Jurisdiction Without Borders: How Global Businesses are Using the DIFC Courts

In the landscape of global commerce, businesses are increasingly seeking efficient, reliable, and neutral venues for resolving disputes. The Dubai International Financial Centre (“DIFC”) Courts have gained prominence as one such venue, designed specifically to serve international and regional business communities, and have emerged as a formidable player in the realm of international dispute resolution. However, a nuanced question frequently arises: Can a foreign claimant bring a case before the DIFC Courts against a foreign defendant when neither party has any connection to the DIFC or the United Arab Emirates (UAE)?

While physically located in Dubai, the DIFC Courts extend their reach far beyond the UAE, functioning as a neutral, English-language common law forum with a distinctive global appeal. In recent years, parties from around the world, spanning sectors like finance, technology, and commercial trade, have opted into the DIFC Courts’ jurisdiction, despite having no physical or legal presence in the DIFC or even the UAE.

This article explores how the DIFC Courts have become a preferred destination for cross-border dispute resolution, focusing on their jurisdictional openness, party autonomy, and the strategic advantages they offer for global enterprises, emphasizing the conditions under which purely foreign parties can access the DIFC Courts and, crucially, when such access may be restricted due to the existence of exclusive jurisdiction clauses in favor of foreign courts.

This blog is a part of our DIFC Practices Services.

What are the DIFC Courts?

The DIFC Courts, based in Dubai, form part of the UAE’s independent judiciary and operate under an English-language common law framework. They offer efficient and impartial resolution of civil and commercial disputes, both domestic and international, in a system designed for clarity, speed, and accessibility. Staffed by internationally renowned judges with extensive experience and a commitment to the highest global standards, the DIFC Courts deliver transparent and enforceable judgments that inspire confidence among global investors. Their consistently strong performance has reinforced Dubai’s reputation as a leading global business centre, serving companies not only across the UAE and the GCC but around the world.

Who Can Use the DIFC Courts?

The DIFC Courts were initially established to handle matters arising solely within the DIFC. However, following their proven success and growing international reputation for delivering efficient, high-quality justice, their jurisdiction was significantly broadened. Pursuant to Decree No. 16 of 2011, the DIFC Courts were empowered to hear a wider range of disputes, including:

• Any civil or commercial dispute where both parties have agreed, either through a clause in their original agreement or by mutual consent after a dispute arises, to submit to the jurisdiction of the DIFC Courts.
• Any civil, commercial, or employment matter that is connected to the DIFC.

This expanded jurisdiction allows a broad spectrum of local and international parties to access the DIFC Courts’ trusted legal platform, even if their dispute has no physical nexus to the DIFC itself.

Overview of the DIFC Courts’ Jurisdiction

Established under Dubai Law No. 12 of 2004 (“Judicial Authority Law”) and DIFC Law No. 10 of 2004 (“DIFC Courts Law”), the DIFC Courts operate as an independent English-language common law judiciary. They are designed to adjudicate civil and commercial disputes and offer a neutral, efficient, and business-friendly forum modelled on international best practices. The DIFC Courts’ jurisdiction is broadly divided into:

1. 1. Original jurisdiction (Article 5(A)(1) of Judicial Authority Law): Automatically applicable to matters arising within the DIFC or involving DIFC-registered entities.
   2. Consent-based (Opt-in) jurisdiction (Article 5(A)(2) of Judicial Authority Law): Applicable when parties agree in writing to submit their disputes to the DIFC Courts, regardless of their domicile, nationality, or connection to the DIFC.

This latter form of jurisdiction opens the door for foreign claimants and defendants, provided certain criteria are met. This opt-in feature empowers parties to contractually choose the DIFC Courts as their forum of choice, even if:

• • Neither party is domiciled or based in Dubai or the DIFC
  • The underlying contract or transaction occurred outside the UAE
  • The governing law of the contract is not UAE law

This flexibility is unparalleled in many civil and common law systems, making the DIFC Courts a rare hybrid that accommodates global business needs.

Example: A company based in Canada and another in Germany enter into a software development agreement. The contract includes a clause stating: “Any dispute arising out of or in connection with this agreement shall be subject to the exclusive jurisdiction of the DIFC Courts in Dubai, UAE.” Despite having no ties to the UAE, both parties have effectively conferred jurisdiction upon the DIFC Courts through mutual agreement.

