Analysis of Abu Dhabi Court of Cassation Judgment No. 406/2025 (Commercial), dated 11 June 2026
The Abu Dhabi Court of Cassation has delivered an important judgment that provides much-needed clarity on the jurisdictional boundaries between the Abu Dhabi onshore courts and the Abu Dhabi Global Market (ADGM) Courts. In Judgment No. 406/2025 (Commercial), issued on 11 June 2026, the Court reaffirmed that the mere physical location of a company’s office within Al Reem Island does not automatically subject disputes to the jurisdiction of the ADGM Courts. Rather, jurisdiction depends upon the statutory requirements prescribed under the ADGM legal framework and the place where the legal relationship giving rise to the dispute was concluded.
This judgment is of significant importance for businesses operating in Abu Dhabi, legal practitioners handling cross-border commercial disputes, and investors who frequently contract with companies situated in or around the ADGM free zone.
Background of the Dispute
The dispute arose from a claim filed by a consultancy firm seeking payment of brokerage and consultancy commissions allegedly earned after introducing investors and facilitating negotiations for a commercial project. According to the claimant, an oral agreement had been reached with the defendants whereby the claimant would receive a commission following the successful award of the project. After the project was ultimately awarded, the defendants allegedly refused to pay the agreed commission, prompting legal proceedings before the Abu Dhabi Court of First Instance.
The defendants challenged the jurisdiction of the Abu Dhabi Courts, arguing that their companies were located on Al Reem Island and therefore fell within the jurisdiction of the ADGM Courts. Accepting this argument, both the Court of First Instance and the Court of Appeal dismissed the claim for lack of jurisdiction. The claimant’s initial appeal before the Court of Cassation was also rejected. However, the claimant subsequently filed an application seeking reconsideration of the cassation judgment. The Court accepted the reconsideration request, reopened the matter before a differently constituted bench, and ultimately reached a different conclusion.
The Central Legal Issue
The principal legal issue before the Court concerned whether companies physically located within Al Reem Island automatically fall under the exclusive jurisdiction of the ADGM Courts, even where those companies have not completed registration and licensing under the ADGM regulatory framework.
The case therefore required interpretation of Article 13 of Abu Dhabi Law No. 4 of 2013 concerning the Abu Dhabi Global Market, as amended by Law No. 12 of 2020, which defines the exclusive jurisdiction of the ADGM Courts.
Exclusive Jurisdiction Under Article 13
The Court examined Article 13(7)(a) and (b) of the ADGM Law, which grants exclusive jurisdiction to the ADGM Court of First Instance over, among other matters:
- disputes involving the ADGM itself, its authorities, or ADGM institutions;
- civil and commercial disputes arising out of contracts concluded, performed, or intended to be performed wholly or partly within the ADGM; and
- transactions or events occurring wholly or partly within the ADGM.
The Court emphasized that these statutory jurisdictional gateways must be satisfied before the ADGM Courts may exercise exclusive jurisdiction. Simply being physically situated on Al Reem Island is not, by itself, sufficient.
Registration Is the Decisive Factor
One of the most important aspects of the judgment concerns the distinction between geographical location and legal status.
The defendants argued that because their offices were situated on Al Reem Island, the dispute necessarily belonged before the ADGM Courts. The Court rejected this argument after examining documentary evidence demonstrating that the companies had not completed the licensing and registration requirements necessary to become ADGM entities.
The Court relied upon correspondence issued by the ADGM Registration Authority granting the companies additional time to regularize their licensing position. This correspondence confirmed that the companies had not yet obtained the required ADGM commercial licences and therefore had not become ADGM institutions within the meaning of the governing legislation. Instead, the companies remained licensed by the Abu Dhabi Department of Economic Development (DED), with valid mainland commercial licences identifying Abu Dhabi mainland addresses as their registered business locations.
Accordingly, the Court concluded that physical presence within Al Reem Island cannot substitute for formal registration under the ADGM legal regime.
Determining the Place of Contract Formation
The Court also undertook a detailed analysis of where the parties’ contract had actually been concluded.
The evidence consisted primarily of email correspondence exchanged between the parties. An email sent by the claimant referred to the parties’ prior oral agreement regarding consultancy fees equal to one percent of the project value and requested that the agreement be formally documented. The defendants responded shortly thereafter confirming the scope of work.
