Dubai's two-track dilemma

Reproduced from Practical Law with the permission of the publishers. For further information, visit www.practicallaw.com.

This article examines a significant decision of the Dubai Conflict of Jurisdiction Tribunal (Application No 002/2025), which ruled that the offshore Dubai International Financial Centre (DIFC) courts lacked jurisdiction to continue hearing enforcement proceedings while parallel annulment challenges in the onshore Dubai courts were being sought. The decision seeks to tighten the engagement between Dubai's dual-court systems and clarify the jurisdictional rules applicable to parallel proceedings. This article provides practical guidance to practitioners and in-house counsel on the critical strategic implications for both award creditors and debtors of forum selection in Dubai.

Dubai's arbitration ecosystem has long offered parties a choice of gateways. One leads to the onshore Dubai courts, the traditional supervisors of Dubai-seated arbitrations. The other opens into the Dubai International Financial Centre (DIFC) courts, a common-law enclave that has, for more than a decade, positioned itself as a brisk and enforcement-friendly forum for arbitral awards, including those with limited connection to the DIFC.

That duality has advantages until it does not. When creditors race to enforce and debtors rush to set aside, the result can be parallel proceedings that pull in opposite directions. A decision of 2 September 2025 by the Dubai Conflict of Jurisdiction Tribunal (Tribunal) (Application No 002/2025) provides a clearer rule for this familiar problem: where an award made in a Dubai-seated arbitration is already under annulment challenge in the Dubai courts, enforcement proceedings in the DIFC courts may be stopped. (Application No 002/2025 (CJT)).

For in-house counsel, the lesson is not that the DIFC is closed for business. It is that forum strategy in the UAE is increasingly policed for coherence, not creativity.

 

The facts: A cross-current of proceedings

The underlying dispute was commercially unremarkable: a contract between two oil-trading firms incorporated in the Dubai Multi Commodities Centre (DMCC), Energen and Serene Resources. The contract led to arbitration under the SIAC Rules, with Dubai (onshore) as the seat. In June 2025, the tribunal awarded Energen approximately USD7.6 million.

The procedural choreography that followed was more instructive than the merits.

• Enforcement track (DIFC). In July 2025, Energen commenced recognition and enforcement proceedings in the DIFC courts. On 9 July 2025, the DIFC courts recognised and enforced the award. On 21 July 2025, they granted a global freezing order over Serene Resources' assets.
• Annulment track (Dubai courts). In parallel, Serene Resources launched set-aside proceedings in the Dubai courts and sought to suspend enforcement pending the validity challenge.

Faced with one court being asked to give the award effect and another being asked to deprive it of effect, Serene applied to the Tribunal to decide which forum should proceed.

 

What the Tribunal is for, and what it is not

The Tribunal exists to resolve jurisdictional conflicts between Dubai's onshore and offshore judiciaries, and to prevent contradictory outcomes. It does not decide whether an award is valid. It decides which court gets to decide.

Under Decree-Law No 29/2024, the Tribunal's jurisdiction is triggered by a “positive conflict” where two courts concurrently assert jurisdiction in a way that risks inconsistent rulings. Here, the Tribunal had little difficulty finding that threshold met. The DIFC courts were enforcing and the Dubai courts were asked to annul. Those are not merely parallel cases; they are mirror-image proceedings aimed at the same legal instrument.

That framing matters because, if enforcement and annulment are treated as separate lanes, parties can pick the forum that feels faster. If they are treated as two sides of the same coin, the system must decide who holds the coin.

 

The legal spine: The “competent court” and the seat's supervisory role

In resolving the conflict, the Tribunal leaned on a familiar principle in arbitration law: the courts of the seat typically supervise the arbitration, including set-aside applications. The UAE Arbitration Law (Federal Law No 6 of 2018) defines the “competent court” by reference to party agreement or, failing that, the court within whose jurisdiction the arbitration is conducted.

The Tribunal accepted the premise that the DIFC courts have statutory jurisdiction to recognise and enforce arbitral awards in certain circumstances, and that this has historically allowed them to act as a conduit jurisdiction even where the underlying dispute has a thin DIFC connection.

But it drew a distinction that is increasingly decisive in Dubai: jurisdiction in principle is not the same as jurisdiction in priority. When parallel proceedings threaten procedural coherence, the question becomes which court should exercise jurisdiction so that the system produces one answer rather than two.

 

The core finding: Enforcement and annulment are inseparable

The Tribunal's central action was to characterise annulment as the “natural counterpart” to enforcement. Both proceedings address the award's effect in the legal order. If the Dubai courts annul the award, enforcement elsewhere in Dubai becomes conceptually awkward and practically destabilising. If the DIFC courts enforce while annulment is pending, a party could find itself subject to coercive measures based on an award that may later be stripped of legal effect at the seat.

