DIFC Law No. (2) of 2025: Transformative changes in jurisdiction of the DIFC Courts explained

Introduction

DIFC Law No. (2) of 2025 (DIFC Court Law) came into force on 15 March 2025 superseding the previous DIFC court law (DIFC Law No. 10 of 2004) and Dubai Law No. 12 of 2004 (Judicial Authority Law).^[1] The new DIFC Court Law updates the DIFC Courts’ judicial and administrative framework, and establishes a Mediation Centre for alternative dispute resolution.

In addition, the DIFC Court Law expands the jurisdiction of the DIFC Court by codifying the decision of the Court of Appeal (COA) in Carmon^[2], which confirmed the independent jurisdiction of the DIFC Courts to grant, in appropriate circumstances, interim remedies in support of foreign litigation or arbitration proceedings, without any apparent connection to the DIFC. This clearly reinforces the DIFC Courts’ stated aim to promote the Emirate of Dubai as an international centre for dispute resolution and settlement.   

In this Law-Now we highlight the key developments and their implications for businesses.

Key changes and practical implications for business

Article 14 - Extended Jurisdiction

• Whilst a number of articles have remained unchanged, there are new articles which depart from the position under the Judicial Authority Law. These additions clarify and/or expand upon the categories in respect of which the DIFC Courts will enjoy exclusive jurisdiction, resulting in the DIFC Court Law being more detailed and specific when compared with its predecessor.
   
• Articles 14(A)(1-3) expressly refer to the inclusion of employment claims alongside general civil and commercial claims. Historically, the majority of employment cases have been heard in the Small Claims Tribunal (SCT), with only 1 or 2 employment claims per year being addressed in the Court of First Instance (CFI). There seems to be no current intention or necessity to establish a dedicated employment tribunal in the foreseeable future. However this could change in the future if the CFI sees an increase in employment claims being heard.
   
• CMS understands that the DIFC Courts have proposed a policy change to the DIFC Authority requesting a waiver of court fees for employment claims and capping adverse costs orders. It remains uncertain if and when these changes would be implemented.
   
• Articles 14(A)(5-6) provide for the DIFC Courts to have the exclusive jurisdiction to hear and determine claims or applications for the ratification or recognition of arbitration awards in accordance with the arbitration law in force within the DIFC.^[3] The DIFC Courts also have supervisory powers relating to arbitration procedures where (i) the seat or place of arbitration is the DIFC; (ii) the seat of legal place of arbitration is not agreed but the proceedings take place within the DIFC; or (iii) the parties agree to the DIFC Court’s involvement.

Article 15 - Interim and Precautionary Measures

• Article 5 of the Judicial Authority Law contained no specific references to the DIFC Court’s jurisdiction to deal with interim relief.
   
• Article 15 of the DIFC Courts Law now confirms that the DIFC Courts have the jurisdiction to determine applications for interim and precautionary measures, such as freezing orders, disclosure orders and injunctions in connection with applications, claims or current or future arbitral proceedings brought outside of the DIFC that seek suitable precautionary measures within the DIFC.^[4] These orders can prevent defendants from dissipating assets in Dubai and can provide applicants with additional tools to protect their interests and secure evidence.
   
• This new legislative provision has been introduced following the DIFC Court of Appeal judgment in the Carmon case. In Carmon the Court of Appeal explained that the granting of a freezing order is always subject to judicial discretion,  and in many cases it would be expected that such an order would be limited to assets within Dubai.^[5]
   
• Claimants with foreign judgments or arbitration awards (or prospective judgments or awards) may now be able to  obtain freezing orders or other precautionary measures without any connection to the DIFC.
   
• This development could significantly enhance the enforcement of foreign judgments and arbitration awards, providing greater security and recourse for those seeking to protect their interests, potentially offering more robust mechanisms for asset protection and recovery.

Article 35 - Contempt of Court

• The DIFC Court Law introduces a clearer framework defining what constitutes contempt of court. This includes non-compliance with any order, decision, or judgment issued by the DIFC, along with the associated penalties for such breaches. The list also includes the insulting of the judge, the interruption of proceedings and the submission of fraudulent evidence.
   
• While the DIFC lacks criminal jurisdiction—and is unlikely to obtain it due to strong policy reasons against granting it the power to imprison individuals—the contempt of court provisions in the DIFC are less stringent compared to other common law jurisdictions. However, the DIFC Courts do possess the authority to impose fines and refer matters to the Attorney General, who does have the power to imprison.
   
• In cases where an individual continues to remain in contempt of court, the DIFC Courts are encouraging judges to impose conditional penalties that will remain in effect until the contempt is resolved within a specified timeframe. It is anticipated that the contempt of court provision will be increasingly relied upon to compel parties to comply with court orders.

Article 13 - Encouraging Settlement through Mediation

• A mediation centre will be established, although the exact timeline for its operation and availability to both litigants and non-litigants remains uncertain.
   
• Notably, the centre will be  accessible to all, regardless of whether they have an active claim before the courts. The DIFC Courts will offer a venue and oversee the mediation process, provided that all parties involved consent in writing to mediate the dispute.
   
• Chief Justice Wayne Martin confirmed that it would not be a mandatory pre-action step for all parties to proceedings but instead some parties involved in suitable cases pending before the court will be directed to use mediation in an effort to resolve their disputes early on. Mediation offers numerous advantages, the most significant being the potential for parties to reach an agreement more swiftly and cost-effectively compared to litigation.

The new DIFC Court Law introduces changes that enhance the jurisdiction and procedural framework of the DIFC Courts, in addition to ensuring that the DIFC continues to be viewed as an arbitration friendly forum. These changes offer practical benefits for businesses, including the ability to bring employment claims, secure interim measures, and resolve disputes through mediation. Overall, the implementation of the New Law reflects the continuing development of the DIFC Courts as a key forum for dispute resolution in Dubai and the wider region.

This article was prepared with the assistance of Nuha Al-Dhahi, Trainee Solicitor in CMS Dubai.
 

^[1] Article 43(A) of the DIFC Court Law.

^[2] Carmon Reestrutura-engenharia E Serviços Técnios Especiais, (Su) LDA v Antonio Joao Catete Lopes Cuenda [2024] DIFC CA 003

^[3]  As at the date of this publication the arbitration law of the DIFC is DIFC Law No. (1) of 2008.

^[4] Article 15(4) of the DIFC Court Law.

^[5] [2024] DIFC CA 003 at [203]