The Dubai International Financial Centre Court Reaffirms Its Status as a Leading Forum for International Asset Protection: Carmon and Dubai Law No. 2 of 2025

The Dubai International Financial Centre (DIFC) has developed into one of the world’s leading common law jurisdictions, serving as a hub for international commercial dispute resolution. A critical aspect of its appeal lies in the ability of its courts to provide interim relief, such as freezing injunctions, to protect assets in cross-border disputes.

The jurisdiction and power of the DIFC Courts to grant interim freezing relief in support of overseas proceedings came under scrutiny in Sandra Holding Limited v Al Saleh & Ors [2023] DIFC CA 003 (Sandra Holding) and Carmon Reestrutura-Engenharia E Serviços Técnicos Especiais, (SU) LDA v Cuenda [2024] DIFC CA 003 (Carmon), and has now been clarified by Dubai Law No. 2 of 2025.

Under applicable DIFC law, the courts had statutory jurisdiction to recognise and enforce foreign judgments, with incidental powers to give injunctive relief.  A central question before the Court of Appeal in Sandra Holding and Carmon was whether those injunctive powers were enlivened in a case in which proceedings were pending in a foreign court (assuming those proceedings were capable of giving rise to a judgment that would be amenable to ratification and enforcement in the DIFC).

Sandra Holding

In Sandra Holding, the DIFC Court of Appeal found that the courts did not have jurisdiction to make freezing orders in support of ongoing overseas proceedings, unless one of the statutory gateways was otherwise satisfied.  In reaching its decision, it rejected a prior line of authorities finding that the courts had freestanding jurisdiction to grant relief in support of overseas proceedings, through a combination of statute and rules, including: statutory jurisdiction in respect of claims “in accordance with DIFC Laws and Regulations”, statutory jurisdiction to ratify foreign judgments; and powers under the DIFC Rules of Court to issue interim remedies in support of overseas proceedings (Judicial Authority Law (JAL) Article 5(A)(1)(e), DIFC Courts Law Articles 24(1) and (32), read with JAL, Article 7(6), and the Rules of the DIFC Court, Part 25).

In reaching its decision, the Court of Appeal held that the Rules of the DIFC Court could not add to nor extend the courts’ jurisdictional powers without clear express words to confer such powers and that the Rules of the DIFC Court referring to interim remedies in aid of foreign proceedings did not confer jurisdiction.

Carmon

Carmon overturned Sandra Holding and the Court of Appeal confirmed its freestanding jurisdiction to grant interim relief in support of foreign proceedings, even where no substantive claim is yet before the DIFC Courts. 

The Court of Appeal found that its jurisdiction to ratify foreign judgments properly construed confers jurisdiction to entertain an application for such relief as may be necessary to prevent its pre-emption by the dissipation of the assets of the prospective judgment debtor, where the applicable judgment can be recognised and enforced in the DIFC.  The Court further found that the Rules of the DIFC Court providing for interim freezing orders could also be viewed as a source of the requisite protective jurisdiction, underscoring that the Rules of the DIFC Court can be a source of jurisdiction, depending on construction.

In reaching its decision, from a policy perspective, the Court noted that if a defendant in proceedings in a foreign court, whose judgment could be enforced in the DIFC, were to dissipate its assets to defeat execution of an apprehended judgment in the foreign jurisdiction and in the other jurisdictions in which the foreign judgment might be enforced, that would be a step which would render the jurisdiction and powers of an enforcing court nugatory.  The Judgment says:

“The ability of a potential judgment debtor in a commercial dispute to make a pre-emptive strike against enforcement of any judgment against it would be inimical to the rule of law in trade and commerce, domestically and transnationally. The DIFC Courts are part of a growing network of international commercial courts in a number of jurisdictions around the world. Where their jurisdiction and powers are amenable to constructions supporting the rule of law in transnational trade and commerce, such constructions should be preferred.”

 

Dubai Law No. 2 of 2025 Concerning the DIFC

Law No. 2 of 2025 (DIFC Courts Law) came into force on 14 March 2025 and repealed and replaced the former legal framework pertaining to the jurisdiction of the DIFC Courts.  The new legislation consolidates and modernises the DIFC Courts’ jurisdictional framework, including provisions for interim and precautionary measures.

Specifically, Article 15(4) of the DIFC Courts Law expressly confirms the DIFC Courts’ jurisdiction to hear and determine applications for interim relief, including freezing orders, disclosure orders, and injunctions, in connection with claims brought outside the DIFC seeking suitable precautionary measures within the DIFC, codifying the principle in Carmon.

The interpretation of the DIFC Courts Law recently came under scrutiny before the Court of Appeal in (1) Nadil (2) Noshaba v (1) Nameer (2) Nassema (Nadil).  An appeal arose from a Court of First Instance decision refusing to grant a worldwide freezing order against the assets of respondents in the UAE (outside the DIFC) including on the basis that the enforcement of foreign judgments in the DIFC Court required "an asset, or something akin to an asset, to exist within the DIFC at the time of enforcement."  That was a marked departure from prior authority (albeit under the prior legal framework) which had confirmed that the enforcement of foreign judgments in the DIFC did not require the presence of assets in the DIFC. 

At appeal, the freezing order was granted (ex parte) on the basis that there was at least a sufficiently arguable case for jurisdiction and power to warrant the grant of the orders sought.  In an indication of the approach the Court can be expected to take in the future, the Court found that the existence of the jurisdiction and the powers to grant the interim orders made in the case is “strongly arguable” and that “[i]t would be surprising if the New Court Law had the effect of contracting the jurisdiction and powers of the Court.”

Conclusion

By clarifying its jurisdiction and power to grant interim relief in aid of foreign proceedings, the DIFC has reinforced its role as a strategic hub for international dispute resolution.  The Court of Appeal decision in Nadil indicates the courts will take a robust approach to its enforcement jurisdiction under the new legal regime.