UAE Commercial Contracts: Do English-Law Clauses Still Work After DIFC Reforms

The assumption that DIFC means English law is no longer safe

For twenty years, international parties drafting commercial contracts in or connected to Dubai selected English law as the governing law and the DIFC Courts as the forum, treating the two as interchangeable. The DIFC was understood as an English common law jurisdiction in a civil law country, and the English-law governing clause was the mechanism that brought familiar contract interpretation, known remedies, and predictable enforcement into an unfamiliar legal environment.

Three legislative and judicial developments between 2022 and 2025 have disrupted that assumption. The DIFC is no longer straightforwardly an English law jurisdiction. English law is no longer the automatic fallback where DIFC statutes are silent. And the enforcement pathway for English-law-governed contracts through the DIFC into mainland Dubai has become more structured but also more contested.

• DIFC Law No. 8 of 2024 removed English law as the final fallback for DIFC statutes. DIFC Courts now "may have regard" to English common law, but the ultimate governing framework is DIFC law itself. The shift was deliberate: an earlier draft would have reinforced the English law backstop, but the final version moved away from it.
• Dubai Law No. 2 of 2025 (the new DIFC Courts Law) requires opt-in jurisdiction agreements to be "specific, clear and express." Boilerplate jurisdiction clauses that would have satisfied the old Judicial Authority Law may not meet the new threshold.
• The Dubai Court of Cassation held in October 2024 that asymmetric jurisdiction clauses (common in international banking) are invalid under UAE law, creating a divergence with the DIFC and ADGM courts, which treat such clauses as enforceable under party autonomy principles.

Who this applies to

This article is for in-house counsel, GCs, and external lawyers drafting or reviewing commercial contracts where the governing law is English law and the dispute resolution forum is either the DIFC Courts, DIAC, or the onshore Dubai Courts. It is relevant to cross-border transactions, joint venture agreements, shareholders' agreements, supply and distribution contracts, and financing documentation where one or both parties have a UAE presence. It is equally relevant to foreign counsel advising international clients on the enforceability of English-law-governed rights in the UAE.

For an overview of how foreign judgments (including English Court judgments) are enforced in the UAE, see our article on enforcement of foreign judgments in the UAE. For arbitration clause selection in UAE contracts, see our guide to DIAC vs ArbitrateAD.

The old position: English law as the DIFC backstop

Before 2022, the operating assumption among practitioners was that DIFC statutes were "backstopped" by English common law. Where a DIFC statute was silent on a particular doctrine, cause of action, defence, or remedy, parties could turn to English law to fill the gap. This made the DIFC attractive to international parties because it combined a Dubai-based forum with a body of law that was familiar to City firms, New York counsel, and Singapore practitioners alike. English-law-governed contracts litigated in the DIFC Courts were interpreted using the same principles that would apply in the Commercial Court in London.

This understanding was partly formal (the previous version of Article 8(2)(e) of DIFC Law No. 3 of 2004 directed courts to apply "the laws of England and Wales" as the final source) and partly cultural (the DIFC bench included serving and retired English judges who naturally drew on English law reasoning).

The practical consequence was that English-law governing clauses in commercial contracts with a DIFC forum selection clause gave international parties a high degree of predictability. The contract would be interpreted using the principles from Arnold v Britton, Rainy Sky v Kookmin Bank, and the broader English approach to commercial construction. Remedies were familiar. The enforcement pathway was tested.

What changed: Industrial Group and the statutory turn

The DIFC Court of Appeal's 2022 decision in Industrial Group v Abdelazim [2022] DIFC CA 005/006 challenged the backstop assumption directly. The Court held that DIFC law is "essentially statutory" and that judges and arbitrators cannot assume the existence of an English common law doctrine, cause of action, defence, or remedy in DIFC law unless a DIFC statute provides for it. Claims for malicious prosecution and abuse of process failed because no DIFC statute created those causes of action, and the Court declined to import them from English law.

The decision sent a signal that the DIFC was moving from deference to English law toward the development of a distinct DIFC common law. It also created immediate practical confusion: practitioners who had drafted contracts and pleadings on the assumption of full English law coverage found that certain remedies and doctrines were no longer guaranteed to be available.

The 2024 response: DIFC Law No. 8 of 2024

DIFC Law No. 8 of 2024 (the Amendment Law) was the legislative response to Industrial Group. It amended the Law on the Application of Civil and Commercial Laws in the DIFC (DIFC Law No. 3 of 2004). The critical provision is the new Article 8A, which addresses the source of DIFC law.

