On March 14, 2025, Dubai introduced Law No. 2 of 2025, bringing key changes to the DIFC Courts that directly affect businesses operating within or engaging with the DIFC. These reforms enhance legal certainty, streamline dispute resolution, and strengthen contract enforcement, reinforcing the DIFC’s position as a premier international business hub.
Key Impacts on Businesses
1. Greater legal clarity and contract certainty
The law provides a clearer framework for businesses by defining the exclusive jurisdiction of the DIFC Courts. This ensures companies have greater certainty about how disputes will be handled, allowing them to structure agreements with confidence and reduce jurisdictional conflicts, thus leading to speedier judicial trials and consequent resolutions.
2. Faster and cost-effective dispute resolution
The introduction of an establishment of a Mediation Centre within the DIFC Courts offers businesses an alternative mechanism to amicably resolve disputes concerning civil or commercial and labour issues. Mediation can significantly reduce time, costs, and reputational risks, enabling businesses to preserve key commercial relationships while efficiently and harmoniously settling disputes. Essentially, the law consolidates previous jurisdictional provisions, replacing Dubai Law No. 12 of 2004 (Judicial Authority Law) and DIFC Law No. 10 of 2004 (Courts Law) with a single legislative framework.
Key changes include:
a. New jurisdictional gateways covering employment, trust disputes, and arbitration-related applications.
b. Provision for hearings outside the DIFC subject to the decision of Chief Justice, thus allowing more flexibility in case management.
c. Formal adoption of hearings to be held open to the public along with announcement of judgements publicly, ensuring greater transparency in judicial proceedings.
d. Introduction of a default limitation period of six years from the date of events within which to commence the proceedings.
3. Stronger contract enforcement and arbitration recognition
For businesses relying on arbitration, the law reinforces the DIFC Courts’ role in recognizing and enforcing arbitration awards, making it a more secure and business-friendly forum. Companies entering contracts with arbitration clauses can now have greater confidence in enforcement mechanisms.
4. Enhanced asset protection and interim measures
DIFC Courts are now empowered to issue interim measures such as asset freezes so that a party cannot hide or transfer them to avoid an adverse judgment, disclosure orders allowing the court to demand declaration of key information about individuals or entities involved in a dispute, and interim orders —even in cases linked to external arbitration. However, all such protective measures can be applied if these are taken within the DIFC. This means that DIFC Courts cannot directly interfere in an external arbitration but can safeguard rights by taking action within their jurisdiction. This is particularly relevant for companies engaged in high-value disputes, ensuring assets, which fall within their jurisdiction, remain frozen during legal proceedings. Further, it provides for the appointment of Assessors, Receivers and provisional liquidators, a measure commonly seen in common law jurisdictions, is now integrated into the DIFC legal framework.
5. Improved regulatory and compliance considerations
With a more defined judicial framework, businesses operating in or engaging with the DIFC will need to review their contracts, compliance strategies, and dispute resolution mechanisms to align with the updated regulations. Companies dealing with cross-border transactions should also assess how the DIFC Courts’ expanded jurisdiction interacts with UAE onshore and international laws to mitigate potential risks.
6. Increased investor and business confidence
The reforms reinforce the DIFC’s reputation as a stable and business-friendly legal jurisdiction, making it an even more attractive destination for regional and international investors. Businesses operating in the DIFC can now benefit from greater legal security, efficient dispute resolution, and a predictable enforcement framework, all of which contribute to a stronger business climate.
Next Steps for Businesses
- Review existing contracts to ensure dispute resolution clauses align with the new law.
- Consider mediation as a first step before litigation to resolve disputes cost-effectively,
- Assess enforcement strategies to understand how the DIFC Courts’ expanded jurisdiction may impact ongoing or future disputes.
- Stay updated on compliance expectations to ensure full alignment with the new legal framework.
Conclusion
The reforms introduced by the DIFC Courts demonstrates their commitment to maintaining a world-class legal framework that aligns with international best practices in commercial dispute resolution. These enhancements not only reinforce the DIFC Courts’ reputation as a preferred jurisdiction for resolving complex business disputes but also provide greater certainty, efficiency, and accessibility to businesses operating within and beyond the UAE. By streamlining procedures, integrating advanced legal technologies, and strengthening enforcement mechanisms, the DIFC Courts ensure a more robust and transparent legal environment. This evolution shall certainly make them particularly attractive to multinational corporations, financial institutions, and investors seeking a secure and business-friendly dispute resolution system. Furthermore, these reforms align with global arbitration and litigation trends, enhancing the DIFC Courts’ ability to handle high-value cross-border disputes with speed and fairness.
If you have any questions about this please contact Merline Dsouza at m.dsouza@alsuwaidi.ae and Rajiv Suri at r.suri@alsuwaidi.ae.
Merline Dsouza is an international dispute resolution lawyer with over 10 years of experience in arbitration and litigation, specialising in high-value commercial, construction, and maritime disputes. She has advised clients under leading arbitration rules, including DIAC, ICC, and LCIA, as well as matters before the DIFC, ADGM, and UAE Courts.
Rajiv Suri is a senior associate in the Corporate & Commercial and Intellectual Property team at Alsuwaidi & Company. Rajiv advises clients on commercial transactions, regulatory compliance, and dispute resolution strategies, with a particular focus on intellectual property, contractual agreements, and digital assets. He has extensive experience managing corporate portfolios across various industries and guiding businesses on legal frameworks within the DIFC and broader UAE jurisdiction.