The DIFC Courts, the Dubai Courts and the Conflict of Jurisdiction Tribunal – A Case Study

In a landmark judgment, Justice Rene Le Miere of the DIFC Court of First Instance has given the first reasoned opinion on the effect of Decree No. 29 of 2024 on DIFC law. While the decision concerns arbitration and is therefore anonymised, it may be of interest to practitioners who encounter jurisdictional disputes within Dubai. In what became a multifaceted piece of litigation, Clyde & Co LLP, with its cross-jurisdictional team, acted successfully for its client before the DIFC Courts, the Dubai Courts and the newly established Conflict of Jurisdiction Tribunal.

Background

The Joint Judicial Committee was established in 2016 to adjudicate on jurisdictional disputes between the DIFC Courts and the Dubai Courts. Decree No. 19 of 2016 provided that, on an application to the Joint Judicial Committee, proceedings before both the Dubai Courts and the DIFC Courts would be stayed pending determination of the appropriate forum. Given the automatic stay, applications to the Joint Judicial Committee were often used as a delaying tactic, as parties often manufactured jurisdictional disputes as a means of resisting enforcement of judgments and arbitral awards. However, in a line of case law culminating with the Court of Appeal’s judgment in Lakhan v. Lamia [2021] DIFC CA 001, the DIFC Court ruled that applications to the Joint Judicial Committee must not be abusive, and that a stay of proceedings would only be granted if the court was satisfied that a genuine jurisdictional dispute had arisen.

Decree No. 29 of 2024, which came into effect on 3 April 2024, abolished the Joint Judicial Committee and replaced it with a newly established Conflict of Jurisdiction Tribunal. While Decree 29 of 2024 uses language similar to its predecessor, until now it was unclear whether the judgment of Lakhan v. Lamia [2021] DIFC CA 001 would continue to bind the DIFC Court of First Instance.

Case Study — The Facts

Company A, having successfully appointed an emergency arbitrator, obtained an interim arbitral award (the Interim Award) against Company B. While the underlying arbitration was seated in the DIFC, Company A sought to enforce the Interim Award directly in the onshore Dubai Courts.

Company B, represented by Clyde & Co LLP, resisted enforcement in the Dubai Courts and issued parallel proceedings in the DIFC Courts seeking (i) to set aside the Interim Award pursuant to Article 41 of the DIFC Arbitration Law and (ii) an anti-suit injunction to restrain Company A from directly enforcing the Interim Award in the Dubai Courts. Company B argued, among other things, that the procedure set out in the Judicial Authority Law (No.12 of 2004) was the exclusive mechanism for enforcing DIFC seated arbitral awards in onshore Dubai and that the New York Convention had no application intra-emirate.

On issuing the DIFC proceedings, Company B made a corresponding application to the newly established Conflict of Jurisdiction Tribunal seeking an order that the onshore Dubai Courts had no jurisdiction to enforce and recognise the Interim Award. Company B also made applications to the DIFC Courts and the Dubai Courts to stay their respective proceedings pending determination of the Conflict of Jurisdiction Tribunal. These applications were resisted by Company A.

Judgment of the DIFC Court

In a 29-page judgment handed down in September 2024, Justice Rene Le Miere granted the stay of the DIFC proceedings as sought by Company B. While he found that the language used by the 2016 and 2024 decrees differed in some respects, he held that:

“[B]oth decrees address conflict of jurisdiction between the Dubai Courts and the DIFC Courts. Their main objectives are to determine the competent court to hear claims where there might be a jurisdictional conflict and to resolve conflicting judgments issued by the Dubai Courts and the DIFC Courts.”

On the facts of the case, Justice Rene Le Miere held:

“[Company A’s] claim or application to the Dubai Court is for an order to enforce the [Interim Award]. The Dubai Court may decline to grant an order for the enforcement on the grounds which include grounds for the annulment of an award substantially similar to the grounds in Article 41(2)(ii) and (iv) of the Arbitration Law 2008 on which [Company B] asks this Court to set aside the [Interim Award].