This consensual approach was validated in the case of (1) Ashok Kumar Goel (2) Sudhir Goyel (3) Manan Goel (4) Prerit Goel v Credit Suisse (Switzerland) Limited [2021] DIFC CA 002, where the Court accepted jurisdiction even though the parties had no operational presence in the DIFC. The Court emphasized that the parties’ express agreement was sufficient to establish jurisdiction. This judgment holds particular importance for practitioners before the DIFC Courts, as it marks the first occasion on which the DIFC Court of Appeal has examined the circumstances under which a party may be deemed to have voluntarily submitted to the Court’s jurisdiction pursuant to Article 5(A)(2) of the Judicial Authority Law. The case sets a notable precedent by shedding light on how the Courts interpret and apply the concept of “opting in” to DIFC jurisdiction in contractual and procedural contexts.

Contractual autonomy vs. jurisdictional constraints

While party autonomy is a cornerstone of DIFC jurisdiction, it has its limits, particularly when a contract contains an exclusive jurisdiction clause in favor of a different court.

What is an Exclusive Jurisdiction Clause?

An exclusive jurisdiction clause specifies that only a particular court or legal system will resolve any disputes arising under the contract. Such clauses are commonly found in international agreements, favouring jurisdictions such as the English High Court or the courts of New York.

If a contract expressly states that the English courts shall have exclusive jurisdiction over any disputes, the DIFC Courts will generally decline to accept jurisdiction, even if one party later prefers the DIFC for reasons of convenience or neutrality.

Scenarios where DIFC jurisdiction may be accepted

The DIFC Courts will generally accept jurisdiction in the following circumstances:

1. 1. Both parties are registered or operating within the DIFC.
   2. The dispute arises from a contract performed or executed within the DIFC.
   3. The contract contains an opt-in clause designating the DIFC Courts as the forum for dispute resolution.
   4. There is a strong factual nexus to the DIFC, such as the place of payment, delivery, or breach occurring within the DIFC.

Each case is assessed on its individual merits, and jurisdiction may be declined if none of these conditions are met and no opt-in clause exists.

Jurisdictional challenges: What happens in practice?

Even when a party files a case in the DIFC Courts, the opposing party may file a challenge to jurisdiction, invoking either:

• • Lack of connection to the DIFC, or
  • Existence of an exclusive jurisdiction clause in favor of another court.

The DIFC Courts will typically hold a preliminary hearing to determine whether they have jurisdiction. If a valid exclusive jurisdiction clause in favor of another court is presented, the DIFC Courts are likely to dismiss the claim.

Practical considerations for contract drafters

Given the increasing relevance of the DIFC Courts as a neutral forum, contract drafters should carefully consider their choice of jurisdiction.

Key drafting tips:

• • Use clear and unambiguous language when conferring jurisdiction on the DIFC Courts.
  • If you intend to give exclusive jurisdiction to the DIFC, say so explicitly.
  • Avoid clauses that suggest multiple forums unless intended (e.g., “non-exclusive jurisdiction”).
  • Be aware of the consequences of selecting a different court, especially if seeking enforceability in the UAE region.

Model Clause

“The parties hereby agree that the DIFC Courts shall have exclusive jurisdiction to hear and determine any dispute arising out of or in connection with this agreement.”

Enforcing DIFC Courts’ Judgments Beyond the Centre

One of the most significant strengths of the DIFC Courts is not only their ability to resolve disputes efficiently but also the enforceability of their judgments both within the UAE and internationally. While seated within the DIFC, the DIFC Courts form an integral part of the UAE’s judicial system. As such, their decisions are capable of being enforced across the Emirates, and in a wide range of foreign jurisdictions under specific procedural frameworks.

Enforcement within Dubai and the UAE

To execute a judgment issued by the DIFC Courts within mainland Dubai or elsewhere in the UAE, the process begins with compliance under Dubai Law No. 12 of 2004 (as amended). This law outlines the mechanism by which DIFC judgments may be presented before the Dubai Courts’ Execution Division for enforcement. The procedure is generally straightforward, provided all jurisdictional and procedural requirements have been observed.

