Dispute Resolution Forums for Digital Assets in Dubai

As the digital asset space continues to evolve, the need for effective dispute resolution mechanisms becomes increasingly important. Dubai has established specialized forums for resolving digital disputes, reflecting the Emirate's commitment to fostering a supportive environment for digital and blockchain ventures.

 

The DIFC Courts

The DIFC Courts have established a specialized framework to handle disputes related to VAs and the broader digital economy. The DIFC Digital Economy Court (DEC) was launched in December 2021. The DEC is specifically designed to handle disputes arising from the digital economy, including VAs. This court addresses issues related to blockchain, cryptocurrencies, artificial intelligence, and other emerging technologies.

Justice Omar Al Mheiri, Director, DIFC Courts, said: “With the digital economy fast emerging as a prime accelerant of global business, these specialised rules have been engineered to strengthen our mission of building a courts system that not only absorbs current dispute resolution needs, but can flex to address and resolve new emerging disputes”¹ .

The new Part 58 section of the DIFC Courts Rules (RDC) govern procedures for resolving digital economy disputes and introduce smart standardized forms. These rules facilitate efficient and modern resolution processes, including the use of advanced digital systems. The DEC employs judges and experts with specialized knowledge in digital technologies and VAs.

On 8 March 2024, the DIFC enacted the Digital Assets Law No. 2 of 2024 (Digital Asset Law). The Digital Assets Law details the legal characteristics of digital assets as a form of property. It also sets out how digital assets may be controlled, transferred, and dealt with by interested parties providing legal certainty for investors and users. The law specifies the proprietary characteristics of digital assets, ensuring they are treated as distinct from traditional assets.

The DIFC Courts’ specialized approach to VA disputes ensures that they are handled with the necessary expertise and efficiency, providing a robust legal framework for the rapidly evolving digital economy.

 

The ADGM Courts

The ADGM has established a comprehensive framework for handling disputes related to VAs. The ADGM’s e-courts platform permits parties to interact with the courts entirely virtually, including filing court forms, making court fee payments, undertaking case management, and filing and using electronic bundles at interlocutory and final hearings.

The ADGM Courts also introduced a blockchain technology solution in 2022 to streamline the global enforcement of commercial judgments. This is a unique solution that publishes judgments to the blockchain, enabling enforcing commercial courts to independently and instantly verify the authenticity of judgments. This is part of the ADGM Courts’ vision to revolutionize every aspect of the enforcement process, driving sustainable change for the justice sector. Linda Fitz-Alan, Registrar and CEO of ADGM Courts, commented that: “There is no point in having a judgment if you cannot enforce it. What we’ve done by using blockchain is cut out an enormous number of traditional, paper-driven, time-consuming, costly steps in the delivery of an immutable and secure judgment available through an API on the ADGM website or from member courts on the blockchain.”²

 

Arbitration

Arbitration is an effective dispute resolution forum for VA disputes. It offers a flexible and confidential means to resolve conflicts, supporting the anonymity that is often crucial in the VA market. Additionally, arbitration aligns well with the decentralized ethos valued by VA investors, providing a tailored approach that respects the unique characteristics of VAs. Some of the key advantages of arbitration in this space are:

• Expertise: Parties can choose arbitrators with specific expertise in VAs, blockchain technology, and cryptocurrencies.
• Confidentiality: Arbitration proceedings are private, which is beneficial for parties who prefer to keep their disputes and resolutions confidential.
• Flexibility: Arbitration allows for more flexible procedures compared to traditional court litigation, which can be tailored

In short arbitration offers a tailored, efficient, and enforceable method for resolving disputes in the rapidly evolving VA space. Additionally, international arbitration is bolstered by the New York Convention on the recognition of foreign arbitration awards, ensuring that these awards can be enforced globally across member countries.

 

Conclusion

The UAE's establishment of specialized dispute resolution forums for digital assets underscores its commitment to supporting the growth of the digital economy. The DIFC and ADGM Courts, along with arbitration mechanisms, provide robust, efficient, and expert-driven solutions for resolving conflicts in the virtual asset space. These frameworks not only enhance legal certainty but also foster innovation by ensuring that disputes are handled with the necessary expertise and confidentiality. As digital assets continue to evolve, Dubai's proactive approach to dispute resolution will play a crucial role in maintaining its position as a leading hub for blockchain and digital ventures.

If you or your organization are facing issues related to the recovery of digital assets, please do not hesitate to contact us.

At DLA Piper, our experienced team of lawyers are at the forefront of the rapidly evolving legal landscape of digital assets and digital finance. Our team has a proven track record of successfully representing clients in complex, high-value disputes in both onshore litigation and offshore litigation including in the DIFC Courts, the ADGM Courts and international arbitration. We can provide the strategic advice needed to protect your interests and navigate the challenges of operating in this emerging space.

Whether you require assistance in recovering misappropriated digital assets, advice on structuring digital asset transactions, or representation in litigation or arbitration, DLA Piper possesses the knowledge, experience, and global reach to achieve the outcomes you need.

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¹World’s first international Digital Economy Court unveils new specialised Rules and global judicial expertise, see here
²ADGM Courts implemented blockchain technology. How is it transforming the legal system? - Fast Company Middle East, see here