts) is a financial-free zone established by Federal Decree No. 35 of 2004. DIFC has independent Courts that apply the DIFC Laws derived from the English Common Law. Proceedings in DIFC Courts take place in English.

Structure and Jurisdiction of DIFC Courts

DIFC Courts consist of the Court of First Instance, Court of Appeal, and Small Claims Tribunal.

Broadly speaking, the Court of First Instance has exclusive jurisdiction to hear and determine civil/commercial cases wherein the parties opt into the jurisdiction of DIFC Courts in the contract, where the dispute involves a DIFC-established party, or if the dispute has occurred in DIFC.

The Court of Appeal has exclusive jurisdiction to hear and determine appeals filed against Judgments/decisions made by the Court of First Instance as well as requests for interpretation of DIFC laws and regulations made by any of the DIFC’s bodies or establishments.

It should be noted that parties to a contract are free to choose the governing law of the contract (such as UAE law or English law). However, if they fail to specify the same, DIFC laws are applicable by default.

Enforcement of Judgments

Local enforcement

To enforce or execute a DIFC Court Judgment within DIFC, a Judgment creditor must approach the Execution Judge and apply for its enforcement. 

If the Judgment debtor does not make payment during the execution proceedings, the Execution Judge has the power to take specific measures, such as a charge over the property, attachment of assets/earnings, or execution against assets to execute the Judgment.

Enforcement of a DIFC Court Judgment through Dubai Courts

A DIFC Court Judgment can be enforced through the Dubai Courts if the following conditions are met:

1. The Judgment has become final and executory 
2. The Judgment has been certified by the DIFC Courts for execution 
3. The Judgment has been legally translated into Arabic.

The party seeking enforcement must first obtain an execution letter from the DIFC Courts. Thereafter, the party must submit an application for enforcement to the Execution Judge at the Dubai Courts, accompanied by the execution letter and an Arabic translation of the Judgment. 

On receipt of the application, the Dubai Courts must enforce the Judgment following the Federal Civil Procedure Law.

Enforcement outside UAE

The enforcement of DIFC Court Judgments, decisions, and orders outside the UAE will be precisely the same as the enforcement of a Judgment of the Dubai Courts. Where a relevant treaty (such as the GCC Convention or Riyadh Convention) exists between the UAE and the target jurisdiction, enforcement will be governed by the terms of that treaty. 

Where no treaty is in place, enforcement will depend on the state’s laws in which the Judgment creditor seeks to enforce the Judgment.

Technology and Construction Division (TCD)

TCD is a specialist division in DIFC that deals with technically complex construction claims, such as:

• complicated engineering disputes or claims arising out of fires, 
• technology-related cases, such as liability for cybercrime incidents, 
• disputes over the ownership and use of data,
• issues relating to emerging technologies, such as artificial intelligence or connected cars.

A party who intends to issue a TCD Claim must make an application within the claim form for the Court to determine whether it should be filed in the Technology and Construction Division (TCD). 

Small Claims Tribunal

The Small Claims Tribunal (SCT) was established in 2007 and is a part of the DIFC Courts. SCT is an ideal jurisdiction for Dubai-based small and medium-sized enterprises (SMEs). SCT has jurisdiction to hear and determine civil and commercial disputes within the jurisdiction of the DIFC Courts in the following cases:

1. If the value of the claim does not exceed AED 500,000,
2. If the value of the claim exceeds the aforementioned amount but is less than AED 1,000,000 and for which the parties elected in writing that the SCT would hear it,
3. If the claim relates to employment or former employment and for which the parties elected in writing, the SCT would hear it.

The DIFC Small Claims Leasing Tribunal (SCLT) is a part of SCT, established by DIFC Courts Order No. 5 of 2019. SCLT is empowered to hear and determine claims related to residential and commercial leasing located within DIFC where the claim amount does not exceed AED 1,000,000.

Advantages of SCT

SCT is the preferred option for SMEs because it facilitates speedy dispute resolution and reduces litigation costs. In most cases, all the steps can be concluded, and a Judgement can be issued in four to five months.

Costs of SCT proceedings are limited due to the following reasons:

• Lawyers are usually not allowed to represent the parties unless permitted by a SCT Judge.
• The Judges usually do not allow disclosure/discovery of documents or exchange of witness statements and expert reports.
• The Judges have the discretion to decide the matter on the papers only (i.e., without a hearing).

Furthermore, it should be noted that after the exchange of pleadings, the SCT usually schedules a consultation to help parties explore settlement possibilities. 

A successful settlement at this stage can result in further reduced costs. If the dispute cannot be settled amicably between the parties, the SCT judge can either decide the matter on the papers only or schedule a further hearing to resolve the claim.

The proceedings in SCT take place in English language, unlike other Dubai mainland courts whose official language is Arabic. Therefore, it is beneficial for SMEs run by non-Arabic expats.

Overall, SCT offers many advantages, and SMEs can take advantage of these benefits by opting for DIFC Courts’ jurisdiction in their agreements.

Proceedings in DIFC Courts

Proceedings in DIFC start when the court issues the claim form at the claimant’s request. There are different types of claim forms, such as:

1. The Part 8 claim form (Form P8/01) is used when the claim is unlikely to involve a substantial dispute of fact.
2. The Part 7 claim form (Form P7/01) is used when the claim does not fall under SCT’s jurisdiction and does not require the use of a Part 8 claim form.
3. The SCT claim form (Form P53/01) is used for claims that fall under the SCT’s jurisdiction.
4. Form P43/01 is used for arbitration-related claims.

After the claim form is issued, the claimant is required to serve it upon the defendant(s) within four months from the date of issue if it is to be served in DIFC or Dubai and within six months if it is to be served outside Dubai. The particulars of the claim can be served with the claim form.

Thereafter, the defendant is required to file an acknowledgement of service within 14 days of receiving the claim form. If the Particulars of the claim are not served with the claim form, the claimant must serve them within 28 days of filing the acknowledgement of service. 

The defendant is then required to file a defence within 28 days of the particulars of the claim being served. Thereafter, the claimant is required to file the reply to the defence within 21 days from the date of service of the defence.

If a defendant wishes to dispute the Court’s jurisdiction, he may apply for an order declaring that the Court has no such jurisdiction or should not exercise any jurisdiction it may have. The application should be made within 14 days after filing an acknowledgement of service.

After the exchange of pleadings, the court schedules a Case Management Conference, during which the timetable for the remaining steps (such as filing witness statements, document production, exchange of expert reports, filing of skeleton arguments, and final hearing) is finalised.

At the Case Management Conference, the Judge may invite the parties to use alternative dispute resolution (such as mediation and conciliation) if it appears to the Judge that the case before him or any of the issues arising in it is particularly appropriate for an attempt at settlement and if the parties have not previously attempted settlement by such means.

Use of Artificial Intelligence (AI) in DIFC proceedings

DIFC has recently issued guidelines regarding the use of Large Language Models (“LLMs”) and Generative Content Generators (“GCGs”) (e.g., ChatGPT) during the proceedings. The guidelines came into effect from 21 December 2023. We provide a brief overview of the guidelines herein below:

1. Parties should declare at the earliest possible opportunity if they have used or intend to use AI-generated content during any part of proceedings. Any issues or concerns expressed by either party in respect of the use of AI should be resolved no later than the Case Management Conference stage. 
2. Parties should not rely on AI-generated content without first verifying its accuracy. This should be done using independent sources such as case law, statutes, and credible legal commentary (for example, practitioners’ texts).
3. When using AI-generated content, practitioners should always be mindful of their obligations under the Mandatory Code of Conduct for Legal Practitioners in the DIFC Courts (DIFC Courts’ Order No. 4 of 2019). Parties should ensure they do not breach any relevant laws, including the Data Protection Law 2020 (DIFC Law No. 5 of 2020) and the Intellectual Property Law 2019 (DIFC Law No. 4 of 2019) (as amended).
4. Parties should not become overly reliant on GCGs and LLMs to produce their documents for proceedings. Such technology should only be used to assist parties in putting forward submissions.
5. Practitioners should keep their clients properly informed and seek their consent to use GCG material in making submissions during proceedings before the DIFC Courts. If confidential information must be provided to a GCG, practitioners should ensure they have their client’s consent first. 
6. Parties should ensure they review the GCG they intend to use to understand if it can complete the required task. Parties should avoid using free conversational GCGs (i.e., tools that provide you with answers to questions). These are often not fit for purpose as they will not necessarily have access to all relevant legal data (such as case law and statutes).