Importantly, the jurisdiction of the DIFC Courts was expanded by Dubai Law No. 16 of 2011, which further facilitated enforcement across the UAE. Under Article 7(2) of this law, DIFC judgments may now be enforced either by the execution judge of the Dubai Courts or directly through the relevant “competent authority” in the Emirate where enforcement is sought. This dual route enhances efficiency and ensures that judgments are not confined to the DIFC’s geographical boundaries.

Recognition under GCC and Arab Treaties

As part of the UAE judiciary, the DIFC Courts’ judgments benefit from several regional enforcement treaties. Under the GCC Convention of 1996, a mutual recognition and enforcement framework exists among member states of the Gulf Cooperation Council. This allows judgments rendered by courts in one member state, including the DIFC Courts, to be recognized and enforced in the others, with relatively limited procedural hurdles.

Likewise, the Riyadh Arab Agreement for Judicial Cooperation (1983), a treaty among Arab League nations, enables broader regional enforceability. Through this agreement, DIFC judgments may be executed in other Arab jurisdictions, provided that they do not conflict with public order or local judicial principles.

Enforcement in other foreign jurisdictions

Beyond the Arab world and the GCC, the DIFC Courts have developed a growing international footprint. A notable example is France, where DIFC judgments may be enforced in accordance with the Paris Convention of 1992. This bilateral agreement allows for mutual recognition and enforcement of judicial decisions between France and the UAE.

In jurisdictions that do not share a treaty with the UAE, enforcement is still possible, albeit subject to the domestic laws on foreign judgments. For instance, countries such as China and India, while not parties to any enforcement treaty with the UAE, permit recognition of foreign judgments under their respective private international law principles—provided certain legal tests are met, including the presence of reciprocal treatment, absence of fraud, and conformity with public policy.

The DIFC Courts’ ability to issue enforceable judgments across a wide geographical scope makes them a compelling forum for international dispute resolution. Whether enforcement is sought within the UAE, across the GCC, in Arab League states, or in countries with sophisticated legal frameworks, the DIFC Courts are well-positioned to offer litigants not only fair adjudication but also meaningful remedies capable of being enforced globally.

Key attractions for international businesses

1. 1. Common law environment in a civil law country: The DIFC Courts operate on English common law principles, with judges drawn from jurisdictions like England and Wales, Australia, and Hong Kong. This gives foreign litigants familiar legal reasoning and procedural predictability.
   2. English language proceedings: All DIFC Court proceedings are conducted in English, an essential benefit for international companies operating in a multilingual region.
   3. Enforceability of judgments: Thanks to memoranda of understanding and reciprocal enforcement agreements, DIFC Court judgments are widely enforceable not only in the UAE (including through Dubai Courts via Article 7 of the Judicial Authority Law), but also in common law jurisdictions such as England, Singapore, and Hong Kong.
   4. Efficient procedures and digital accessibility: The DIFC Courts offer world-class e-filing, remote hearings, and digital case management, streamlining cross-border litigation for international players.

Future Trends and International Expansion

Looking ahead, the DIFC Courts continue to expand their international reach:

• • Launching DIFC Courts of the Future Foundation to develop AI-driven legal technology.
  • Collaborating with courts in China, Singapore, and the UK.
  • Expanding their role in blockchain and fintech litigation via the DIFC Innovation Hub.

Conclusion: Global justice from a local base

The DIFC Courts have redefined the geography of jurisdiction. No longer bound by physical borders, they offer a powerful platform for international dispute resolution anchored in fairness, neutrality, and legal predictability. For global businesses, whether based in Tokyo, Toronto, or Tunis, the DIFC Courts offer a truly international court, right in the heart of the Middle East. As commerce continues to transcend national boundaries, legal systems like the DIFC Courts, which embrace this borderless reality, will increasingly become the preferred guardians of international commercial justice.

The DIFC Courts’ opt-in jurisdiction model is highly attractive for international contracts, particularly when neutrality, common law procedure, and enforceability are key concerns. However, the existence of an exclusive jurisdiction clause in favor of a foreign court will typically defeat DIFC jurisdiction, regardless of the parties’ location or the nature of the dispute. This balance of party autonomy and jurisdictional discipline ensures that the DIFC Courts remain both accessible and principled. Contract drafters, litigators, and cross-border clients should therefore approach jurisdiction clauses with both strategic foresight and legal precision.