Introduction
In a significant development for the UAE legal landscape, the General Assembly of the Abu Dhabi Court of Cassation issued a landmark decision on 1 April 2026 aimed at resolving conflicting judicial principles concerning the jurisdiction of the Abu Dhabi Global Market (ADGM) Courts. This ruling represents a major step toward legal certainty, particularly in disputes involving commercial transactions, corporate structures, and financial instruments such as bank guarantees.
The decision, rendered under the authority of Article 9 of Law No. 6 of 2024 concerning the Judicial Department of Abu Dhabi, reflects the Court’s supervisory role in harmonizing jurisprudence and ensuring consistency across its chambers.
Background: Conflicting Jurisprudence
Prior to this decision, the Court of Cassation had issued divergent rulings regarding when ADGM Courts would have jurisdiction. Two principal conflicting approaches had emerged:
- Location-based approach: Jurisdiction was recognized if the company’s headquarters was located within ADGM-designated areas (e.g., Al Reem Island).
- Regulatory approach: Jurisdiction depended strictly on whether the entity was formally licensed or registered with ADGM authorities.
This inconsistency created uncertainty for businesses, investors, and legal practitioners, particularly in cross-border and hybrid transactions involving mainland and free zone elements.
Legal Framework: Article 13 of the ADGM Law
The Court grounded its reasoning in Article 13 of Law No. 4 of 2013 (as amended by Law No. 12 of 2020), which governs the jurisdiction of ADGM Courts. The provision establishes that ADGM Courts have jurisdiction over:
- Disputes involving ADGM authorities or institutions.
- Disputes arising from contracts executed wholly or partially within ADGM.
- Events occurring within ADGM territory.
- Appeals against decisions issued by ADGM authorities.
- Matters relating to the interpretation of ADGM regulations.
Importantly, the Court emphasized that these categories are equal and independent jurisdictional gateways, meaning that satisfying any one of them is sufficient to confer jurisdiction.
Expansion of ADGM Geographic Scope
The Court also acknowledged Cabinet Resolution No. 41 of 2023, which expanded ADGM’s jurisdictional territory to include Al Maryah Island and Al Reem Island. However, it clarified that geographical presence alone is insufficient unless accompanied by regulatory compliance (i.e., licensing or registration).
Key Legal Principles Established
- Equal Jurisdictional Criteria
The Court confirmed that jurisdiction arises if any one of the following is met:
- A party is an ADGM authority or institution.
- The dispute arises from a contract performed (fully or partially) in ADGM.
- The relevant event occurred within ADGM.
This clarification eliminates prior ambiguity and aligns ADGM jurisdiction with modern international commercial courts.
- Bank Guarantees: Distinction Between Contractual Relationships
A critical contribution of the ruling lies in its treatment of bank guarantees, a common instrument in construction and commercial disputes.
The Court distinguished between:
- Employer vs Contractor disputes: Where the dispute concerns enforcement of a guarantee linked to a construction contract performed in ADGM, jurisdiction lies with ADGM Courts.
- Bank vs Contractor disputes: Where the dispute concerns the issuing bank, the guarantee is treated as an independent contract, and jurisdiction lies with onshore UAE courts, unless otherwise agreed.
This distinction reinforces the principle of autonomy of bank guarantees under commercial law.
- Corporate Jurisdiction: Licensing as a Determinative Factor
The Court rejected the purely geographical test and adopted a regulatory compliance standard:
ADGM Courts have jurisdiction if:
- The dispute involves a branch licensed within ADGM, and
- The branch is duly registered or authorized to operate in ADGM.
Conversely, jurisdiction does not extend to:
- Head offices or branches located outside ADGM.
- Entities lacking ADGM licensing or registration.
This approach aligns with international financial center practices, where jurisdiction is tied to regulatory integration rather than mere location.
- Contractual Autonomy and Jurisdiction Agreements
The Court reaffirmed the principle of party autonomy, allowing:
- Parties to agree in writing to submit disputes to ADGM Courts.
- Parties with no connection to ADGM to opt into its jurisdiction.
- Parties to refer disputes to arbitration within ADGM.
This reflects ADGM’s positioning as an international dispute resolution hub, comparable to DIFC Courts and other global financial centers.
Practical Implications
For Businesses
Companies must ensure proper licensing and registration within ADGM to benefit from its jurisdiction. Merely operating or being located within ADGM-designated areas is insufficient.
For Contract Drafting
Contracts should clearly specify:
- Jurisdiction clauses;
- Governing law;
- Whether disputes involving guarantees will follow ADGM or onshore jurisdiction.
For Financial Institutions
Banks issuing guarantees must be aware that disputes involving them may fall outside ADGM jurisdiction, even if the underlying project is within ADGM.
Conclusion
This decision marks a turning point in UAE jurisprudence, providing much-needed clarity on the jurisdictional scope of ADGM Courts. By reconciling conflicting principles and adopting a structured, rule-based approach, the Abu Dhabi Court of Cassation has reinforced:
- Legal certainty,
- Predictability in commercial disputes,
- The credibility of ADGM as a global financial and legal hub.
For practitioners and businesses alike, these ruling underscores the importance of regulatory compliance, precise drafting, and strategic jurisdiction planning in navigating the UAE’s dual court system.
If you require further clarification or legal assistance concerning the matters discussed in this article, please do not hesitate to contact Khairallah Advocates & Legal Consultants LLC. Our lawyers would be happy to assist you.
Authors:
