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Transforming the DIFC Courts: Insights into Law No. (2) of 2025 governing the Dubai International Financial Centre (DIFC) Courts

On March 10, 2025, Sheikh Mohammed bin Rashid Al Maktoum issued Law No. (2) of 2025 (the “New Law”), a landmark legislation governing the Dubai International Financial Centre (DIFC) Courts. The New Law replaces the previous DIFC Law No. (10) of 2004 and Dubai Law No. (12) of 2004 (as amended) (collectively referred to as “Old Law”), marking a significant evolution in the DIFC legal framework and transforming the way disputes are resolved within the DIFC.

1. Expanded scope and exclusivity of Jurisdiction

  • Exclusive Jurisdiction: The DIFC Courts now have exclusive authority over civil, commercial, and labor disputes involving DIFC entities, reducing jurisdictional conflicts and providing legal certainty for businesses.
  • Expanded Scope: The DIFC Courts’ jurisdiction has been broadened to include claims arising out of or related to trusts, wills of non-Muslims, and arbitration-related applications, offering a more comprehensive legal framework.

2. Establishing a Mediation Services Centre

  • Alternative Dispute Resolution: The New Law establishes a new Mediation Centre providing an efficient and cost-effective way to resolve disputes amicably, reducing litigation costs and thereby preserving commercial relationships.

3. Judicial Efficiency and Transparency

  • Public Hearings and Judgments: The New Law mandates public access to court proceedings and judgments, enhancing transparency and accountability.
  • Provisional Measures: The DIFC Courts can now issue provisional or interim orders, such as asset freezes, to protect rights effectively.
Feature Old Law (DIFC Law No. 10/2004 & Dubai Law No. 12/2004) New Law (DIFC Law No. 2/2025)
Jurisdiction Parties may agree in writing to have civil or commercial claims or actions heard before the DIFC Courts. Expanded to include cases with employment disputes, trusts, wills of non-Muslims, and arbitration-related applications.
Enforcement of Judgments Less robust mechanisms for enforcing judgments outside the DIFC. Improved mechanisms for enforcing judgments both within the UAE and abroad.
Dispute Resolution Traditional litigation was the primary method. Introduction of a Mediation Centre for civil, commercial, and labor disputes, offering an alternative to litigation.
Alignment with UAE Laws Less emphasis on alignment with UAE federal laws. Strengthened alignment with UAE federal laws to ensure legal harmony across jurisdictions to aid in enforcing judgements.
Provisional Measures Limited ability to issue interim orders. Empowered to issue asset freezes, disclosure orders, and other interim measures to protect rights.
Transparency Less emphasis on public access to court proceedings. Mandates public hearings and announcements of judgments to enhance transparency.
Arbitration Recognition Less streamlined process for recognizing foreign arbitration awards. Simplified process for recognizing and enforcing foreign arbitration awards.
Enforcement Writ No explicit provision for Enforcement Writs. Enforcement was based on court orders and arbitral awards. Explicitly includes judgments, decisions, orders, arbitral awards, and settlement agreements, enhancing clarity and efficiency in enforcement procedures.

 

For parties interacting with the DIFC Courts, the New Law offers several benefits:

  • Legal Certainty: Businesses have clearer guidelines on jurisdiction, reducing legal risks and enhancing contract enforcement.
  • Enhanced Legal Protection: The ability to issue provisional measures provides better protection for individuals’ rights during legal proceedings.
  • Efficient Dispute Resolution: The mediation centre and streamlined procedures reduce the time and cost associated with disputes.
  • Enhanced Enforcement: The New Law strengthens the enforcement of judgments, including the ability to execute judgments against assets outside the DIFC.
  • Increased Transparency: Public access to court proceedings ensures that justice is not only served but also seen to be served.

In conclusion, Law No. (2) of 2025 marks a significant step forward for the DIFC Courts, enhancing legal certainty, efficiency, and transparency. The benefits of streamlined dispute resolution and stronger enforcement mechanisms cannot be overstated and are likely to make the DIFC an even more attractive hub for international business and investment.

At Al Midfa & Associates, we offer comprehensive services tailored to meet your needs, ensuring that your rights are protected at every step of the way. Please feel free to contact us.

Dubai Freezone exapansion

Dubai Free Zone Expansion Update: Enhanced Opportunities and Key Considerations

On the 17th of March 2025, His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, in his capacity as Chairman of Dubai’s Executive Council, introduced a transformative resolution (No. 11 of 2025) permitting free zone businesses (excluding DIFC financial institutions), to operate in mainland Dubai. While this marks a pivotal shift in Dubai’s economic framework, stakeholders should note that the resolution has not been issued yet and key details remain pending, including the finalized list of permitted activities.

Below, we expand on the implications, challenges, and steps for businesses navigating this evolving landscape.

  • Activity-Specific Permissions: The resolution currently only applies to specified economic activities. However, the Dubai Department of Economy and Tourism (DET) is yet to announce what activities will fall under the ambit of the resolution and will publish a list of specified economic activities within six months. 
  • Licensing: Free zone entities can apply for a renewable one-year mainland license or activity-specific permits through the DET.
  • Compliance Window: Existing businesses operating outside free zones must align with the resolution within one year (extendable further for similar periods subject to approval from the Director General of the DET).
  • Direct Access: Eliminates the need for local sponsors or intermediaries to serve mainland clients, much like certain dual-licensing free zones (e.g. DMCC).
  • Hybrid Model: Combine free zone tax benefits with mainland market reach (e.g., retail, direct B2C services).
  • Infrastructure Leverage: Utilize existing free zone offices while expanding mainland operations, reducing overhead.

Despite the welcome change, the resolution is still in its nascent stages and requires further details to be issued as highlighted below –

1. Pending Activity List

  • Early-Stage Limitation: Businesses will need to closely monitor the changes in this space given that the DET has not yet defined which activities will be permitted.

2. Compliance Burden

  • Financial Segmentation: Despite having a free zone registered license, it will be mandatory that all financial records maintained by the business remain separate to indicate free zone and mainland financial records.
  • Dual Regulations: The free zones and mainland have historically operated with separate laws and their application to entities within their respective zones. As such, with the new resolution coming into effect, further clarity will be needed to navigate overlapping free zone and mainland laws (e.g. VAT, employment norms).

While the resolution is transformative for Dubai and is in alignment with the goals of the Dubai Economic Agenda, D33, undoubtedly consolidating its position among the world’s top economic cities, its full impact hinges on the DET’s forthcoming guidelines.

Al Midfa & Associates is tracking regulatory updates and will provide tailored strategies once the DET clarifies permitted activities.

At Al Midfa & Associates, we offer comprehensive services tailored to meet your needs, ensuring that your rights are protected at every step of the way. Please feel free to contact us.