Key takeaway

The United Arab Emirates is characterised by a “jurisdiction within a jurisdiction” model for international dispute resolution. The UAE offers three distinct jurisdictions: the onshore civil law system, the Dubai International Financial Centre (DIFC), and the Abu Dhabi Global Market (ADGM).

While onshore UAE arbitration operates under a civil law system governed by Federal Law No. 6 of 2018, the DIFC and ADGM offer common law jurisdictions modelled on English law, providing a familiar environment for international parties. The ADGM applies English law directly, whereas the DIFC is heavily influenced by English law but has statutes and evolving common law of its own.

What are the key differences between onshore UAE arbitration and the financial free zones?

The primary distinction between is the civil law tradition of onshore UAE and the common law frameworks of the financial free zones. The onshore jurisdiction operates under a civil law system largely based on Egyptian and French jurisprudence, where proceedings are conducted in Arabic.

Conversely, the DIFC (established in 2004) and ADGM (introduced in 2013) were established as offshore financial free zones with their own civil and commercial laws, modelled on English common law and operating in English. Read here for the advantages of selecting English law as the governing law in international contracts.

While the onshore courts have modernised significantly, particularly following the enactment of the Federal Arbitration Law in 2018, the free zones generally offer an environment that mirrors the English Commercial Court, providing a higher degree of predictability for parties accustomed to English legal principles.

What is the difference Between ADGM and DIFC?

The DIFC has its own body of codified statutes, such as the DIFC Arbitration Law No. 1 of 2008, which is based on the UNCITRAL Model Law. DIFC courts interpret these statutes using common law principles, creating adistinct body of DIFC case law. The DIFC courts apply DIFC precedent only, but judgments from England & Wales can and have been used where there is no case law.

The ADGM court’s jurisdiction is limited to civil and commercial disputes related to the ADGM. The ADGM Court is comprised of two levels: a Court of First Instance (with Civil, employment, and Small Claims divisions) and a Court of Appeal.

The ADGM adopts a different methodology to the DIFC through the direct application of English common law, subject to any local ADGM statutes. The courts directly apply English law and may reference English court precedents.

The ADGM Arbitration Regulations 2015 are also based on the UNCITRAL Model Law but are designed to reflect the most recent best practices in international arbitration. This direct reception of English law often provides parties with an immediate depth of legal precedent on substantive issues, reducing the uncertainty that can sometimes accompany the interpretation of bespoke free zone statutes.

Which are the arbitration rules of the DIFC and ADGM?

The ADGM does not have a specific set of arbitration rules - however the ADGM Arbitration Centre (ADGMAC) has published its Arbitration Guidelines, which parties can use in addition to whatever rules they select.

The DIFC has its own Arbitration Law but, following the disbanding of the DIFC-LCIA, has no specific arbitration rules. What this means is that parties must now elect a set of rules to apply to their DIFC arbitration, with a backstop being that if no rules are selected then the DIAC Rules will apply. Where arbitration matters need to be expedited, the DIAC does offer this solution – read more in our guide to expedited arbitration in Dubai.

How does onshore UAE arbitration operate?

Arbitration seated onshore is governed by Federal Law No. 6 of 2018. This statute replaced the outdated arbitration provisions of the UAE Civil Procedure Code and aligned the onshore regime more closely with international standards.

The 2018 Law recognises the validity of electronic signatures, allows for the separability of the arbitration agreement, and limits the grounds for annulment of awards. Despite this modernisation, unique quirks remain. For example, while the requirement for arbitrators to sign every page of a UAE arbitral award has been relaxed, failures relating to witness oath requirements or strict time limits can still jeopardise an award’s enforceability.

Furthermore, the default language of the onshore courts is Arabic which means all documents must be translated by a certified translator, adding a layer of complexity that is absent in the ADGM or DIFC.

What factors should parties consider when choosing between DIFC, ADGM and onshore courts?

The decision between onshore, DIFC and ADGM seats is largely dependent on the nature of the matter. For disputes involving government entities or purely domestic matters, an onshore seat may be required.

However, for cross-border transactions, particularly involving UK or European parties which are accustomed to common law systems, the financial free zones offer an arbitration-friendly environment. For more, read the key takeaways from Dubai Arbitration Week 2025 from our Managing Partner Yulia Barnes, and how the UAE arbitration landscape is continuing to progress at pace.

Please contact the International Arbitration team at Barnes Law for advice on arbitration in the UAE.

Authored by Barnes Law Managing Partner, Yulia Barnes.

‍