The DIFC Courts and Third Party Funding

1. The DIFC Courts and Third Party Funding Bashar 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, third- party 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-funding- difc-courts/>. 2 See Practice Direction 2 of 2017, art. 4.