In any event, the application before the Dubai Court involves whether the Court will or will not enforce the [Interim Award]

[Company B’s] claim in this Court includes a claim to set aside the [Interim Award] pursuant to Article 41 of Arbitration Law 2008.

An order by one court to set aside an award or order and an order by another court to enforce the award or order are contradictory. This is because the two orders directly oppose each other: one court is nullifying the order while the other is upholding it. It is impossible to comply with both orders simultaneously, as enforcing an order or award that has been set aside is inherently contradictory.”

Based on the reasoning above, it follows that notwithstanding the language of Decree No. 29 of 2024, the DIFC Court will not automatically stay its proceedings following an application to the Conflict of Jurisdiction Tribunal. Rather, the court must be satisfied (as under the case law pertaining to the Joint Judicial Committee and the 2016 decree) that a genuine jurisdictional dispute has arisen.

Judgment of the Dubai Court of Appeal

In a judgment dated October 2024, following Company B’s application to the Conflict of Jurisdiction Tribunal, the Dubai Court of Appeal also stayed its proceedings until the Conflict of Jurisdiction Tribunal issued its decision.

Conflict of Jurisdiction Tribunal

In Decision No. 11 of 2024 (the Decision), issued on 9 October 2024, the Conflict of Jurisdiction Tribunal found that the DIFC Courts had exclusive jurisdiction to determine the validity of the Interim Award. According to the Decision:

“As for the application, it is established in the documents that the parties to the [contract] have mutually agreed to choose institutional arbitration as a means of settling disputes arising from the agreement, and since the arbitration institution selected by the parties is the Dubai International Arbitration Center, and Decree No. 34–2021 of the Dubai International Arbitration Centre has expressly provided in Article 4/A-2, that the DIFC Courts have exclusive jurisdiction to hear and adjudicate any claim, request or appeal relating to any award or procedure of arbitration, issued by the arbitration tribunals of the Dubai International Arbitration Centre, where the parties agree that the DIFC shall be the legal seat or place of arbitration, and that the arbitration laws and regulations applicable within the DIFC must be applied when considering and adjudicating such applications.

Accordingly, the court competent to consider and decide on the ratification of all provisional and final arbitral awards issued in the arbitration case, including precautionary decisions, which include the emergency order, is the Court of First Instance that the parties have agreed to resort to, in departure from the general rules of jurisdiction in accordance with the legislation in force in the Emirate of Dubai.”

The implication of the Decision is that if a party wishes to enforce a DIFC seated award in onshore Dubai, it must first have that award recognised in the DIFC and then proceed with enforcement through the mechanism set out in Article 7 of the Judicial Authority Law. A party cannot take a DIFC seated arbitral award directly to the onshore courts.

Conclusion

Through an application to the DIFC Courts and subsequently to the Conflict of Jurisdiction Tribunal, Clyde & Co LLP assisted its client in successfully resisting the enforcement of an arbitral award in the Dubai Courts.

The speed with which the Dubai Courts, the DIFC Courts and the Conflict of Jurisdiction Tribunal operated was quite remarkable. The Interim Award was issued in February 2024, Company A issued recognition proceedings in the Dubai Courts in June 2024, Company B issued the DIFC proceedings in August 2024 and the application to the Conflict of Jurisdiction Tribunal was issued in September 2024. The DIFC Courts, Dubai Courts and Conflict of Jurisdiction Tribunal issued their decisions on 25 September, 2 October and 9 October 2024 respectively. It follows that applications to the Conflict of Jurisdiction Tribunal can no longer be relied upon to frustrate the enforcement of arbitral awards or other judgments.

Clyde & Co LLP’s cross jurisdictional team consisted of Susie Abdel-Nabi, Darcy Beamer-Downie and Tom Parkin before the DIFC Courts, and Maher Al Nashar and Abdelmajid Alsalous before the Dubai Courts and Conflict of Jurisdiction Tribunal. Advocacy before the DIFC Courts was undertaken by William Prasifka.