16 May 2024

Decree No. 29 of 2024 on Dubai conflicts of jurisdiction: important changes and impacts

Authored by: Ghalib Mahmoud, Ayman Saey and Jawaher Alreyaysah

In Brief, Dubai Decree No. 29 of 2024:

  1. increases the scope of the mandate of the Joint Judicial Committee;
  2. confers upon the rulings of the JJC a precedential value; and
  3. restates the circumstance which triggers a stay of proceedings where an application has been made to the JJC, in effect reversing the landmark DIFC Court of Appeal decision Lakhan v Lamia [2021] DIFC CA 001.

On 3 April 2024, the Ruler of Dubai issued Decree No. 29 of 2024 (the “New Decree”). Amongst other things, the New Decree repeals Decree No. 19 of 2016 (the “Old Decree”) by which the Joint Judicial Committee (the “JJC”) – tasked (in summary) with resolving jurisdictional conflicts between the Dubai Courts and the Courts of the Dubai International Financial Centre (the “DIFC Courts”) – was established. Despite speculation in the legal community that the JJC would be abolished, the New Decree has not done that and instead makes important changes to the JJC’s mandate and its composition, together with the consequence of an application being made to the JJC on the main proceedings, and to the value of the JJC’s rulings in relation to future cases. These key changes are discussed in this article.

The purpose of the JJC

Under the Old Decree, if party A made a claim against party B in the Dubai Courts and B then made a claim against A in relation to the same subject matter in the DIFC Courts (or vice versa), each of A and B was entitled to request the JJC to decide whether the Dubai Courts or the DIFC Courts had jurisdiction to decide both A’s claim and B’s claim. The purpose of the JJC, evidently, was twofold: (1) to prevent parallel proceedings in the two courts of Dubai – which could result in conflicting judgments – and (2) to protect parties from being subject to litigation in the wrong court.

The JJC’s new mandate

The first change the New Decree introduces is to the name of the JJC. Under the Old Decree, it was called “the Judicial Committee of the Dubai Courts and the DIFC Courts.” Under the New Decree, the JJC’s full name has been expanded to “the Judicial Committee for Resolving Jurisdictional Disputes between the DIFC Courts and the Judicial Bodies of the Emirate of Dubai” (Article 2(b)). The JJC’s name change reflects the significant increase to the scope of the JJC’s mandate under the New Decree.

“Judicial Bodies” is defined in Article 1 of the New Decree as:

the Dubai Courts, the Rental Disputes Centre in the Emirate, the Judicial Committees formed by decree or decision of the Ruler or the President [of the Judicial Council] and other judicial committees in the Emirate whose founding legislation or regulations render [these committees] judicial committees.”

Under the New Decree, the JJC is tasked with resolving jurisdictional conflicts, not just between the DIFC Courts and the Dubai Courts as was the case under the Old Decree, but between the DIFC Courts and any of Dubai’s Judicial Bodies as defined in Article 1. It follows that the DIFC Courts can expect to see more jurisdiction contests –which prior to the New Decree would have been before the DIFC Courts – now argued (or reargued) before the JJC.

In Caterpillar Financial Services (Dubai) Limited v NGC LLC & anr [2018] DIFC CFI 055 (12 October 2022), the question was whether the DIFC Court or a judicial committee had jurisdiction. In Latins v Lidina [2021] DIFC CFI 094 (7 December 2021), the issue was whether the DIFC Court or the Rental Disputes Centre had jurisdiction. In both cases, it was for the DIFC Court to decide whether it had jurisdiction over the dispute, and in each case it held that it did. Today, those questions would likely be determined (or finally determined) by the JJC rather than the DIFC Court.

The JJC’s composition

The composition of the JJC is determined by Article 3 of the New Decree. The JJC’s bench will consist of seven members as follows:

  1. the President of the Dubai Court of Cassation who is the President of the JJC;
  2. the Deputy Chief Justice of the DIFC Courts who is the Deputy President of the JJC;
  3. the Secretary General of the Dubai Judicial Council, who is currently the Director of the Dubai Courts;
  4. the President of the Dubai Court of Appeal;
  5. the President of the Dubai Court of First Instance; and
  6. two judges of the DIFC Courts, chosen by the Chief Justice of the DIFC Courts.

Unlike under the Old Decree, the Chief Justice of the DIFC Courts does not have a permanent seat on the JJC. Whether the Chief Justice is able to appoint himself to the JJC is not addressed in the New Decree.

While the New Decree does not stipulate a Dubai Court majority on the JJC’s bench, at the time of writing this article a majority of members are from the Dubai Courts. Moreover, if the JJC is split on a decision, the side in agreement with the President of the JJC (who as we have seen is the President of the Dubai Court of Cassation) prevails (Article 5(a) of the New Decree).