The risk is not theoretical. It sits at the heart of commercial certainty: counterparties price risk on the assumption that courts will not simultaneously treat the same award as both binding and voidable within the same jurisdictional ecosystem.

On that basis, the Tribunal held that allowing DIFC enforcement to proceed alongside Dubai annulment would produce precisely the sort of incoherence the Tribunal exists to prevent.

 

Why the Dubai courts were preferred

The Tribunal did not conclude that the DIFC courts can never enforce a Dubai-seated award. Rather, it preferred the Dubai courts to have control in these circumstances, based on a mix of legal architecture and practicalities:

• General jurisdiction. The Dubai courts are courts of general jurisdiction under UAE law, particularly where the parties have not agreed to submit disputes to the DIFC courts.
• No DIFC nexus. Neither Energen nor Serene Resources was incorporated in the DIFC, and there was no agreement conferring DIFC jurisdiction.
• Active annulment proceedings at the seat. Once the award debtor commenced annulment proceedings in the Dubai courts, it became more logical to allow that forum to decide whether to enforce or annul the award.
• Enforcement reality. Enforcement was expected to be pursued against assets outside the DIFC, limiting the practical usefulness of a DIFC enforcement pathway once the onshore court was seized.

The Tribunal therefore ruled that the DIFC courts lacked jurisdiction to continue hearing the enforcement proceedings and ordered the suspension of the enforcement measures previously granted.

 

A footnote with bite: Interim measures treated differently

The Tribunal drew a line between the core enforcement and annulment conflict (on the one hand) and interim relief (on the other). It declined to rule on competing freezing and attachment applications, treating them as urgent and temporary measures that did not, in themselves, create the kind of substantive jurisdictional conflict that warrants the Tribunal's intervention.

For counsel, the nuance is important. Interim measures may still be obtainable and may still create commercial leverage. But they do not necessarily decide the forum question, and they may be vulnerable to later procedural reallocation when the Tribunal is asked to choose the principal track.

 

What this means for in-house counsel

This decision signals a tightening of the rules of engagement between Dubai's onshore and offshore courts in arbitration matters. Several implications follow:

• DIFC conduit enforcement is more exposed once annulment is live onshore. Where a Dubai-seated award is under active annulment challenge in the Dubai courts, DIFC enforcement proceedings face a credible risk of being halted through the Tribunal. A creditor can still attempt a DIFC route, but the path is less insulated than it once appeared.

• Timing is now a strategic variable with legal consequences:
  • Award creditors may still seek rapid DIFC recognition and interim relief, particularly where speed and pressure matter. But they should factor in the likelihood of a jurisdictional challenge if the debtor files annulment in Dubai.
  • Award debtors now have a clearer playbook: prompt annulment proceedings in the Dubai courts can shift the dispute back onshore and interrupt DIFC enforcement momentum.

• Asset mapping matters more than forum preference. If realisable assets sit onshore, the Dubai courts' gravitational pull strengthens. If assets sit in the DIFC, or if there is a genuine DIFC nexus, the analysis may differ. Either way, enforcement strategy should start with an asset map, not a filing instinct.
  
  
• Drafting choices remain relevant, but not all-powerful. Parties can reduce uncertainty by considering dispute resolution clauses that address jurisdictional pathways for enforcement, where legally permissible. But this decision is a reminder that, in a dual-court system, courts may still prioritise coherence when two tracks collide.

 

Practical guidance: A short internal checklist

Before you enforce a Dubai-seated award:

• Confirm where the counterparty's assets are, and which forum can realistically reach them.
• Assess whether an annulment filing is likely and how quickly it can be made.
• Treat DIFC enforcement as potentially time-sensitive leverage, not a guaranteed endgame, if annulment in Dubai is foreseeable.
• Align internal messaging and risk disclosure: parallel proceedings can change the enforcement timeline and cost profile materially.

If you are resisting enforcement:

• Consider whether annulment proceedings in the Dubai courts are available and strategically justified.
• Evaluate the downside of interim measures, including freezing risk, and plan liquidity and operational contingencies accordingly.

 

Closing thoughts

Dubai's arbitration offering has always been shaped by its dual-court design. The Tribunal's 2 September 2025 decision refines the operating system: when a Dubai-seated award is being challenged at the seat, domestic enforcement should not proceed in parallel elsewhere in Dubai. The DIFC courts remain an important enforcement venue, but their role is increasingly bounded by the system's demand for a single, orderly answer.

For in-house counsel, that translates into a familiar corporate discipline: plan the enforcement journey from the outset, assume the other side will respond quickly, and treat forum selection not as a tactical afterthought but as a risk-managed component of the dispute lifecycle.