The earlier consultation draft (the Draft Amendment Law) would have reinforced English law's role. Article 8A(3) of the draft allowed DIFC Courts to adopt English common law doctrines unless expressly excluded by a DIFC statute. That version would have restored the pre-Industrial Group status quo.

The final version pulled back. Article 8A now provides that the content of DIFC law is determined primarily by DIFC statutes and DIFC Court judgments interpreting those statutes. Where a doctrine, cause of action, defence, or remedy exists under English common law but has not been expressly incorporated into DIFC law, the DIFC Courts "may find, if appropriate in the circumstances," that it exists in DIFC law, subject to modification or development as the circumstances require. The Courts may also "have regard" to the common law of England and Wales and the common law of "other common law jurisdictions."

The shift is from "shall apply" to "may have regard." English law is now one source among several that DIFC Courts can draw on, not the automatic gap-filler. For contracts governed by English law and litigated in the DIFC Courts, this distinction matters in two ways.

First, where the contract is governed by English law and the parties have opted into DIFC Courts jurisdiction, the DIFC Courts will apply English law as the governing law of the contract (party autonomy is respected). The 2024 amendments do not change this. A contract that says "this agreement is governed by the laws of England and Wales" will still be interpreted using English law principles.

Second, where the question is not the interpretation of the contract but the availability of a remedy or procedural mechanism, DIFC law (not English law) governs. A party seeking an equitable remedy that exists under English law but has no DIFC statutory basis cannot assume the DIFC Courts will grant it. The Courts may do so under the new Article 8A, but they are not obliged to.

Dubai Law No. 2 of 2025: the new DIFC Courts Law

On 13 March 2025, Dubai Law No. 2 of 2025 came into effect, replacing both DIFC Law No. 10 of 2004 (the old DIFC Courts Law) and Dubai Law No. 12 of 2004 (the Judicial Authority Law). The new law consolidates the DIFC Courts' jurisdiction into a single onshore statute and introduces changes that directly affect governing law clause strategy.

The most significant change for contract drafters is the jurisdictional gateway for opt-in agreements. Under Article 14(B), the DIFC Courts have jurisdiction over civil and commercial matters where the parties agree in writing, "provided that such agreement is made pursuant to specific, clear and express provisions." The old Judicial Authority Law used more permissive language. Practitioners who previously relied on broadly worded forum selection clauses should review whether their existing drafting meets the new threshold.

The law also codifies the conduit jurisdiction (Article 32), whereby DIFC-recognised judgments can be enforced in onshore Dubai even where the debtor holds no DIFC assets. For English-law-governed contracts with English Court dispute resolution clauses, this confirms a two-step enforcement pathway: obtain judgment in the English Courts, recognise it in the DIFC Courts, then enforce it onshore through the Dubai Execution Courts. The 2022 Ministry of Justice letter confirming reciprocity for English judgments in onshore UAE courts provides an alternative direct pathway, but the DIFC route remains more tested in practice for high-value claims.

The asymmetric jurisdiction clause problem

On 29 October 2024, the Dubai Court of Cassation held that a unilateral option to arbitrate is invalid. Asymmetric jurisdiction clauses — which give one party the option to choose between litigation and arbitration while restricting the other party to a single forum — are standard in international banking documentation and widely used in loan agreements, facility agreements, and guarantee structures.

The English courts and the DIFC Courts have treated such clauses as enforceable under the principle of party autonomy. The Dubai Cassation's position is that they violate the principle of equality between the parties and fail to reflect mutual agreement on dispute resolution.

For contracts governed by English law but with enforcement exposure in mainland Dubai, this creates a divergence. An asymmetric clause that is valid under English law and enforceable in the DIFC may be unenforceable in the onshore Dubai Courts. The practical risk arises where the creditor obtains a judgment or award under the asymmetric clause and seeks to enforce it onshore. The debtor may argue, in the onshore Execution Court, that the underlying dispute resolution mechanism was invalid under UAE law and that the judgment should not be given effect.

The safest drafting response is to avoid asymmetric clauses in contracts where enforcement in mainland Dubai is anticipated. If the commercial position requires different dispute resolution options for different parties, the contract should specify a single mandatory forum with the broadest enforcement pathway, and use separate standalone agreements (guarantees, security documents) with their own forum clauses where needed.

