In November 2024, the Dubai International Financial Centre (DIFC) amended the Law on the Application of Civil and Commercial Laws in the DIFC (the Application Law).¹ Graham Lovett and Michael Stewart of Akin were instructed by the DIFC Authority to draft the amendments. The amendments were foundational, relating to the source, content and interpretation of DIFC laws. Most significantly, the amendments confirmed that DIFC statutory law is supplemented with reference to international common law (including the principles and rules of equity), uncertainty having arisen on that issue in DIFC Court authority. The intention was to provide a clear statutory footing for the emergence of a uniquely DIFC common law and to give the DIFC Courts flexibility to ‘plug the gap’ in the event of a lacuna in DIFC statutory law.

This article considers how the amendments to the Application Law have been applied by the DIFC Court, and whether they are functioning as expected. It will be of interest to DIFC-law practitioners as well as businesses interacting with DIFC law. As outlined below, recent case law demonstrates that the amendments to the Application Law are functioning as intended, empowering the DIFC Courts to shape DIFC law by reference to common law principles from a variety of jurisdictions.

Background

The DIFC’s chosen legal model is to enact statutes on core areas of commercial law, supplemented by the common law. International best practice in a particular area is selectively identified, adjusted to suit the DIFC and then codified. The common law is then used in two ways: (1) as an interpretive guide when applying provisions of DIFC statutory law; and (2) as a supplement to the statutes, adding additional detail to the general statutory regime, and filling gaps in the law. Often, DIFC statutes are intentionally ‘skeletal’ in nature (for example the DIFC Law of Obligations²), such that the common law has a significant role in shaping the content of DIFC law. The hybrid approach ensures that the DIFC law stays flexible and rapidly responds to modern developments.³

While the above was the intended structure of the DIFC since inception, it was not clearly codified in statute. As a result, a degree of uncertainty emerged in the case law from time to time, with some judges querying whether DIFC law was intended to be a code—that is to say, purely statutory.⁴ This came to a head in the Court of Appeal case of The Industrial Group Limited⁵, which considered the question of whether the torts of abuse of process and malicious prosecution formed part of DIFC law, despite there being no express statutory source. Industrial Group (at least on one reading) found that DIFC law is essentially statutory: Judges and Arbitrators could not find that a common law or equitable doctrine, cause of action, defence or remedy exists in DIFC law, unless there was a DIFC statute to that effect.⁶ The torts of abuse of process and malicious prosecution were therefore not a feature of DIFC law.

Industrial Group generated considerable discussion within the DIFC legal community, including reflection on the jurisdiction’s common law foundation. In response, the DIFC amended the Application Law to reverse the effect of the decision and put the position on a clear statutory footing.

The Amendments

Article 8A: Content of DIFC law

Article 8A provides that the content of DIFC law is determined in the first instance by DIFC statute law. The common law (including equitable principles) then supplements DIFC statute law, so long as it is not inconsistent. Importantly, when determining what the common law of the DIFC is, the DIFC Courts are not confined to the law of England & Wales, and can look to other common law jurisdictions. This is consistent with the fact that DIFC statutes draw inspiration from multiple jurisdictions and model laws issued by transnational bodies, and the DIFC Court bench is multijurisdictional.

The key interpretative question under Article 8A is what “supplements” means. It is clear that the DIFC Courts cannot engage in wholesale judicial legislation, but where exactly supplementation ends and legislation begins is a nuanced question. For example, in what circumstances could the DIFC Courts find that a common law cause of action, doctrine or defence exists under DIFC law, where there is no express statutory ‘hook’ to supplement? Would Industrial Group have been decided differently under Article 8A or would it have been held that the omission of these torts from the DIFC Law of Obligations was a deliberate decision of the DIFC legislature?

In drafting the amendments, it was felt that these questions were best left to the DIFC Courts, which over time will develop principles and rules as to the permitted scope of common law supplementation. To this end, the wording of Article 8A was intentionally made broad and general to give the Courts latitude. From our perspective, there is no reason (whether based on principle or the text of Article 8A) why in an appropriate case the DIFC Courts could not develop a common law cause of action, doctrine or defence, just as any other leading international common law court.

