UAE Supreme Court: foreign parties cannot confer jurisdiction on onshore courts
On 17 July 2025, the UAE Supreme Court delivered an important judgment clarifying the jurisdiction of the UAE onshore courts over disputes between foreign companies. The decision confirms that where both parties are foreign entities with no domicile or place of business in the UAE, the UAE Courts will generally have no jurisdiction, even if the contract between them contains a clause purporting to submit (or opt-in to) the jurisdiction of the UAE Courts.
Background to the dispute
The case arose from a contractual dispute between two foreign companies. The contract included a clause referring the dispute to the UAE Courts. However, neither company was domiciled in the UAE, nor did either have a branch, office or other permanent establishment in the country. The dispute related to obligations and performance entirely outside the UAE, with no connection to UAE-based assets or events.
The Supreme Court’s reasoning
The Supreme Courts applied Article 20 of the UAE Civil Procedure Law (Federal Law No.42 of 2022) which sets out the limited circumstances in which the UAE courts may exercise jurisdiction over foreign defendants with no domicile in the country. These include cases where:
- The defendant has an elected domicile in the UAE
- The dispute concerns real estate in the UAE
- The contract is concluded or performed in the UAE
- The dispute relates to an event or harmful act that occurred in the UAE.
Importantly, Article 20 expressly renders void any agreement that confers jurisdiction on the UAE Courts in the absence of these statutory conditions.
The Supreme Court found that none of the jurisdictional triggers in Article 20 were satisfied. As a result, the contractual jurisdiction could not override the statutory requirement. The Court held that the UAE onshore courts lacked jurisdiction and dismissed the claim in its entirety.
Comparison with the DIFC and ADGM courts
The position under the UAE onshore courts stands in clear contrast to that of the DIFC Courts and ADGM Courts, both of which are opt-in jurisdictions.
The DIFC Courts operate under the DIFC Courts Law (Dubai Law No. 5 of 2024). Unlike Article 20 of the UAE Civil Procedure Law, the DIFC regime expressly permits jurisdiction based purely on the parties’ consent. Under the DIFC Courts Law, the DIFC Courts will have jurisdiction where the parties have expressly agreed in writing to submit to their jurisdiction, regardless of domicile or any factual connection to the DIFC. This means that two foreign parties with no UAE presence may still validly litigate their disputes in the DIFC Courts if their contract includes a DIFC jurisdiction clause. The DIFC Courts have consistently upheld such opt-in agreements, underscoring party autonomy and freedom of contract.
Similarly, under section 16(2)(e) of the ADGM Courts Regulations the ADGM Court of First Instance will have jurisdiction where the parties have made a request in writing to have the Court determine the claim or dispute.
Key takeaways
- Parties to a contract cannot confer jurisdiction on the UAE Courts if neither has a domicile or relevant connection to the UAE under Article 20 of the UAE Civil Procedure Law.
- Jurisdictional clauses in a contract involving foreign parties must be carefully reviewed in light of the UAE law as they may be unenforceable if statutory conditions are absent.
- Businesses should ensure that, where UAE jurisdiction is desired, there is a substantial link to the UAE, such as performance of contractual obligations in the UAE or the presence of UAE-based assets.
- Parties can still opt-in to the jurisdiction of the DIFC Courts and the ADGM Courts.
The Supreme Court’s decision reinforces the importance of aligning contractual jurisdictional clauses with the mandatory jurisdictional rules in the UAE law. It confirms that the UAE onshore courts will take a restrictive approach to assuming jurisdiction over purely foreign disputes, thereby upholding the principle of territorial nexus in UAE onshore civil litigation.
