Litigation Funding in Dubai vs Abu Dhabi: A Legal Comparison of Courts and Arbitration Institutions

PostedAugust 2, 2026

UpdatedAugust 2, 2026

Litigation funding in Dubai and Abu Dhabi is not governed by a single uniform legal regime. Each emirate has onshore courts operating within the UAE’s civil-law framework, a financial free zone with common-law courts, and a major arbitration institution with its own procedural rules.

The practical comparison therefore involves six principal frameworks:

Dubai onshore courts.
DIFC Courts.
Dubai International Arbitration Centre, or DIAC.
Abu Dhabi onshore courts.
ADGM Courts.
Abu Dhabi International Arbitration Centre, or arbitrateAD.

The most important difference concerns the degree and form of express regulation. The DIFC Courts rely on a practice direction focused principally on disclosure, costs and the relationship between the funded party and the funder. ADGM has adopted a more detailed regulatory framework addressing funder eligibility, financial capacity and the content of funding agreements. In arbitration, both DIAC and arbitrateAD expressly address third-party funding, but their disclosure requirements are not identical.

For proceedings before the onshore courts of Dubai and Abu Dhabi, the available official materials do not establish a single comprehensive federal statute governing all forms of litigation funding. These arrangements must therefore be analysed through contract law, public policy, professional regulation, confidentiality, procedure and the substance of the rights granted to the funder.

What Is Litigation Funding?

Litigation funding, also known as third-party funding, is an arrangement under which an independent funder provides capital to cover some or all of the costs of pursuing a legal claim in exchange for an agreed return if the dispute produces a recovery.

The funding may cover:

Lawyers’ fees.
Court or arbitral institution fees.
Expert costs.
Translation and document management.
Security for costs.
Adverse-cost protection.
Asset tracing and enforcement.

Commercial litigation funding is commonly structured on a non-recourse basis. The funder expects to recover its capital and return from the proceeds of the dispute rather than from the claimant’s unrelated assets. If the claim fails, the funder ordinarily loses the invested capital, subject to provisions dealing with fraud, breach, misuse of funds or material non-disclosure.

The funder does not legally represent the claimant. Counsel remains responsible for advice, advocacy and professional independence, while the claimant should retain appropriate authority over the proceedings and settlement decisions.

Litigation Funding in Dubai: Three Distinct Environments

Funding Before the Dubai Onshore Courts

The Dubai onshore courts operate within the UAE’s civil-law judicial system. The available official sources do not establish a comprehensive third-party funding regime equivalent to the express framework applicable in the DIFC Courts.

The absence of a dedicated regime does not mean that every funding arrangement is prohibited or automatically enforceable. The agreement must instead be examined in light of matters including:

Contractual validity and lawful purpose.
Public policy.
Regulation of lawyers and legal consultants.
Counsel’s professional independence.
Confidentiality and professional secrecy.
Control over proceedings and settlement.
The structure of the funder’s return.
Costs and procedural rules.
Enforceability of rights over claim proceeds.

A funding arrangement should not be used to circumvent restrictions applicable to lawyers’ fees or to grant an unlicensed commercial party powers equivalent to providing legal services.

The rules of the DIFC Courts should also not be assumed to apply to the Dubai onshore courts. The DIFC is a separate legal jurisdiction, and its procedural directions are not general rules for every court in the emirate.

Funding Before the DIFC Courts

Third-party funding in the DIFC Courts is expressly addressed by Practice Direction No. 2 of 2017.

The Practice Direction requires a funded party to disclose to the Court and the other parties:

The existence of the funding arrangement.
The identity of the funder.

It does not require automatic production of the full funding agreement, although the Court may order disclosure of the agreement or relevant terms where appropriate.[1]

The DIFC Court of Appeal confirmed in 2025 that disclosure of the existence of funding and the identity of the funder is distinct from disclosure of the complete commercial terms of the agreement.[2]

The Practice Direction also addresses the relationship between funding and security for costs. The existence of funding does not, by itself, determine whether security should be ordered, although it may form part of the circumstances considered by the Court.

The DIFC framework also recognises the possibility of costs orders against third parties, including funders, where the applicable legal test is satisfied. Claimants and funders should therefore assess possible adverse or non-party costs exposure, not merely the claimant’s own legal expenses.

The DIFC approach is principally procedural and focuses on:

Transparency.
Conflicts of interest.
Practitioner duties.
Security for costs.
Potential costs orders against funders.
The Court’s ability to require additional information.

