In a recent landmark decision, the UAE Court of Cassation has provided crucial clarification on the international jurisdiction of UAE courts in financial disputes involving foreign parties. This ruling, issued on 12 February 2025, in Civil Case No. 1353/2024, sheds light on the application of Article 20 of the UAE Civil Procedure Law and its implications for cross-border litigation.

Background of the Case

The case originated from a claim filed by the plaintiff (the appellant in the cassation) against multiple defendants for the repayment of AED 300,553. The plaintiff alleged that this sum was transferred to the defendants through a licensed money exchange in the UAE for the purpose of purchasing property abroad. The transfers were made in installments to individuals closely associated with the first defendant, who was reportedly married to the plaintiff at the time.

Lower Court Rulings

The Court of First Instance initially ruled in favor of the plaintiff, ordering the defendants to repay the claimed amount with interest. However, upon appeal (Appeal No. 294/2024), the Appellate Court overturned this decision on 19 November 2024. The Appellate Court ruled that UAE courts lacked international jurisdiction to hear the case, effectively dismissing the lawsuit.

Court of Cassation’s Analysis

The Court of Cassation, in its review, found that the Appellate Court had erred in its application of the law. The key points of the Court’s reasoning are as follows:

1- Application of Article 20 of the Civil Procedure Law: The Court emphasized the importance of Article 20, which states that UAE courts have jurisdiction over cases against foreigners who do not have a domicile or place of residence in the UAE under specific circumstances. These circumstances include:

• If the case relates to property within the UAE
• If the case concerns an obligation that was concluded, executed, or was supposed to be executed in the UAE

2- Nature of the Dispute: The Court of Cassation pointed out that the lower court failed to recognize the true nature of the claim. The case was not about a property dispute abroad but rather concerned the repayment of funds transferred from within the UAE through a licensed money exchange.

3- Misapplication of Law: By ruling that UAE courts lacked jurisdiction, the Appellate Court misapplied the law. The Court of Cassation held that the case fell within the jurisdiction of UAE courts as it involved financial transactions executed within the UAE.

Implications of the Ruling

This decision has significant implications for international disputes in the UAE:

1- Broad Interpretation of Jurisdiction: The ruling demonstrates a willingness by UAE courts to assert jurisdiction in cases where there is a substantial connection to the UAE, even if the ultimate purpose of the transaction was related to foreign assets.

2- Protection of Financial Transactions: By affirming jurisdiction in such cases, the UAE judiciary is providing a legal avenue for parties who engage in financial transactions within the UAE, regardless of the nationality or residence of the defendants.

3- Importance of Transaction Location: The physical location where a financial transaction is initiated or executed can be a determining factor in establishing jurisdiction, even if the intended outcome of the transaction is abroad.

Conclusion

This ruling by the UAE Court of Cassation reinforces the principle that UAE courts have jurisdiction over financial disputes where the core of the transaction occurred within the UAE. It serves as a reminder to both local and international parties that engaging in financial activities through UAE-based institutions may subject them to the jurisdiction of UAE courts, regardless of their domicile or the ultimate destination of the funds.

The case has been remanded to the Appellate Court for reconsideration in light of this jurisdictional clarification. Legal practitioners and businesses operating in or through the UAE should take note of this expanded interpretation of international jurisdiction when structuring their transactions and considering potential dispute resolution forums.