1- Types of courts specialized in international trade in UAE and reason for their establishment
UAE judicial system operates through a bilateral framework involving a civil judiciary based on the French legal system and an Anglo-Saxon judiciary based on English commercial courts. Thus, the UAE has become the only country in the Middle East that has a dual judicial system, similar to other countries like Canada. The start was when Dubai began attracting international financial companies to its free zones, which enjoy special laws enabling foreign investors to full ownership right. Disputes arising in all free zones were subject to the jurisdiction of Dubai Courts, except where the parties agreed on an arbitration clause.
Dubai International Financial Center “DIFC” was established in 2004, as a federal financial free zone. Its establishment then required the enactment of Federal Law No. 8 of 2004 as an amendment to the UAE Federal Constitution that permitted establishing financial free zones in any of the emirates, while exempting them all from applying all commercial and federal laws applicable within the country. The aforementioned law also laid the foundations for the judicial independence of these financial free zones thus leading to establishing their respective courts. DIFC Courts consist of a Court of First Instance and a Court of Appeal similar to the structure of English common law. The jurisdiction of the court is also held in civil and commercial matters, while it lacks jurisdiction in criminal and family cases. However, cases related to wills of non-Muslims and their inheritance later was latter added.
Abu Dhabi Global Market “ADGM” was established along the lines of Dubai International Financial Center under the said constitutional amendment and under Federal Law No. 4 of 2013. ADGM legislature included public English law as the cornerstone and enacted ADGM regulations to include a First Instance Court and an Appeal Court similar to the structure of public English law. ADGM Courts are competent in all civil and commercial matters except for matters related to criminal cases, divorce and inheritance.
Today, there are two English courts in the UAE, in Dubai and Abu Dhabi, each with an international arbitration center. London’s Court of International Arbitration seat is in Dubai International Financial Center courts and Paris International Chamber of Commerce Arbitration Center seat is in Abu Dhabi International Market Courts.
2- Work mechanism and approved language
DIFC Courts have been established by Law No. 12 of 2004 issued by the judiciary in DIFC. According to this law, the beneficiaries dealing with the Center and those subject to its jurisdiction avail of its courts certainty, flexibility and efficiency provided by English common law.
These courts consist of two plenary and appellate levels, and their headquarters shall be in Dubai International Financial Center, and they may, when necessary, hold their sessions anywhere in the emirate. The Court of First Instance is composed of a single judge, the Court of Appeal is composed of a president and two judges, and both the Court of First Instance and the Court of Appeal have one or more circuits, and the Court of Appeal is presided over by the chief judge or senior judge. When necessary, judges, including the chief justice, are appointed by a decree of the Ruler.
The Courts of First Instance concern themselves with examining and adjudicating commercial, labor and civil claims and suits stipulated under Article (5) of Law No. 12 of 2004, which was amended by Law No. 5/2017. The courts apply the laws and regulations of the Center, unless the litigants expressly agree to apply another law, provided that this law does not contradict public order and public morals.
Courts apply Anglo-Saxon law or common law, being derived from English law, both substantive laws and the code of procedures. They consist of two degrees; the First Instance and Appeal. The Court of Appeal judgments are final. There is a Small Claims Court that examines lawsuits not exceeding UAED 500,000. Cases hearing process in these courts includes two phases; the first is dedicated to reconciliation while the second for issuing enforceable rulings. The rulings of this court may be appealed before the Court of First Instance. The rulings of the latter court are thus final, and it is not permissible to appeal its rulings.
Abu Dhabi Global Market Courts were established in accordance with Article 10 of the law stating that the market shall consist of three main authorities: the Market Registrar Office, the Financial Services Regulatory Office and Market Courts. As for market courts, Article 13 of the law stipulates its types namely at two degrees: a First Instance Court (formed by a single judge) and an Appeal Court (consisting of three judges). The market courts have a president who is appointed and his remunerations are determined under a decision of the Board of Directors. Market courts also have a special system issued by the Market’s Board of Directors to regulate the administration of court affairs, litigation procedures, the sentencing mechanism, and any other dispute resolution mechanisms.
