By Dr. Abdultaiyab Bahrainwala, Partner, Head of Corporate, and Jouslin Khairallah, Founder & Managing Director, Head of Litigation.
A recent Dubai Court of Cassation judgment clarifies the procedural consequence of failing to present an eligible dispute to the Amicable Settlement Centre before commencing court proceedings.
DUBAI COURT OF CASSATION | COMMERCIAL APPEAL 1888 OF 2026 | 13 AUGUST 2026
The central holding
If a dispute falls within the jurisdiction of Dubai’s Amicable Settlement Centre and reaches court without first being presented to that Centre, the court should refer the case to the competent Centre. It should not stop at declaring the claim inadmissible.
Why this judgment matters
Civil procedure can decide the fate of a commercial claim before the court ever examines who is right on the merits. A claimant may have a strong contractual case, detailed accounting evidence and a substantial claim, yet still lose time and incur cost if the dispute begins in the wrong forum. The Dubai Court of Cassation’s judgment in Commercial Appeal No. 1888 of 2026 addresses what should happen when an eligible dispute is filed in court without first passing through the Amicable Settlement Centre.
The Court held that inadmissibility is not the end of the procedural road. Once the court determines that the dispute should have been presented to the Centre under Dubai Law No. 18 of 2021 and the relevant implementing decision, it must refer the proceedings to the Centre. The ruling therefore protects the statutory allocation of jurisdiction while also preserving procedural continuity.
That distinction is commercially significant. A dismissal may force parties to begin again, repeat filing steps and face questions about limitation, fees and procedural delay. A referral moves the existing dispute to the body that the law identifies as competent to consider it first.
The dispute behind the ruling
The underlying proceedings arose from a shareholder dispute concerning a free-zone limited liability company. One shareholder, holding 75 percent of the company’s shares, brought Commercial Case No. 3352 of 2024 before the Dubai Court of First Instance. It sought the dissolution and liquidation of the company and the appointment of a liquidator.
According to the judgment, the claimant alleged that the company had failed to generate profits, had sustained losses exceeding its capital and had effectively lost all of its funds. A general assembly convened on 25 June 2024, at which the majority shareholder voted in favour of dissolution, liquidation and the appointment of a liquidator. The holder of the remaining 25 percent opposed the proposal, leading the majority shareholder to commence proceedings.
The defendants responded with a counterclaim. They sought the transfer of the counterclaimant’s shares and compensation of AED 5,736,000, together with legal interest at five percent per year from the date of judicial demand and costs. Their case was based on allegations that the opposing shareholder had not paid its contribution to the company’s capital and had announced an intention to withdraw from the business, allegedly causing material and moral damage.
The Court of First Instance appointed an expert. After receiving the expert’s original and supplementary reports, it ordered the company’s dissolution and liquidation on 30 October 2025, appointed the next liquidator on the roster to identify and liquidate the company’s assets, dismissed the remaining requests and rejected the counterclaim.
The appeal turned on a preliminary procedural requirement
The original defendants and counterclaimants appealed in Commercial Appeal No. 3165 of 2025. On 26 January 2026, the Court of Appeal set aside the first-instance judgment and declared both the original claim and the counterclaim inadmissible because they had not been initiated through the procedure required by law.
The Court of Appeal relied on Article 5 of Dubai Law No. 18 of 2021 concerning conciliation in the Emirate of Dubai and Article 1 of the President of the Dubai Courts’ Decision No. 8 of 2022, which identifies the disputes falling within the Amicable Settlement Centre’s jurisdiction. In substance, it found that the parties should have presented the dispute to the Centre before pursuing the court proceedings.
The majority shareholder attempted a cassation appeal in Commercial Appeal No. 385 of 2026, but the Court of Cassation ruled on 31 March 2026 that the appeal was not permissible. That procedural outcome would ordinarily have left the Court of Appeal’s ruling in place.
The Attorney General’s exceptional intervention
The matter returned to the Court of Cassation through an exceptional mechanism. The Attorney General of the Emirate of Dubai challenged the Court of Appeal judgment under Article 176 of the Federal Civil Procedure Law. The challenge did not seek to reopen the commercial merits of the shareholder dispute. It targeted the procedural consequence selected by the Court of Appeal.
The Attorney General accepted that the claims had not followed the route required by law. The objection was narrower: having found that the Centre was competent, the Court of Appeal should have referred both the original claim and the counterclaim to the Centre instead of merely declaring them inadmissible.
This feature makes the judgment particularly instructive. The Court of Cassation was not deciding whether the company should be liquidated, whether the capital contribution remained unpaid or whether compensation was due. It was deciding how courts must respond when a dispute has bypassed a mandatory pre-court settlement forum.
