Jurisdiction (from the Latin ius, iuris meaning "law" and dicere meaning "to speak") is generally understood to be the practical authority granted to a formally constituted legal body (or to a political leader) to deal with and make proclamations on legal matters. Further, by logical extension, it is the practical authority to administer justice within a defined area of responsibility.

The UAE offers many alternative forums within which parties can resolve their disputes. Accordingly, understanding what jurisdiction the courts, (Federal or Local) have to hear disputes is essential prior to the filing of a claim by a potential litigant.

Article 31 of the UAE Civil Procedure Law ("CPL") identifies several factors which need to be considered in determining whether the courts of a particular Emirate will have jurisdiction in relation to a particular dispute. It is important to note that other than in the circumstances stipulated in Article 32 of the CPL, parties can agree to empower another court to hear their disputes, unless matters of public policy prevent this. For example, with respect to in rem actions(dealt in Article 32 of the CPL) - or actions related to real estate - parties cannot agree to empower another court, other than the court which has original jurisdiction over the place/location in which the concerned real estate is domiciled. This is a matter of public policy and the parties may not agree otherwise.

Article 32 of the CPL stipulates that:

"With regard to actions in rem concerning real estate or possession, if the subjects are located within The jurisdiction of various courts, competence lies with a court within the jurisdiction of which the property or some part thereof is located.

In personal real estate actions, competence lies with the court within the jurisdiction of which the real estate or the address of the defendant is located."

With the exception of the DIFC, there are no separate judicial jurisdictions for the other free zone areas in Dubai - the courts in the UAE have jurisdiction over matters that arise in these free zones.

In contrast, the Dubai International Financial Centre ("DIFC"), which was established in 2002 by Law No.3 of 2002 has its own separate legal system. Two important laws assist in understanding how the DIFC Courts were established. Firstly, Dubai Law No. 12 of 2004 established the Judicial Authority at the DIFC, sets out the jurisdiction of the Courts, and protects the independent administration of justice in the DIFC. DIFC Law No. 9 of 2004 outlines the powers, procedures, functions and administration of the DIFC Courts. The Courts established in the DIFC pursuant to the Judicial Authority Law No 12 of 2004, that is, the Court of First Instance and the Court of Appeal, are known as the DIFC Courts.

Article 5A(1) of Law No. 12 of 2004 provides that the DIFC Courts have exclusive jurisdiction over:

A. The Court of First Instance:
1. Without prejudice to paragraph 2 of this Article, the Court of First Instance shall have the exclusive jurisdiction over:
a. Civil or commercial cases and disputes involving the Centre or any of the Centre's Bodies or any of the Centre's Establishments.
b. Civil or commercial cases and disputes arising from or related to a contract that has been executed or a transaction that has been concluded, in whole or in part, in the Centre or an incident that has occurred in the Centre.
c. Objections filed against decisions made by the Centre's Bodies, which are subject to objection in accordance with the Centre's Laws and Regulations.
d. Any application over which the Courts have jurisdiction in accordance with the Centre's Laws and Regulations;
2. Parties may agree to submit to the jurisdiction of any other court in respect of the matters listed under paragraphs (a), (b) and (d) of this Article.

In summary, the effect of the above is that where the DIFC Court has jurisdiction, the jurisdiction of the Dubai Courts is specifically excluded (it should also be noted that the DIFC Courts do not have jurisdiction in relation to criminal and matrimonial matters).

Related to this is another important point. The DIFC Court is not an opt-in jurisdiction. This means that whenever article 5A is not satisfied, parties with no other connection to the DIFC may not choose to submit to the jurisdiction of the DIFC Court. Jurisdiction is, therefore, partly territorial, partly based on the identity of the parties and partly based on the subject matter of the proceedings.

There are some cases that are clearly within the DIFC Courts' jurisdiction. Equally clear is a case where neither the parties, nor their contract, have anything to do with the DIFC – in such circumstances disputes would be outside the jurisdiction of the DIFC Courts as defined. Between these two extremes there will be borderline cases where issues as to the DIFC Courts' jurisdiction will be raised and the relationship between the DIFC Courts and the Dubai local Courts will require further clarification.

