UAE Trends and Developments Contributed by: Amr Bajamal, NHB Legal
company sought an order to allocate jurisdiction to the Dubai courts on multiple grounds, including: • the incidents in question took place outside the DIFC; and • not all the defendants were DIFC entities. The Conflict of Jurisdiction Tribunal disagreed with the claimant’s position. It held that the DIFC courts should have jurisdiction over the dispute and that the existence of one defendant who falls under the default jurisdiction of the DIFC courts is sufficient to exclude the jurisdiction of the Dubai courts. It follows then that the same logic can be applied to a claim by an insured party against an insurer who is a DIFC entity. Could the courts of the DIFC or ADGM then assume jurisdiction for overturning the decision issued by the Insurance Disputes Committee? Other than the above straightforward scenario, there could be a more complex scenario. What if a DIFC insurer issued a policy that adopts the laws of the UAE, and consequently the Insurance Law, as the substantive applicable law. In this case, the applica- tion of the Insurance Law would require the insured party to first file the claim before the Insurance Dis- putes Committee. In such a scenario, would it be possible for courts of the DIFC or ADGM to then assume jurisdiction for overturning the decision issued by the Insurance Dis- putes Committee? The answer appears to be a “yes” on both counts. If the insured party is a DIFC or ADGM entity, then all the applicable federal and local emirate laws both in Dubai and Abu Dhabi grant exclusive jurisdiction to the courts of each financial freezone over claims filed by or against entities established in each respective freezone. Similarly, if the DIFC or ADGM courts are the courts of the seat, then this would grant them juris- diction to hear disputes relating to the validity of the arbitration clause.
While, in principle, all of this sounds very straightfor- ward, there are some procedural and practical con- siderations to bear in mind. The first consideration is that both the DIFC and ADGM courts operate under a common law proce- dural regime under which, in most cases, the courts of appeal are not engaged directly unless permission for appeal is granted either by the court of first instance or a court of appeal following a ruling by the latter. Therefore, on the face of the procedural rules, there is no direct mechanism for an insurer to file a chal- lenge directly to the DIFC or ADGM courts of appeal to seek to overturn a decision rendered by the Insur- ance Disputes Committee. There are creative ideas to overcome these procedural/technical obstacles; how- ever, the industry would benefit from having a direct application process for such challenges to be avail- able under the procedural frameworks of the DIFC and ADGM courts. The second consideration has more of a substantive nature. Both the DIFC and ADGM legal frameworks operate under a strict observance of the principle of “Kompetenz-Kompetenz”. According to this underpin- ning principle of the arbitration world, the first bite at determining the validity of an arbitration clause must always rest with the arbitral tribunal. A party seeking to challenge the tribunal’s decision on jurisdiction may do so thereafter by pursuing a challenge before the competent court by reference to the narrow grounds applicable under the relevant arbitration law. As such, an insurer seeking to challenge an unfavour- able decision by the Insurance Disputes Committee on the validity of an arbitration clause would be caught in a procedural predicament. If the insurer manages to file a direct challenge to the DIFC or ADGM courts of appeal, these courts will likely refrain from making a ruling on the validity of an arbitration clause in the absence of a decision by the arbitral tribunal. At the same time, the Insurance Law only allows the over- turning of the committee’s decision to be by the “Court of Appeal”. Thus, a favourable preliminary award on jurisdiction by an arbitral tribunal would not suffice, on its own, to overturn a decision rendered by the Insur- ance Disputes Committee.
287 I NSURANCE L I T IGATI O N 2026
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