Stare decisis

The New Decree has conferred upon the rulings of the JJC precedential value.  Article 9(c) provides (in translation) as follows:

The rules of law established in the decisions of the Judicial Committee made pursuant to the provisions of this Decree [are to be] considered judicial precedents. All of the Judicial Bodies including the [DIFC] Courts and each of their levels are bound by [these rules] and any departure from [them] in any [of the Judicial Bodies’] ensuing rulings provides a ground for appeal in any way established in law.”

While stare decisis will be familiar to the common law DIFC Court and its practitioners, the introduction of the doctrine into the JJC and, via the JJC, into the Dubai Court and other dispute resolution forums in civil law is novel. Debate can be expected on the meaning and effect of Article 9(c) of the New Decree, including the extent to which the rulings of the JJC will affect proceedings in the DIFC Court or any of Dubai’s Judicial Bodies. For example, it might be argued that the JJC’s jurisprudence on the scope of the DIFC Courts’ “jurisdictional gateways” under Article 5(A)(1) of the Judicial Authority Law is binding upon the DIFC Courts even in cases where the question of jurisdiction does not relate to another Dubai judicial body, for example the English courts.

The effect of an application to the JJC

There is some evidence that one objective of the New Decree was to bring the approach of the DIFC Courts in line with that of the Dubai Courts. Until 2021, there was an understanding in Dubai that once an application was made to the JJC for it to resolve a conflict of jurisdiction, the Dubai Courts and the DIFC Courts were required to stay their respective proceedings until the application was decided upon by the JJC. This understanding was based on the prevalent interpretation of Article 5 of the Old Decree which provided as follows:

The referral of a dispute [as to jurisdiction between the Dubai Courts and the DIFC Courts] to the Judicial Committee pursuant to Article 4 of this Decree will result in:

(1) the stay of proceedings for hearing the claims or applications in respect of which a conflict of jurisdiction arises until the issuance of the Judicial Committee’s decision determining the competent court having jurisdiction over these claims or applications; and

(2) stay of execution of conflicting judgments until the enforceable judgment is determined pursuant to a relevant resolution issued by the Judicial Committee.”

It had been understood that only a “referral” to the JJC triggered any stay. In other words, even if the referral was baseless, the fact that there were proceedings in the Dubai Courts and the DIFC Courts and that the referral had been made to the JJC meant that stays were required to be imposed on the proceedings.

A development in the DIFC

In the DIFC case Lakhan v Lamia, the defendant had issued proceedings in the Dubai Court after which the claimant issued proceedings in the DIFC Court, made a petition to the JJC and sought stays of the proceedings in both courts. Stays were duly imposed. The defendant then applied for permission to appeal the DIFC Court’s stay. In the order granting permission to appeal made on 7 January 2021, H.E. Justice Shamlan Al Sawalehi commented as follows:

Applications to the JJC are capable of halting proceedings for very long periods of time – I am aware of one set of proceedings in the Court of First Instance that has been stayed for around a year now – and can be made even if there is no genuine dispute as to jurisdiction or if the applicant’s position has no merit whatsoever. If this is what the law requires, so be it. But if the law does not require a stay on DIFC proceedings upon a litigant’s mere application to the JJC, then, in my view, it is time that this practice was abandoned.

In its judgment dated 8 April 2021 ([2021] DIFC CA 001), the DIFC Court of Appeal ruled that, on a proper construction of Article 5 of the Old Decree, the former practice of the DIFC Court of imposing a stay upon mere application to the JJC was incorrect: “What triggers a stay, then is the existence of a conflict of jurisdiction … and an application to the JJC to determine the ‘competent court’ or the judgment to be enforced. Mere application to the JJC does not trigger a stay, and the Court must be satisfied that there is a conflict of jurisdiction.” ([31]) The Court noted that “There would otherwise be opportunity for abuse by making an application to the JJC asserting a spurious conflict of jurisdiction, with a stay effective until the JJC determined that there was no basis for the exercise of its function – which (despite Article 3 of the Decree) as [Al Sawalehi J] indicated, could be for a long period.” ([32]) The Court of Appeal explained that, for a stay to be triggered, “there must be some step in the proceedings amounting to a relevant exercise of jurisdiction by the Court, or refusal of the step on jurisdictional grounds, in order that there be maintenance or declining of jurisdiction.” ([35]) Lakhan was a landmark decision and many stays were lifted in the DIFC Court after it.

