How Proper Courts Litigation Services Structuring Saves Millions
Most of the money wasted in UAE litigation is spent by parties running a case in one court system with the habits of another.
The onshore courts, the DIFC Courts and the ADGM Courts differ on what they charge to take a claim, on whether the case is fought in written memoranda or at an oral trial, on who may stand up and argue it, on how much of the winner's legal spend comes back, and on how many appeals follow the first judgment. Read as a pricing sheet, those differences decide what is worth suing over.
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
A company doing business in the UAE can end up in front of three unconnected court systems, and it often finds out which one only when a claim is served on it. The onshore courts of the emirates, the DIFC Courts and the ADGM Courts do not share a language, a procedure, a profession or a rule about who pays for the lawyers. A litigation budget built for one of them will be wrong for the other two.
What follows is about running a case in each: what the court charges to take it, how the case is actually presented, who is allowed to stand up and present it, what the winner gets back, and what happens after the first judgment.
Related: Our courts litigation team acts before the onshore courts, the DIFC Courts and the ADGM Courts.
Three court systems in one country
The UAE contains parallel court systems that are not variations on each other. The onshore courts of each emirate apply UAE federal and local legislation in Arabic through a civil-law procedure. The DIFC Courts and the ADGM Courts are common-law courts, sitting in English, in jurisdictions with their own laws and their own regulators, the DFSA and the FSRA respectively. A judge in one system does not apply the rules of another, and a case prepared for one does not transfer neatly into another.
| Onshore courts | DIFC and ADGM Courts | |
|---|---|---|
| Court fees | Calculated on the value claimed, up to a ceiling fixed by the emirate, and paid on filing | Set by each court's own published scale, with further fees falling due at defined stages |
| How the case is presented | Rounds of written memoranda with documents attached; hearings are short and largely procedural | Pleadings, case management conferences and an oral trial |
| What drives the timetable | How many rounds of memoranda the court allows before it closes submissions | The directions timetable fixed at case management |
| Legal costs | The successful party recovers little towards its own lawyers' fees | Costs generally follow the event and a substantial part is recoverable |
Read that table as a pricing sheet rather than a description. It is the reason the same claim, on the same facts, is a different commercial proposition depending on which building it is filed in.
The case is fought in writing, or it is fought at trial
Onshore, a party's case is what it files. Submissions are exchanged in writing over successive rounds, documents are attached to them, and the hearings that punctuate the process are brief and mostly administrative. There is no general mechanism for compelling the other side to hand over the documents that damage it, so a claimant proves its case out of the material it already holds. The work, and the fees, are therefore front-loaded: by the time the first memorandum is filed, most of the case has been built.
In the DIFC and ADGM Courts the shape is inverted. Disclosure, witness statements and cross-examination all exist, the trial is the event everything points at, and the heaviest spend falls in the months before it. A claimant whose case depends on documents held by the other side, or on testing a witness in person, has a route to both here and no equivalent route onshore.
The practical consequence is one of cash flow as much as strategy. Two identical claims, filed in the two systems, produce two very different spending curves, and a company that budgets for one curve while litigating on the other will be asking for supplementary approvals at the worst moment.
Related: See our commercial litigation advisory service for onshore commercial claims.
Who is allowed to appear for you
This surprises foreign general counsel more than anything else on the list. Before the onshore courts, only advocates registered for that purpose may appear, and that registration is open to UAE nationals. A foreign-qualified lawyer working in the UAE advises on the case, drafts it and manages it, but does not stand up in the hearing. Before the DIFC and ADGM Courts, a lawyer must be registered with the court itself in order to act, and registration there is open to qualified practitioners from common-law and other jurisdictions.
So the composition of a team is dictated by the forum, not by preference. Onshore, a claim run properly involves a registered advocate filing and appearing alongside the lawyers who built the case; a firm that cannot put both sides of that together is offering half a service. In the DIFC and ADGM Courts a single registered team can carry the matter from letter of claim to judgment. Confirming that the people who will actually conduct the case have the right to conduct it in the chosen court is a question worth asking at the engagement stage rather than the filing stage.
Recoverable costs change what is worth suing over
The difference that surprises foreign parties most is what the winner gets back. In the onshore courts, an award towards the successful party's legal fees is customarily modest, so a party that wins still bears most of what it spent. In the DIFC and ADGM Courts, costs generally follow the event and a successful party can recover a meaningful proportion of its actual legal spend.
This changes the arithmetic in both directions. Onshore, a claim whose value is close to the cost of pursuing it is usually not worth issuing, and defendants know it — which is precisely why some of them do not pay. In the DIFC Courts, the costs exposure gives a well-founded claim genuine settlement pressure, and gives a weak claim a reason not to be brought. Choosing the forum is therefore also choosing how credible your own threat to litigate will be.
Related: Our DIFC Courts practice handles claims brought under the Courts' opt-in jurisdiction.
An objection to jurisdiction is answered before anything else
A defendant who says the claim has been brought in the wrong court is raising a point the court must dispose of before it looks at the merits. Onshore that objection is taken as a preliminary plea and answered in the same written cycle as everything else. In the DIFC and ADGM Courts it turns on whether jurisdiction is properly founded — a real connection to the financial centre, or a valid agreement by the parties to submit to the court — and it is argued out at the front of the case.
The answer arrives eventually. The months and the fees spent getting to it do not come back, and a defendant with no intention of paying knows that as well as anyone. For a claimant, this is the argument for confirming at the outset that the chosen court's jurisdiction can be demonstrated from the documents, rather than discovering the weakness when the defence is served.
The first judgment is a stage, not the finish
Onshore, a judgment at first instance sits below an appeal that reconsiders the facts as well as the law, and above that a cassation stage confined to points of law. A defendant who wants to delay payment has a route to do so, and the party that budgeted for one round finds itself funding a second and sometimes a third. In the DIFC and ADGM Courts there is a single appeal on defined grounds, which makes the outer limit of the process easier to see from the start.
Two things follow for anyone pricing a case. Settlement offers should be measured against the whole route rather than against the next hearing, because a discount that looks poor next to a likely first-instance win can look generous next to two further years of the same case. And onshore, the moment a first-instance judgment lands is often the point of maximum settlement pressure on both sides — worth using while it lasts.
Matching the case to the court
The question worth asking early is not who is right. It is which of the three systems this claim was built for. A case assembled around live testimony and documents in the other side's possession belongs in a common-law court and will underperform onshore. A documentary claim on a signed contract, against a defendant with money in the country, rarely needs anything more than the onshore courts and the fee scale that goes with them.
Most of the money wasted in UAE litigation is spent by parties running a case in one system with the habits of another.
Related Services: Explore our Courts Litigation Services and our legal consultation services for practical 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