Article 8B: interpretation of DIFC statutes

The Industrial Group also discussed the approach to interpretation of DIFC statutes, finding:

1. The source of DIFC law is not confined to the law of England & Wales. For example, the DIFC Contract Law is based on the International Institute for the Unification of Private Law (UNIDROIT) Principles of International Commercial Contracts developed by the International Institute for the Unification of Private Law, and the DIFC Arbitration Law is based on the United Nations Commission on International Trade Law (UNCITRAL) Model Law.⁷
2. Where a DIFC statute is based on principles which come from other jurisdictions, the Court will look to those jurisdictions to determine the content of the principles in question, and their incremental development.⁸

Given these findings, it was unclear the extent to which the common law could be used as an interpretative aid in respect of DIFC statutes that are of a non-common law origin, such as where the laws are based on a Model Law. Was the Industrial Group saying that the common law was not to be used to understand and apply these Laws at all? The amendments to the Application Law addressed this by granting a broad interpretative discretion to the DIFC Court in a new Article 8B, which states:

1. The interpretation of a DIFC statute may be guided by the principles developed in respect of analogous laws in common law jurisdictions, irrespective of whether the statute is based on international model law or another non-common law source.
2. If a DIFC statute is based on an international model law, its interpretation may also be guided by international jurisprudence, as well as interpretative aids and commentary.

This reflected the orthodox position prior to Industrial Group and received broad support in consultation.

Article 8(2)(e)

Article 8(2) of the Application Law determines which body of law governs a legal relationship in the DIFC (i.e. DIFC law or a foreign law). It is purely about choice of law; it is not intended to say anything about the content of the applicable law, once selected.

Prior to the amendments, Article 8(2)(e) provided that if a choice of law is unable to be made under Articles 8(2)(a) to (d), the law of England & Wales applies. Article 8(2)(e) had been interpreted inconsistently by parties and the DIFC Courts, with some decisions finding it permitted English law to ‘backstop’ DIFC law where there was a gap (and in this way determined the content of DIFC law), and other decisions finding that Article 8(2) was purely a choice of law regime that could have no impact on the content of DIFC law.⁹

As part of the amendments, the reference in Article 8(2)(e) to the law of England & Wales was replaced with DIFC law. The effect is to put it beyond doubt that Article 8(2) is a choice of law regime and cannot be used to import English law concepts into DIFC law. The content of DIFC law is set by Article 8A.

DIFC Court decisions on the amended Application Law

There have been three decisions of particular note on the amendments to the Application Law:

Korek

Korek Telecom Company LLC v Iraq Telecom Limited¹⁰concerned a claim to set aside a US $1.7 billion International Chamber of Commerce (ICC) arbitral award (in which Akin acted for the successful respondents). The Court of Appeal considered whether the common law Act of State doctrine existed under DIFC law. Relevantly, the parties were in dispute as to whether the amendments to the Application Law had retrospective effect. The Court of Appeal held that they did not, as they were substantive and not procedural in nature.¹¹ This meant that the amendments were not in issue before the Court of Appeal.

However, in obiter, the Court of Appeal said: “[u]nder the new Application Law, Article 8A, the applicable common law will be the common law of the DIFC which may draw for its content on all common law jurisdictions” (emphasis added).¹² Later, the Court noted that, were Article 8A to be applied, the Court could “draw upon all common law jurisdictions for the purpose of delineating the relevant limitations of the [Act of State] doctrine”, and was not myopically focused on the laws of England & Wales.¹³ The Court specifically referred to a US law exception to the Act of State doctrine, known as the Kirkpatrick exception.

Korek is therefore indicative of the broad approach that the DIFC Courts will take to Article 8A: DIFC law can draw on any and all common law jurisdictions to reach the optimal solution for the DIFC. This also reflects a broader trend in DIFC Court jurisprudence whereby the laws of jurisdictions other than England, such as Australia, are playing an increasingly significant role in shaping DIFC law.

Ward Holdings

Ward Holdings v Meshico Corporation¹⁴ determined an immediate judgment application brought by a landlord against a tenant of restaurant premises in the DIFC who had ceased paying rent. The landlord sought a declaration that the lease was validly terminated and an order for vacant possession. In defence, the tenant argued that the lease contained an implied term that the premises would be operationally viable for its intended use and that this was breached by the landlord because of an alleged failure to provide sufficient chilled water. The landlord argued against the implied term, relying on the express terms of the lease and the DIFC Leasing Law 2020.

The Court sided with the tenant on this point (but not overall—immediate judgment was granted), finding that it was “arguable that [the Landlord] bears an implied obligation to provide the required chilled water flow, which is necessary for the Property’s operational viability, and that failure to do so constitutes a breach of the lease”.¹⁵ In reaching that conclusion, the Court drew from the common law of England & Wales and Australia on the implication of terms into a commercial lease. The Court relied on Article 8A of the Application Law as the basis for taking this approach: “These principles, where consistent with DIFC law, may be applied to supplement the statutory framework under the Leasing Law 2020 pursuant to Article 8A…”.¹⁶

Ward Holdings is therefore an excellent example of Article 8A in action. The DIFC Leasing Law 2020 was ‘fleshed out’ by the common law.

