How Proper ADGM Courts Structuring Saves Millions
The savings from choosing the ADGM Courts come from getting the clause right, not from the forum itself.
An ADGM jurisdiction clause is worth what the drafting makes it worth. Covered here: the limited circumstances in which the ADGM Courts take jurisdiction, why the court applies English common law directly rather than its own code, the matters it will not hear at all, and the separate enforcement step needed to reach onshore assets.
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
Choosing the ADGM Courts is a drafting decision with consequences that appear years later. Done properly, it gives a commercial party an English-language common law court, a predictable procedure and a judgment that can be enforced. Done casually — a clause naming "the courts of Abu Dhabi", or an ADGM clause in a contract that has nothing to do with ADGM — it produces a jurisdictional fight that has to be won before anyone reaches the merits. The savings come from getting the clause right, not from the forum itself.
Related: Our ADGM Courts representation team advises on jurisdiction clauses, claims and enforcement.
What the ADGM Courts are
The Abu Dhabi Global Market is a financial free zone with its own civil and commercial law, its own regulator in the Financial Services Regulatory Authority, and its own courts. Proceedings are in English and the procedure will be familiar to anyone who has litigated in a common law jurisdiction: pleadings, disclosure, witness statements, cross-examination, and reasoned written judgments.
ADGM's distinguishing feature is how its law is sourced. Rather than enacting a complete separate code, ADGM applies English common law, including the rules of equity, directly, alongside its own regulations and certain applied English statutes. DIFC, the other common law jurisdiction in the UAE, has instead built its own body of statutes. For a party used to English contract principles, ADGM removes a translation step: the case law it argues from is the case law the court applies.
Structurally the courts run a Court of First Instance and a Court of Appeal, with a small claims track for lower-value matters. The system is designed for commercial work, and its judgments are published.
Related: If you are establishing an entity in the zone, see our free zone company formation service.
When the ADGM Courts have jurisdiction
Jurisdiction is not a matter of preference. It arises in a limited set of circumstances, and a clause that assumes otherwise is the weak point in the structure.
- The claim involves an ADGM-established entity, or one of its bodies, officers or employees acting in that capacity.
- The claim arises out of a transaction conducted wholly or partly in ADGM, or out of an incident that occurred there.
- The claim arises under ADGM legislation or a contract governed by ADGM law.
- The parties have agreed in writing that the ADGM Courts will decide their dispute.
That last route is the one most often used and most often drafted badly. A written agreement to ADGM jurisdiction should be specific, exclusive where that is the intention, and consistent with the governing law clause sitting next to it. A contract governed by the law of one jurisdiction and referred to the courts of another is not fatal, but it invites an argument and adds a layer of expert evidence to every case.
Related: Our ADGM Courts process guidance covers drafting, filing and case management.
What the choice does not give you
Two limits are worth stating plainly, because they account for most of the disappointment in practice.
First, the ADGM Courts do not decide criminal matters, and they do not determine title to land registered onshore. Selecting them for a dispute of that character does not move the dispute; it delays it.
Second, a judgment still has to be enforced where the assets are. An ADGM judgment is enforced against onshore assets through the Abu Dhabi execution route under the arrangements agreed between the ADGM Courts and the local judicial authorities, and abroad under whatever treaty or reciprocity rules apply in the target state. That process is workable, but it is a separate step with its own requirements. Anyone selecting a forum without first asking where the defendant's assets are, and what it will take to reach them, has chosen a forum for the wrong reason.
Related: Our ADGM Courts counsel advise on enforcement pathways before the clause is signed.
ADGM Courts and arbitration
The two are complementary rather than alternatives. Arbitration seated in the UAE is governed by Federal Law No. 6 of 2018, as amended in 2023, and ADGM can serve as a seat with its courts acting in the supervisory role — appointing or removing arbitrators, granting interim relief in support of the arbitration, and hearing challenges to an award.
Institutional choice needs the same care. In Abu Dhabi, ADCCAC was restructured as arbitrateAD and has operated under that name from 2024. In Dubai, the DIFC-LCIA was abolished by Dubai Decree No. 34 of 2021 and its caseload transferred to the Dubai International Arbitration Centre, while DIFC remains available as a seat for other institutions. Clauses naming an institution that no longer exists are still circulating in long-term contracts, and each one is a preliminary application waiting to happen.
Related: For the Dubai equivalent, see our DIFC Courts litigation service.
Related: Our ADGM Courts solutions cover litigation, supervisory applications and award enforcement.
Drafting the clause
A workable ADGM clause states four things and no more:
- The governing law of the contract, named precisely.
- The forum — the ADGM Courts — and whether that jurisdiction is exclusive.
- Where an escalation step is wanted, a defined period for negotiation or mediation, with a clear end date so the step cannot be used to stall.
- Service of process: an address within the jurisdiction, or an agent appointed to accept service, which removes one of the more common sources of delay at the start of a case.
Then check the rest of the agreement against it. Related contracts in the same transaction — the shareholders' agreement, the security documents, the guarantees — should point to the same forum. Split clauses across a single deal are how a party ends up litigating the same facts in two places.
Strategic considerations for UAE businesses
Match the forum to the transaction. ADGM jurisdiction makes sense where an ADGM entity is a party, where the deal is performed in the zone, or where the parties want a common law court and can enforce against assets reachable from it. It makes little sense in a purely local contract between onshore entities with onshore assets, where the additional enforcement step is a cost without a corresponding benefit.
Audit existing contracts rather than only new ones. Legacy portfolios frequently contain clauses naming abolished institutions, vague references to "the courts of Abu Dhabi", or governing law and forum provisions that contradict each other. Renewal or amendment is the natural moment to fix them.
Decide the enforcement route before the claim. Establish where the assets sit, whether interim relief will be needed to keep them there, and which court can grant it quickly. Finally, keep the transaction documents in order — signature authority, corporate approvals, and a clear record of performance. A well-chosen forum decides where the case is heard; the documents decide how it ends.
Related Services: Explore our ADGM Courts representation and ADGM Courts services for practical legal support in this area.
Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.
Nour Attorneys Team
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