Litigation in the Dubai International Financial Centre
Nov 29, 2023
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Tom Montagu-Smith, an expert in international litigation, discusses the unique DIFC court system in Dubai, where foreign lawyers and judges resolve disputes. They talk about writing the rules, jurisdictional issues, interesting cases, and the growth of financial free zones in other countries. They also explore the comparison between DIFC court and Singapore International Court, diverse lawyers practicing in DIFC, and challenges in enforcing judgments.
The DIFC Court in Dubai was created to attract foreign lawyers and judges to decide disputes on its sovereign territory and is modeled on the rules of the English Commercial Court.
The DIFC Court faces challenges in resolving jurisdiction conflicts with local courts, but efforts are being made to improve the effectiveness of existing mechanisms.
Deep dives
Overview of DIFC and its Purpose
The Dubai International Financial Center (DIFC) is a financial free zone in Dubai, UAE. It has its own civil and commercial laws, financial regulatory system, and an independent court system focused on providing financial services. The creation of the DIFC aims to encourage investment, improve investor confidence, and guarantee the rule of law.
Establishment and Development of the DIFC Court
The DIFC Court was established in 2005-2006 with the help of English judges and barristers, who wrote the court's rules based on the model of the English commercial court. The court has undergone developments and evolutions since its establishment. It handles a broad range of commercial disputes, including lending disputes, joint venture disputes, property transactions, and enforcement of foreign judgments and arbitration awards.
Jurisdictions and Laws in the DIFC Court
The DIFC Court has four main categories of jurisdiction. These include jurisdiction based on the parties involved, subject matter jurisdiction, opt-in jurisdiction where parties agree to have their disputes heard in the DIFC, and jurisdiction based on DIFC legislation. The court applies its own laws, which are based on English law in certain aspects, and also other international laws depending on the governing law of the case. The court's judgments can be enforced in various jurisdictions based on treaties, conventions, or the recognition of the court's jurisdiction and due process.
Challenges and Future of the DIFC Court
One of the key challenges faced by the DIFC Court is the issue of jurisdiction conflicts between the DIFC Court and local courts. Efforts have been made to resolve this issue, such as the establishment of the Joint Judicial Committee (JJC), composed of judges from both courts. However, the effectiveness of the JJC has been questioned, and solutions are being sought to ensure practical and efficient resolution of jurisdiction conflicts. The future of the DIFC Court looks promising, with ongoing efforts to improve and update legislation, potential expansion of its jurisdiction to other zones in Dubai, and continued focus on enhancing investor confidence and attracting international business.
John is joined by Tom Montagu-Smith, KC, with 3 Verulam Buildings. They discuss practicing in the Dubai International Financial Centre (DIFC) Court, including the rationale for creating the unusual DIFC court system where the United Arab Emirates allow foreign lawyers and judges to decide disputes on its sovereign territory, Tom’s experience writing the rules for the Court which are modeled on the rules for the English Commercial Court, and the very recent growth of similar financial free zones and court systems in other jurisdictions. They also discuss the backgrounds of the judges, the Court’s jurisdictional rules and the mix of cases that are generally brought before the Court. Finally, they discuss some of the interesting issues that have recently arisen in the DIFC Court including whether to allow malicious prosecution actions, the extent to which principles like Sovereign Immunity and the Act of State Doctrine will apply in the DIFC, where to draw jurisdictional lines between the DIFC Court and local courts, and the possible extension of the jurisdiction of the DIFC Court to other economic free zones in the UAE