The DIFC Courts and Third Party Funding
Bashar H. Malkawi
Dean and Professor of Law
College of Law, University of Sharjah
The Dubai International Financial Centre (DIFC) Courts, in a step first in the UAE
and Arab countries in general, issued Practice Direction 2 of 2017 – Third Party
Funding in the DIFC Courts”.1 The Practice Direction No. 2 of 2017 recognizes
funding arrangements. More specifically, the Practice Direction No. 2 of 2017
mandates that a funded party gives notice to the other party in the dispute in respect of
third party funding.2 In other words, the new Practice Direction is basically a
disclosure provision. However, the Practice Direction No. 2 of 2017 does not provide
further details – such as conflict of interests, eligibility requirements for funders,
independence, and security of costs- that would provide guidance to parties, counsel,
arbitrators and courts when facing third-party funding issues arising in different
contexts. Currently, there are no laws regulating third party funding in mainland
Dubai and UAE courts and arbitration institutions. Until this legal gap is filled, thirdparty funding can to be dealt with under the general provisions of UAE law. Although
Practice Direction No. 2 of 2017 is considered an infant step but it is one in the right
direction.
1
See DIFC, Practice Direction 2 of 2017 – Third Party Funding in the DIFC Courts, March 14, 2017,
available at < https://www.difccourts.ae/2017/03/14/practice-direction-no-2-2017-third-party-fundingdifc-courts/>.
2
See Practice Direction 2 of 2017, art. 4.