Applying established principles of contract formation, the Court held that the claimant’s email constituted an offer, while the defendants’ response amounted to an acceptance. Under UAE contract law, contracts between parties communicating at a distance are generally deemed concluded at the place where the offeror receives notice of acceptance, unless otherwise agreed by the parties or prescribed by law.
Since the claimant received acceptance outside the geographical limits of the ADGM, the Court determined that the contract was concluded outside the ADGM. Consequently, this jurisdictional gateway under Article 13 was not satisfied.
Evaluation of the Documentary Evidence
The Court further noted that the majority of the defendants’ commercial correspondence identified addresses outside the ADGM jurisdiction.
Additionally, the Court examined the commercial licences issued by the Abu Dhabi Department of Economic Development, which confirmed that both defendant companies continued to hold mainland commercial licences and maintained registered offices within Abu Dhabi mainland rather than under the ADGM regulatory regime.
This documentary evidence significantly undermined the argument that the dispute belonged exclusively before the ADGM Courts.
The Court’s Decision
Having found that neither statutory registration under the ADGM nor contractual formation within the ADGM had been established, the Court concluded that the ordinary Abu Dhabi Courts possessed jurisdiction over the dispute.
Accordingly, the Court:
- quashed the previous appellate judgment;
- ordered the defendants to bear the judicial fees and litigation costs;
- awarded AED 1,000 in legal costs in favour of the claimant;
- ordered the refund of the security deposit lodged for the cassation proceedings; and
- remitted the matter to the Court of First Instance for determination of the substantive commission claim, since that court had never considered the merits after declining jurisdiction.
Legal Significance of the Judgment
This judgment establishes several important legal principles that are likely to influence future jurisdictional disputes involving the ADGM.
First, it confirms that statutory registration and licensing under the ADGM framework—not merely physical location within Al Reem Island or Al Maryah Island—determine whether an entity qualifies as an ADGM institution for jurisdictional purposes.
Secondly, the judgment reinforces that the jurisdiction of the ADGM Courts remains statutory rather than territorial. Geographic location alone does not automatically confer ADGM jurisdiction.
Thirdly, the decision illustrates the evidential importance of commercial licences, registration records, regulatory correspondence, and corporate documentation when determining jurisdiction.
Fourthly, the judgment demonstrates the continuing relevance of classical principles of contract formation in determining where commercial agreements are concluded, particularly where negotiations occur electronically through emails and other digital communications.
Finally, the decision underscores that jurisdictional challenges must be assessed on the actual legal relationship between the parties rather than assumptions arising from business addresses or office locations.
Practical Lessons for Businesses
Businesses operating in Abu Dhabi should carefully review their regulatory status before assuming that disputes will fall within the jurisdiction of the ADGM Courts. Companies transitioning into the ADGM or operating from Al Reem Island should ensure that their licensing and registration processes have been fully completed if they intend to benefit from the ADGM legal framework.
Commercial contracts should also include carefully drafted jurisdiction clauses expressly identifying the agreed forum for dispute resolution. Although statutory jurisdiction cannot always be displaced by agreement, clear jurisdiction clauses substantially reduce uncertainty and minimise costly preliminary jurisdictional disputes.
Furthermore, parties negotiating contracts electronically should recognise that emails and other digital communications may ultimately determine where a contract is legally concluded and, consequently, which court possesses jurisdiction.
Conclusion
The Abu Dhabi Court of Cassation’s Judgment No. 406/2025 represents an important clarification of the jurisdictional relationship between the Abu Dhabi Courts and the ADGM Courts. By confirming that formal ADGM registration, rather than physical location alone, governs jurisdiction, the Court has reinforced the statutory nature of the ADGM legal framework while providing greater certainty for businesses operating within Abu Dhabi’s evolving commercial landscape.
The decision also serves as a timely reminder that jurisdictional disputes often turn upon detailed factual and documentary analysis. Corporate licences, regulatory correspondence, contractual communications, and the legal mechanics of contract formation remain decisive considerations in determining the proper judicial forum. As commercial activity within Abu Dhabi continues to expand across both mainland and free zone jurisdictions, this judgment provides valuable guidance for companies, investors, and legal practitioners seeking certainty in cross-jurisdictional commercial litigation.