Bank Sarasin

In Ms Georgina Marie Eason (in her capacity as Official Liquidator of Bank Sarasin-Alpen (ME) Limited),¹⁷ the DIFC Court of First Instance granted an application brought by the liquidator of a financial services company under Article 102 of the DIFC Insolvency Law, seeking the Court’s sanction (i.e. approval) of a global settlement of claims against the company.

The Court used Article 8A as the gateway for drawing on common law principles from England and Australia to guide the exercise of its sanction discretion under the DIFC Insolvency Law: “Given this consistent approach across common law jurisdictions, the DIFC Courts should apply the same principles when assessing liquidators’ applications for approval or sanction of compromises”.¹⁸

Once again Article 8A functioned as intended. Article 102 of DIFC Insolvency Law confers a broad discretionary power on the Court to make orders it considers just in relation to the conduct of a liquidation. The Court then drew on common law authority from multiple jurisdictions to determine how that discretion should be exercised in a particular scenario (the sanctioning of a settlement agreement).

Conclusion

The real significance of the 2024 amendments to the Application Law is not that they changed the DIFC’s legal identity, but that they settled it. The DIFC is not a code-based enclave, nor a dependent system that automatically backstops to English law, but a mature common law jurisdiction in its own right. The early cases show what that means in practice: authorities from across the common law world are drawn on carefully and selectively to inform the content of DIFC law. Questions of course remain: will the DIFC Courts be prepared to recognise genuinely freestanding common law causes of action, defences and doctrines in the absence of a statutory footing? Were certain causes of action deliberately omitted from DIFC law, such that they should not supplement DIFC law?¹⁹ Are certain DIFC laws comprehensive ‘codes’ such that supplementing them would be contrary to DIFC statute? However, for now, what we do know is that the amendments have provided a cogent practical framework, allowing future cases to focus less on complex source of law questions, and more on the quality of the rule to be applied.

^{1 DIFC Law No. 3 of 2004 (Consolidated Version – November 2024).}

^{2 DIFC Law No. 5 of 2005 (Consolidated Version – March 2024).}

^{3 See for example the DIFC Digital Assets Law – DIFC Law No. 2 of 2024.}

^{4 See for example (1) Abdel Mohsen Bader Al Khorafi (2) Amrah Ali Abdel Latif Al Hamad (3) Alia Mohamed Sulaiman Al Rifai v (1) Bank Sarasin-Alpen (ME) Limited (2) Bank Sarasin & Co. Ltd [2009] DIFC CFI 026, per Justice Sir John Chadwick at [164].}

^{5 The Industrial Group Limited v Abdelazim EL Sheikh EL Fadil Hamid [2022] DIFC CA 005/006.}

^{6 The Industrial Group Limited at [105]-[112] and [120].}

^{7 The Industrial Group Limited at [111].}

^{8 The Industrial Group Limited at [105].}

^{9 See for example The Industrial Group Limited at [120].}

^{10 (1) Korek Telecom Company LLC (2) Korek International (Management) Limited (3) Sirwan Saber Mustafa v (1) Iraq Telecom Limited for itself and in the name and on behalf of International Holdings Limited (2) International Holdings Limited [2024] DIFC CA 016.}

^{11 Korek Telecom Company LLC & Ors v Iraq Telecom Ltd & Anor at [124].}

^{12 Korek Telecom Company LLC & Ors v Iraq Telecom Ltd & Anor at [312].}

^{13 Korek Telecom Company LLC & Ors v Iraq Telecom Ltd & Anor at [317].}

^{14 Ward Holdings Ltd (t/a Waldorf Astoria Dubai International Financial Centre Hotel) v Meshico Corporation (t/a Puerto 99 Mexican Seafood & Steak) [2025] DIFC CFI 015.}

^{15 Ward Holdings v Meshico at [60].}

^{16 Ward Holdings v Meshico at [58].}

^{[17] Ms Georgina Marie Eason (in her capacity as Official Liquidator of Bank Sarasin-Alpen (ME) Limited) [2025] DIFC CFI 005.}

^{18 Eason at [34]-[41], and [49]-[51].}

^{19 Examples of this include defamation, which is treated as a criminal matter in the UAE, and unfair dismissal, which has been found by the DIFC Courts not to form part of the DIFC Employment Law.}