DIFC Announces Consultation for Amendments to DIFC Law on Application of Civil and Commercial Laws in the DIFC

In May 2024, the Dubai International Financial Centre Authority (“DIFCA”) issued a Consultation Paper in relation to certain proposed amendments to DIFC Law No. 3 of 2004 (otherwise known as the “Application Law”). The DIFCA seeks to enact these amendments to the Application Law by way of DIFC Law No. 6 of 2024 (the “Proposed Amendment Law”). The Consultation Paper invites public comment on the Proposed Amendment Law by no later than 1 June 2024, and any comments should be addressed to the DIFCA’s Chief Legal Officer, Mr. Jacques Visser.

I. Introduction

There has been a perception in the DIFC that the English Common Law supplements DIFC legislation. In light of the DIFC Court of Appeal’s recent decision in The Industrial Group v El Fadil Hamid, the DIFCA seeks to provide “statutory certainty” (through the Proposed Amendment Law) in respect of two key issues that arise from The Industrial Group decision: (a) the Source of Law Issue and (b) the Interpretation Issue.

II. Source of Law Issue:

As The Industrial Group decision provides, DIFC law is statutory: “[p]roperly analysed, though the DIFC Courts are common law courts and DIFC law is to be interpreted and developed incrementally, in accordance with the methodology of the common law, the basis of the DIFC Courts’ jurisdiction is statutory”. The Court of Appeal also went one to provide that “[i]t does not, however, follow that DIFC Courts’ Judges are free to incorporate into DIFC law any common law development from any common law jurisdiction, simply because there has been such a development elsewhere and because the outcome might prove attractive to the Judges sitting on the individual case”.

III. Interpretation Issue:

In The Industrial Group, the Court of Appeal addressed the way in which DIFC legislation is to be interpreted. The Court determined that the source of DIFC law does not only arise from the English Common Law: “There can be no doubting that English law, very much including English common law, has featured importantly in furnishing the foundations for DIFC law. But it cannot be assumed, merely because there has been a common law development in English law, that any such development will be transplanted into DIFC law. The sources of DIFC law are not confined to English law, as readily demonstrated by the fact that DIFC arbitration law is based on the UNCITRAL Model Law and the DIFC Contract Law is derived from the UNIDROIT Principles of International Commercial Contracts”.

The Court also determined that the DIFC Courts should look to “other jurisdictions” in circumstances where DIFC legislation is based upon principles or doctrines from those other jurisdictions: “[w]here DIFC (statutory) law identifies principles which come from other jurisdictions, it is legitimate to look to those jurisdictions to determine the content of the principles in question and their appropriate, incremental, development”.

IV. How does the Proposed Amendment Law seek to address the Source of Law Issue and the Interpretation Issue:

In light of the findings in The Industrial Group, there is uncertainty as to whether the English Common Law can be used to interpret DIFC legislation that arises from a “non-common law origin”.

Source of Law Issue

The Proposed Amendment Law, by way of the introduction of Article 8A, seeks to address the Source of Law issued in 4 respects:

  1. At the outset, the substance of DIFC law is to be determined by the relevant DIFC legislation as that legislation has been interpreted by the DIFC Courts).
  2. Where there exists “a doctrine, cause of action, defence or remedy” under the English Common Law (and which has not been incorporated into DIFC law), the Court is permitted to determine that the “doctrine, cause of action, defence or remedy” exists in DIFC law and can therefore be applied to the matter before the Court.
  3. The discretion given to the Court in point (2) above is not permitted in circumstances where the “doctrine, cause of action, defence or remedy” is excluded by DIFC legislation, whether expressly or implicitly.
  4. DIFC common law (including law adopted from the English Common Law as set out in point (2) above) is subject to amendment / modification by DIFC legislation which will always prevail in cases of inconsistency.

 

Interpretation Issue

By way of Article 8B, the DIFCA seeks to address the Interpretation Issue as follows:

  1. DIFC legislation may be interpreted by the Court taking guidance from “established common law jurisdictions” including England, Australia, or Singapore. The list of common law jurisdictions is non-exhaustive, and the Court is permitted, at its own discretion, to consider the approaches of any other relevant common law jurisdictions.
  2. The approach outlined in point (1) above will apply regardless of whether the relevant DIFC legislation is based on “international model law” or another “non-common law source”.

 

V. Conclusion

The Proposed Amendment Law appears to be designed to maintain the flexibility of the common law within DIFC law, ensuring that the DIFC continues to be seen as an internationally recognizable and competitive jurisdiction. The Proposed Amendment Law further ensures that common law will always be the first step in the interpretation of DIFC legislation.

 

 

Disclaimer

This publication does not provide any legal advice and it is for information purposes only. You should not rely upon the material or information in this publication as a basis for making any business, legal or other decisions. Therefore, any reliance on such material is strictly at your own risk.

Author: Ayesha Zia (Senior Associate) & Nathan Baikie (Senior Associate) & Maryam Abdelaziz (Intern) – Arbitration Team

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Senior Associate – Ayesha Zia

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Senior Associate – Ayesha Zia

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