UAE: DIFC Courts pronounce landmark decision for regional insurance market
Source: Middle East Insurance Review | Oct 2022
Clyde & Co has successfully represented Al Buhaira National Insurance Company (ABNIC) in a significant marine insurance case in the DIFC Courts.
In a landmark case for the marine insurance market in the UAE, and of wider significance to parties operating in the region, the DIFC Courts ruled in favour of ABNIC, deciding that it has jurisdiction over a $70m claim for the alleged disappearance of an oil tanker.
The jurisdiction battle concerned the interpretation of the parties’ agreement to refer disputes to “the Courts of the UAE”, said Clyde & Co in a blog published on the law firm’s website.
As the parties – ABNIC and Horizon Energy – have no connection with the DIFC and the contract was not formed or performed in the DIFC, Horizon argued that the parties could not have intended to refer disputes to the DIFC Courts. Horizon contended that it is instead the Federal Courts in the UAE (which operate a civil law system in Arabic), not the DIFC Courts (which operate a common law system in English), which have jurisdiction. Horizon also claimed that as ABNIC’s insurance activities were governed by the UAE (Federal) Insurance Law this meant the DIFC Courts could not have jurisdiction over the dispute.
Justice Roger Giles dismissed Horizon’s challenge. Where parties agree to refer disputes to the UAE Courts this includes the DIFC Courts – no link is required – and any restriction on insurance business in or from the DIFC does not have any bearing on the ability of parties to refer disputes to the DIFC Courts.
“This is a significant decision for companies operating in the region that have agreed to refer their contractual disputes to the UAE Courts, particularly if they have agreed for the contract to be governed by a foreign law. Historically in practice, it has been difficult to have a foreign law applied in the ‘onshore’ UAE courts. This is particularly relevant for marine insurance, shipping and trading contracts in the region which are often governed by English law. In this case, it was held that a choice of English law was a relevant consideration; parties should be able to submit their disputes to the DIFC Courts, as a court operating in English and with greater familiarity of applying English law,” said Clyde & Co legal director in Dubai Len Soudagar.
“This is a very important judgment for the regional insurance market. The judgment clarifies that insurance policies that require disputes to be determined by the ‘UAE Courts’ will include the DIFC Courts and that, therefore, Insurers can themselves seek relief before the DIFC Courts to protect their interests,” Clyde & Co head of insurance disputes Mark Beswetherick said. M