Meanwhile, there was no change in onshore Dubai

The Dubai Courts continued meanwhile to impose stays upon mere application to the JJC, consistent with their interpretation of Article 5 of the Old Decree, and this approach was confirmed in several judgments including by the Dubai Court of Cassation in Centurion Investment & Ors v Al Ahli Bank of Kuwait Cassation No. 820/2021 on 6 October 2022 i.e. after Lakhan. The Dubai Courts have found Article 5 to be unambiguous in requiring a stay upon mere application to the JJC, and this approach makes sense from a Dubai Court perspective not just because of the Dubai Court’s interpretation of Article 5 of the Old Decree, but also because the Dubai Court usually decides jurisdiction at the end of proceedings along with the merits. As such, in the vast majority of cases, the Dubai Court will not take a step or refuse to take a step on jurisdictional grounds, in the language of Lakhan, until any benefit of a stay of proceedings has generally passed.

The New Decree intervenes

Critical words for the Court in Lakhan were the opening words of Article 5 of the Old Decree: “… referral of a dispute to the [JJC]…” There had to be both a “dispute” as to jurisdiction between the two courts and an application, or a “referral” of the dispute to the JJC for the stays to be triggered. While Article 7 of New Decree substantially preserves the remainder of Article 5 of the Old Decree, these words, “… referral of a dispute to the [JJC]…, have been changed to “contact between [the JJC] and the application [made to it]…” In other words, stays of proceedings are now triggered by an application to the JJC making “contact” with the JJC.

According to the original understanding of what triggers a stay of court proceedings, which the Dubai Court continued to maintain, there is probably little difference between a “referral” of a dispute to the JJC (Article 5 of the Old Decree) and that referral making “contact” with the JJC (Article 7 of the New Decree). In both cases, what is being referred to is (more or less) the making of the application to the JJC. The change is more important in relation to the approach introduced by the DIFC Court of Appeal in Lakhan.

Precisely at what point “contact” between the JJC and an application made to it takes place is not spelt out in the New Decree. There is a suggestion in Article 6, however, that “contact” occurs simply when an application is made. Article 6 is entitled, insofar as material, “Contact between the [JJC] and the application …” and Article 6 makes reference to the adversaries “applying” to the JJC to determine the forum that has jurisdiction; there is no mention of further steps, whether by the JJC or otherwise, which might contribute to what “contact” between the application and the JJC comprises.

Whatever “contact” means, it seems reasonably clear that “contact” between the JJC and an application is intended to be something less than “the referral of a dispute” to the JJC as understood by the Court of Appeal in Lakhan. In other words, a step from the Court amounting to the exercise of jurisdiction or the refusal of the step on jurisdictional grounds may no longer be required to trigger stays of proceedings under the New Decree. It follows that the New Decree has almost certainly reversed the approach established by Lakhan.

It should be noted that whereas Article 3(b) of the Old Decree provided that the JJC was required to issue decisions within 30 days of receiving an application, under the New Decree no time limit is imposed on the JJC for delivering decisions.

Conclusion

The New Decree has introduced important changes to the JJC. These changes impact resolution of conflicts of jurisdiction between the DIFC Courts and Dubai’s other judicial bodies, and the impact may extend further, depending on how Article 9(c) of the New Decree is interpreted and applied within Dubai. However, it will be for the DIFC Courts, Dubai’s other judicial bodies and the JJC to address the extent of the changes when ruling on jurisdictional questions put before them. While the approach of the Dubai Courts will likely remain unchanged following enactment of the New Decree on the important question of what triggers a stay of proceedings in particular, the DIFC Courts will have to revisit the question in light of Article 7 of the New Decree which has removed the words on which the DIFC Court’s previous approach was premised. To the extent a difference in approach persists after enactment of the New Decree, the Supreme Legislation Committee of the Emirate of Dubai – which provides binding interpretations on Dubai legislation – may be required to settle such difference.

The legal community is anticipating guidance from the JJC on important procedural matters such as the requirements for filing applications and submissions, how service is effected, whether the JJC will hear oral arguments and whether the JJC will issue decisions within a certain time frame.

Hadef and Partners has significant experience appearing before the JJC. For advice on jurisdictional disputes, please contact Ghalib Mahmoud, Partner, Dispute Resolution.

 
 

This article, together with any commentary, does not constitute legal advice. It is provided solely for information purposes on a complimentary basis, without consideration of any specific objectives, circumstances or facts. It reflects then current views of the writer which may modify in time and based on differing objectives, circumstances or facts. A writer's view may differ from views of colleagues and/or the firm. You should seek legal advice on each specific matter. Access to this article does not form an attorney-client relationship.