For this reason, on 7 December 2009, the DIFC Courts and Dubai Courts signed a Protocol of Jurisdiction to clarify and interpret certain concepts relevant to the determination of jurisdiction that are not defined in the law and to identify the legal procedures for transferring cases between the Dubai Courts and the DIFC Courts, where appropriate.1

The Protocol is not new law and does not replace the existing jurisdiction provisions that apply. Rather, the Protocol is an attempt to navigate jurisdictional issues to assist parties in the drafting of their jurisdiction clauses and the filing of their claims so that parties know the correct court to which their cases should be submitted.

Al Tamimi practice in the Court
In a recent case Al Tamimi & Company was instructed to act for the sellers of properties (the "Defendants") and for a third party joined to the proceedings by the Purchaser (the "Claimant"). The Claimant requested an order from the Court:

- Validating and enforcing a Sale and Purchase Agreement concluded between parties on 15 April 2008 ("SPA") for shops A, B, C and D ("the Shops") and to order the Defendants to deliver the Shops; and
- That the Defendants to pay him jointly and severally an amount of AED 19, 372, 646 and to compensate him for the loss of profits that he suffered in this regard along with 9% interest starting from the due date.

Facts of the claim
The Claimant argued that on 15 April 2008 he purchased 4 Shops in the Tower for AED 34, 106, 184 (the "Price"). The Claimant further argued that the additional amount of AED 3, 478, 830.80 was paid as scheduled in the SPA. The Claimant also submitted that the Defendants had refrained from both the registration of the SPA and from the handover of the Shops because they intended to sell the Shops as the prices had increased more than AED 50 M. During the proceedings before the Court of First Instance the Claimant filed an application requesting the court to join a third party to the claim. The claimant argued that the UAE courts had jurisdiction to hear the case as stipulated in Law No. 13 of 2008 regulating the Interim Real Estate Register in the Emirate of Dubai ("Law No. 13 of 2008"). To the contrary, the Defendants requested the court to dismiss the case as the Shops were located in the DIFC area and hence any disputes in relation thereto attracted the jurisdiction of the DIFC.

Court of First Instance
The Court of First Instance ruled in favor of the Defendants. The Court of First Instance dismissed the case as the Shops were located in the DIFC thus qualifying the jurisdiction of the DIFC court. The Claimant appealed this decision.

Court of Appeal
The Court of Appeal reversed the decision of the Court of First Instance. The Court of Appeal ruled in favor of the Claimant in holding that the UAE courts had jurisdiction to hear the case. The case was consequently referred back to the Court of First Instance to decide on the merits of the case. The Defendants and the third party appealed this Court of Appeal's decision to the Court of Cassation. Similar arguments were mounted in that the Appellants submitted that the Dubai Court lacked the requisite jurisdiction to hear the case. The Claimant objected to these arguments.

The Court of Cassation
The Defendants and the third party argued that the Court of Appeal had erred in its decision to reverse the lower's Court decision. The defence raised in this case was that:

- The Claimant's argument that Decree No 28 of 2008 gave Dubai Court jurisdiction for all real estate cases without any exception is erroneous as the said decree did not incorporate such term. The Defendants and the third party argued that the basis for the Decree was to cancel Decree No. 30 of 2007 establishing a special judicial committee for tenancy disputes in the Emirate of Dubai and that it excludes the areas located in the DIFC.
- Article 8 of Law No. 9 of 2004 regarding the DIFC Judicial Authority grants exclusive jurisdiction to the DIFC Courts to hear and determine any claims in which the Centre, the Centre Establishments or any of the Centre's Bodies are parties (and also to hear and determine any dispute arising out of any transaction carried out in the Centre or to determine an incident which took place therein)
- By virtue of the Shops' location in the DIFC, meant that the DIFC courts had the jurisdiction to hear the case;
- The parties had agreed, in Clause 13 of the SPA that the DIFC Courts would have the jurisdiction to hear any disputes that may arise in the future between them.

The Court of Cassation held that as the Shops were located in the DIFC area, the DIFC Courts had the exclusive jurisdiction to hear and determine the dispute. The result of this finding was that the Court of Cassation overturned the Court of Appeal's decision and upheld the Court of First Instance's decision (which had initially held that the DIFC Courts had jurisdiction).

Footnotes

1 Refer to Rita Jaballa's article on "The DIFC Courts" published in the January Issue of Law Update (Issue 225).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.