3- How Judges are Appointed
The judges appointed to DIFC Courts were initially retired British judges specializing in English public law. Currently there are competent and experienced judges in Anglo-Saxon courts with a long track record of working in various judicial authorities, similar to commercial courts in Singapore, London Commercial Court, Australia or Canada and even Malaysia recently. In Dubai International Financial Center courts, citizen judges who enjoy long years of experience in national law, as well as training that they received in the courts of England and training courses organized by DIFC courts.
The Center’s judges also train an increasing number of judges in Dubai through a 13-week program managed by DIFC Courts, through which local judges are educated on the provisions of English common law, best practices, and the International Business Protocol. The DIFC Courts adopt a program to encourage Emiratization and attract national talents to work in the courts, where candidates undergo extensive training programs, where they have to pass the transfer program from the Latin judicial system to the Anglo-Saxon system.
4- Execution Procedures and Enforceability of Judgments Abroad
The execution judge in Dubai International Financial Center courts shall implement the judgments, decisions and orders and arbitration awards issued and approved by the courts, if the place of execution is within the jurisdiction boundaries of the Center. Any matters involving execution outside the jurisdiction of Dubai International Financial Center Courts must be sent directly to Dubai Court Execution Judge, as he is the original competent authority in charge of execution. Here, Dubai courts operate as a link between the courts of Dubai International Financial Center and the place of execution outside the authority of Dubai International Financial Center. However, the execution judge in Dubai courts shall not be entitled to review the merits of the judgment, decision or order issued by the courts. It is also permissible to execute judgments, decisions and orders issued by courts and arbitral awards approved by the courts, via methods prescribed in the laws of the center.
If the place of execution is outside the boundaries of the center by the execution judge in Dubai courts, provided that the ruling, decision or order is final and enforceable, and that it is translated into Arabic.
All court decisions and rulings have executive and final status, and can be executed anywhere in the world. A cooperation protocol was signed between Dubai Courts and Dubai International Financial Center on executing the judgments in 2011, and a mechanism for the execution procedures was established. If execution shall take place in a country of the Gulf Cooperation Council, execution is carried out by judicial rogatory through Dubai Courts.
The provisions of the Gulf Cooperation Council Convention apply to the execution of the judgments in this regard, but if the place of execution is in an Arab country, then the Riyadh Agreement applies. The principle of reciprocity applies to countries UAE does not have agreements with.
Abu Dhabi Global Market Courts also signed a mutual execution agreement with Abu Dhabi Judicial House, Abu Dhabi Federal Courts and the Courts of Dubai International Financial Center, as the said courts had to be linked to the civil system applicable in UAE and respective local law in both emirates.
The judgments of both courts are executed under the execution agreements signed with the courts of Dubai and Abu Dhabi, which in turn are executed in the rest of the emirates in accordance with the provisions related to execution contained in the Federal Civil Procedure Law.
5- Have these judicial systems achieved the anticipated results?
The fast-paced progress in technology, the freedom of movement of capital globally, and the need to serve increasing global customers, creates the need in Dubai and Abu Dhabi to establish new global financial centers to keep up with the needs of investors in the region. To establish these global financial centers that would compete with New York, London and Hongkong markets had to be incorporated within the free zones, where companies could be wholly owned by foreign entities - which, in the case of Dubai International Financial Center and Abu Dhabi International Market, are subject to their own judicial system. It is certainly an effective, low-cost means of economic diversification away from the increasingly volatile oil industry.
6- The extent of demand by foreign investors
Statistics of Dubai International Financial Center courts for the year 2019 showed that the total number of cases submitted to DIFC courts reached 952 cases in all departments, with an increase of 43% on an annual basis. The volume of cases before the Court of First Instance increased dramatically in 2019 by 16% on an annual basis, reflecting the great confidence that the courts of Dubai International Financial Center received from the business sector.
The total value of the cases during this period, including cases related to arbitration, amounted to 3.1 billion, with an average value of 82.8 million dirhams. The cases before the Court of First Instance included a wide range of business sectors.
There was also a noticeable increase in the number of cases voluntarily brought before the Center’s courts in 2019, where 70% of the cases brought before the Court of First Instance came from parties who chose to resort to the Center’s courts to resolve their disputes.
The total value of the execution lawsuits filed reached 2.6 billion dirhams in 2019, indicating the growing confidence of companies in the ability of courts to execute rulings. Execution cases registered an increase of 35%, and reached 251, compared to 185 cases in the same period of 2018.