The Court of Cassation’s reasoning
The Court accepted the Attorney General’s argument. Referring to Article 5 of Dubai Law No. 18 of 2021 and Article 1 of Decision No. 8 of 2022, it stated that when a court rules that a claim is inadmissible because the dispute should have been presented to the Amicable Settlement Centre first, the court must also refer that claim to the Centre.
The Court of Appeal had correctly identified the procedural defect but had imposed an incomplete remedy. By ending its ruling at inadmissibility and omitting the referral, it misapplied the law. The Court of Cassation therefore partially overturned the appellate judgment and, because the relevant part of the appeal was ready for determination, ordered that the original claim and the counterclaim be referred to the Amicable Settlement Centre.
Referral and dismissal produce different consequences
| Issue | Dismissal or inadmissibility alone | Referral to the Centre |
|---|---|---|
| Procedural continuity | The court proceeding ends without being moved to the competent settlement forum. | The existing dispute is transmitted to the forum designated by law. |
| Time and cost | A party may need to restart the process and repeat administrative steps. | Referral reduces duplication and keeps the dispute moving. |
| Limitation risk | A fresh filing may create arguments about elapsed time, depending on the claim and applicable rules. | Referral may better protect continuity, although limitation must still be analysed case by case. |
| Commercial resolution | The parties leave court without entering the required settlement channel. | The parties proceed to a structured settlement process before further litigation. |
What the ruling changes in practice
The judgment confirms that classification of the dispute must occur at the outset. Before filing, counsel should test the nature of each claim and counterclaim against the jurisdictional rules governing the Amicable Settlement Centre. The label placed on a pleading is not enough. The relief sought, the parties, the value of the dispute and any statutory exclusions may affect the proper route.
The ruling also shows that original claims and counterclaims require separate procedural attention. Here, both sides advanced substantive commercial relief, and both sets of claims were affected by the same forum issue. A party cannot assume that a counterclaim will escape a mandatory preliminary process merely because it is pleaded defensively in existing proceedings.
For judges and litigants, the judgment draws a clear line between identifying a procedural defect and selecting the legally correct response. Where the Centre has jurisdiction, the court’s role is not confined to rejecting the claim. The court must direct the dispute to the competent settlement body.
For businesses, the decision is a reminder that procedural planning should begin before the statement of claim is drafted. Corporate disputes often involve urgent commercial pressure, deteriorating relationships and concern about asset preservation. Those circumstances can encourage immediate court filing, but urgency does not remove mandatory jurisdictional steps unless the governing law provides a relevant exception or a separate urgent remedy is available.
A practical filing checklist
- Identify the true legal and factual nature of every proposed claim, including any anticipated counterclaim.
- Check whether Dubai Law No. 18 of 2021 and Decision No. 8 of 2022 place the dispute within the Amicable Settlement Centre’s jurisdiction.
- Confirm whether a statutory exclusion, special forum, arbitration agreement or urgent application changes the procedural route.
- Record the relevant limitation periods and assess how referral, registration and any failed filing may affect them.
- Prepare the core contract, corporate records, notices, accounting evidence and authority documents before commencing the settlement process.
- Frame settlement proposals with the eventual litigation case in mind, while protecting privilege and avoiding unnecessary admissions.
Broader significance for shareholder disputes
The facts demonstrate how a procedural forum question can overtake a complex corporate dispute. The parties had litigated dissolution, liquidation, share ownership, capital contributions and a multimillion-dirham compensation claim. The Court of First Instance had received two expert reports and issued a merits judgment. Yet the appellate proceedings ultimately turned on whether the dispute had first been presented to the correct settlement forum.
Shareholders considering dissolution or liquidation proceedings should therefore map the procedural route alongside the substantive company-law analysis. They should review the company’s constitutional documents, free-zone rules, voting requirements, financial evidence and any arbitration or jurisdiction clause, while separately determining whether a mandatory settlement process applies. A strong merits case does not cure a defective commencement route.
Conclusion
Dubai Court of Cassation Commercial Appeal No. 1888 of 2026 provides a focused but important procedural rule. When a dispute should first be heard by the Amicable Settlement Centre, a court that finds the claim inadmissible must also refer it to that Centre. The judgment prevents the statutory settlement requirement from becoming an unnecessary procedural dead end and gives parties a clearer path when a dispute begins in the wrong forum.
The practical lesson is straightforward: determine the competent forum before filing, but if the issue is identified only after proceedings have begun, seek referral rather than accepting dismissal as the complete outcome.