What is more expensive: Dubai Courts, DIAC Arbitration or DIFC Courts?

The cost of Dubai Courts or litigation and/or arbitration in Dubai is important for parties to economically organize themselves at the time of initiating litigation. It is surprising that this question often only comes up when we are provided with contracts and we explain to clients the consequences of the existence of a jurisdictional clause or arbitration agreement.

We deem important to evaluate the pros and cons of each jurisdiction at the time of drafting the initial agreement between the transacting parties, including the costs involved as part of the list of good and bad aspects of each potential selection.

Prior to comparing the costs of the three options – cost of Dubai Courts vs DIFC Courts and DIAC arbitration – we address in this publication, we will highlight what are the Dubai Courts, the DIFC Courts and the Dubai International Arbitration Centre (also known as DIAC).

What are the DIFC Courts?

The DIFC Courts are courts located in the Dubai International Financial Centre, a common law system that carries out their functions in an independent manner in accordance to the provisions of the DIFC laws and regulations.

These courts exclusively deal with all cases and claims arising out of DIFC and any other claims in which all parties agree in writing to opt in and use the DIFC Courts. They do not have jurisdiction over criminal matters. All criminal matters are referred to the competent external authority i.e. the Dubai public prosecution.

The DIFC Courts were established in 2004 under Dubai Law No.12 of 2004. On 31 October 2011, the signing of Dubai Law No 16 of 2011 allowed the DIFC Courts to hear any local or international cases and to resolve commercial disputes with the consent of all parties.

As per Article 3 of Law no. 12 of 2004, the Courts shall be situated in the Dubai International Financial Centre and may when necessary, hold hearings anywhere else in the Emirate of Dubai.

What is DIAC?

DIAC or the Dubai International Arbitration Centre is the leading arbitration center in Dubai, very possibly the region largest arbitral institution.

DIAC was established in 1994 as the Dubai Chamber of Commerce & Industry’s Commercial Conciliation and Arbitration Centre and it was rebranded in 2004 as the Dubai International Arbitration Centre (DIAC). Despite that it has been almost 20 years since this rebranding it is still common to find arbitration agreements referring to the former Dubai Chamber of Commerce & Industry’s Commercial Conciliation and Arbitration Centre (yes, they are valid, these references).

Those of you who wonder why the DIFC-LCIA is not listed in this publication, this is due to Ruler’s Decree No. 34 of 2021 pursuant to which the DIFC-LCIA was eliminated and arbitration clauses selecting the DIFC-LCIA should be referred to the DIAC. In addition to eliminating the DIFC-LCIA, strengthening the DIAC as the leading arbitration centre in the region. If this recent development is of interest, we do invite you to take a look to a couple of earlier publications in this respect:

• Publication about Decree No. 34 of 2021; and
• Publication about the DIAC Rules post Decree, the DIAC Arbitration Rules 2022.

What are the Dubai Courts?

The Dubai Courts are the civil court system in charge of deciding all Dubai disputes that do not fall within the jurisdiction of the DIFC Courts. It is the default system when Parties have not agreed a valid alternative forum.  Some disputes cannot be agreed to be solved elsewhere: criminal matters, labor, family matters, etc. This is due to the fact that these matters are deemed to fall within the domains of public order and as such need to be supervised and decided by national state courts.

The Dubai Courts follow a civil law system modeled in the Egyptian modeled, which in turn based on the Napoleonic French Codes.

The Dubai Courts manage separate civil and criminal courts, commercial, labour, personal, each with three levels of hearings: first instance, appeals and cassation.

Having seen what the DIFC Courts, the DIAC and the Dubai Courts are, below we provide a comparison of their respective costs.

How much does it cost to litigate in Dubai?

Cost of Dubai Courts

The Dubai Courts apply a 6% over the claim amount subject to the following potential caps:

• If claim amount is below AED 500,000, a cap of AED 20,000 will apply.
• If claim amount is below AED 1,000,000 and higher than AED 500,000, a cap of AED 30,000 will apply.
• If claim amount is above AED 1,000,000, a cap of AED 40,000 will apply.

If matter goes to appeal, the applicable fees will be 50% of the fees paid to the Court of First Instance.

If matter reaches the Court of Cassation:

• AED 3,000 as a deposit
• AED 2,000 fixed fees
• AED 1,000 for staying execution request

For rent disputes, the fee is 3.5% of the ejari contract value subject to a potential cap of AED 20,000.

For employment disputes, the fee is 5% of the claim value subject to a potential cap of AED 20,000.

When litigating in front of the Dubai Courts, we often tend to recommend to budge reasonably (based on the documents available) for translations as only documents duly translated into Arabic by translator registered with the Ministry of Justice will be accepted.

Cost of Arbitrating in DIAC

Registration Fee of AED 5,000.

The arbitration expenses (referred to as Advance on Costs in the Rules) are fixed in line with Article 2.1 of Appendix 1 of the Rules:

The Centre shall fix an advance on costs of the arbitration, which is intended to cover the fees and expenses of the Tribunal and the Centre’s administrative fees. The Centre shall fix the advance on costs of the arbitration by reference to the total of the sum(s) claimed and/or counterclaimed in accordance with the Table in force on the date of the commencement of the arbitration. The Centre may, at any time during the arbitration, readjust the advance on costs of the arbitration pursuant to Article 4.2 of Appendix I. 

These costs are fixed at the average value of the DIAC Table of Fees and Costs, which can be found in this link.

DIAC has an advance on costs calculator that works by pluggin in the claim value in AED (if claim and counterclaim, both figures would need to be added) and selecting the number of Tribunal members (1 or 3). We encourage you to play with the cost calculator in this link.

Cost of DIFC Courts

Small Claims Tribunal

Employment claims – 2% of the value of the claim, with a minimum fee of USD 100.

Other claims – 5% of the value of the claim, with a minimum fee of USD 100.

Applications – USD 50.

Appeals:

Employment – 1% of the value of the claim with a minimum fee of USD 100.

Other Claims – 2.5% of the value of the claim, with a minimum fee of USD 100.

Part 7 Claims

We trust that the above is of assistance when selecting the best forum to litigate a potential dispute in Dubai and evaluating the cost of Dubai Courts. The costs are very important but they must be read in conjunction with the other parameters of the specific transaction to ensure that the best option is selected. Expert advice is recommended at an early stage of the transaction building and contract drafting.

For more information about UAE law  you can visit all our publications in this link as well as the videos of our director Maria Rubert.

**This publication is not intended as legal advice and rather as general information.