How onshore courts treat English-law governing clauses

Outside the DIFC and ADGM, mainland UAE courts apply the Civil Procedure Law (Federal Decree-Law No. 42 of 2022) and the Civil Transactions Law. The onshore courts are civil law courts that do not apply foreign governing law provisions in the same way a common law court would.

The established position is that UAE courts will recognise a choice of foreign governing law in a commercial contract, provided the contract does not concern real estate in the UAE (governed by UAE law regardless of the parties' choice), is not subject to mandatory UAE law (employment, commercial agency, insurance), and does not violate UAE public policy or morality.

However, the practical reality is that onshore judges are trained in civil law methodology, interpret contracts through the lens of Articles 265 and 266 of the Civil Transactions Law (good faith, intention of the parties, literal meaning of the terms), and may not apply English law principles of contractual construction as an English judge would. The governing law clause selects the applicable legal framework, but the judge's interpretive methodology remains civil law. This creates a gap between the law on the books (English law governs) and the approach in the courtroom.

For this reason, international parties with significant UAE enforcement exposure typically prefer arbitration under DIAC or ICC rules (where the tribunal will apply the chosen governing law using the methodology of that law) or DIFC Courts litigation (where the bench is trained in common law reasoning). The onshore courts are the venue of last resort for English-law-governed contract disputes, not the venue of choice.

What this means for contract drafting in 2026

Five drafting principles apply across all categories.

Separate governing law from forum selection. A contract can be governed by English law and litigated in the DIFC Courts, or governed by DIFC law and arbitrated at DIAC. Treating "English law + DIFC Courts" as a package deal obscures the separate analysis each choice requires.

Make the opt-in to DIFC Courts explicit and detailed. Under Dubai Law No. 2 of 2025, a general reference to "the courts of Dubai" is not sufficient. The clause should name the DIFC Courts, cite the basis for jurisdiction (opt-in under Article 14(B)), and confirm that the agreement is intended to be specific, clear, and express.

Avoid asymmetric dispute resolution clauses in contracts that may require onshore enforcement. The divergence between the DIFC/ADGM position and the Dubai Cassation position means asymmetric clauses carry enforceability risk in exactly the jurisdiction where enforcement matters most.

Specify governing law for both substantive and procedural matters. A clause that says "governed by English law" does not automatically mean English procedural remedies are available in the DIFC. If the contract contemplates specific remedies (injunctive relief, specific performance, declarations), state the basis for seeking them under the relevant DIFC statute or RDC provisions.

Review existing contracts against the new framework. Contracts executed before March 2025 using old-form DIFC jurisdiction clauses should be reviewed to check whether they satisfy the "specific, clear and express" threshold in Dubai Law No. 2 of 2025. Contracts executed before the 2024 Amendment Law should be assessed for reliance on English law doctrines that may no longer be automatically available in the DIFC.

For an overview of how SPA dispute resolution clauses interact with UAE enforcement, see our article on share purchase agreements in UAE M&A. For technology contracts with cross-border elements, see our guide to drafting software and SaaS contracts in the UAE.

How should parties drafting UAE commercial contracts approach governing law in 2026?

The practical answer has not changed as much as the legal landscape suggests. English law remains the most common governing law choice for cross-border transactions involving the UAE, and the DIFC remains the most sophisticated commercial court in the region. The 2024-2025 reforms have not made English-law governing clauses unworkable. They have made sloppy ones riskier.

The contracts that face enforcement problems in 2026 are the ones drafted on autopilot: a governing law clause copied from a template, a boilerplate DIFC jurisdiction clause that was adequate under the old Judicial Authority Law but may not satisfy the "specific, clear and express" standard under the new one, and an assumption that English law fills every gap in DIFC law without checking whether the relevant doctrine survived Industrial Group and Article 8A.

The contracts that hold up are the ones where the drafter chose the governing law, the forum, and the enforcement pathway as three separate decisions, tested each one against the specific facts of the transaction, and drafted clauses that leave no room for a debtor's lawyer to argue ambiguity.

For businesses reviewing or entering into commercial contracts with a UAE dimension, our disputes and corporate team advises on governing law strategy, forum selection, and enforcement planning across the DIFC, ADGM, and mainland jurisdictions.

Legal advice may be required to assess how the 2024-2025 DIFC reforms affect the enforceability of governing law and jurisdiction clauses in your existing or prospective contracts.

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