Funding in DIAC Arbitration

The DIAC Arbitration Rules 2022 entered into force on 21 March 2022. Article 22 expressly addresses third-party funding.[3]

The provision requires disclosure of:

The existence of the funding arrangement.
The identity of the funder.
Whether the funder has committed to an adverse-cost liability.

After constitution of the tribunal, the Rules also prevent a party from entering into a funding arrangement that will or may create a conflict of interest between the funder and a member of the tribunal.

The requirement to disclose whether the funder has accepted adverse-cost liability is commercially significant. It provides information beyond the funder’s identity and may be relevant to applications for security for costs or other procedural decisions.

Article 22 does not state that the full agreement must be produced automatically. A tribunal may nevertheless seek disclosure of specific terms where they are relevant to conflicts, costs, security or control.

Litigation Funding in Abu Dhabi: Three Separate Frameworks

Funding Before the Abu Dhabi Onshore Courts

As with the Dubai onshore courts, the available official materials do not establish a comprehensive standalone statute governing every form of litigation funding in ordinary civil and commercial proceedings before the Abu Dhabi onshore courts.

A funding agreement may therefore require analysis under:

General contractual principles.
Public policy.
Professional regulation.
Confidentiality and data protection.
Allocation of control over the claim.
Calculation of the funder’s return.
Rights over claim proceeds.
Costs and enforcement rules.

ADGM’s litigation funding rules should not be imported automatically into Abu Dhabi onshore litigation. ADGM is a distinct legal jurisdiction with its own courts, legislation and procedures.

The onshore positions in Dubai and Abu Dhabi are similar in that neither appears, from the official sources reviewed, to be governed by an express comprehensive funding code. That does not mean that judicial treatment will necessarily be identical in every case. The result may depend on the nature of the claim, the contract, the applicable professional regime and the governing law.

Funding Before the ADGM Courts

ADGM provides the most detailed express litigation funding framework in the UAE.

The Litigation Funding Rules 2019 were introduced to regulate the funding of proceedings within their scope, and ADGM’s official legislative index records an amendment issued in 2023.[4]

Unlike the DIFC Practice Direction, which is principally concerned with procedural disclosure and costs before the Court, the ADGM framework also regulates the funder and the funding agreement.

According to ADGM’s official materials, the framework addresses matters including:

The requirement that the funder’s principal business involve funding proceedings to which it is not a party.
A minimum level of qualifying assets of USD 5 million.
Mandatory terms in the funding agreement.
Conflicts of interest.
The funder’s involvement in settlement.
Dealings between the funder and lawyers.
Protection of legal representatives’ independence.[5]

ADGM therefore goes beyond asking whether funding has been disclosed. It establishes a broader framework concerning the funder’s eligibility and the structure of the funding relationship.

In practical terms, a claimant should assess:

Whether the funder can finance the full approved budget.
Whether capital will remain available throughout the proceedings.
How budget overruns are handled.
Whether appeals and enforcement are covered.
How settlement disagreements are resolved.
The consequences of termination.
Whether the funder’s rights preserve counsel’s independence.

Funding in arbitrateAD Arbitration

The arbitrateAD Arbitration Rules entered into force on 1 February 2024. Article 48 addresses third-party funding expressly.[6]

The provision requires a party to disclose, as soon as reasonably possible:

The existence of a non-party that has agreed to fund claims or defences.
The identity of that funder.

The disclosure must be made to the Case Management Office, the other parties and the tribunal, if constituted.

Where the claimant entered into the funding arrangement before commencement of the arbitration, the information must be included in the Request for Arbitration.[6]

The arbitrateAD provision is focused principally on early disclosure and identification of the funder, enabling conflicts to be assessed at the tribunal-constitution stage and during the proceedings.

Unlike Article 22 of the DIAC Rules, the published text of Article 48 does not include an equivalent express requirement to disclose whether the funder has committed to pay adverse costs.

That procedural difference is important, although it does not prevent an arbitrateAD tribunal from addressing costs or security for costs under its powers, the applicable law and the circumstances of the dispute.

The Principal Difference Between DIFC and ADGM

Both DIFC and ADGM expressly recognise litigation funding, but they adopt different regulatory models.

The DIFC Approach

The DIFC framework is contained in a court practice direction concerned with proceedings before the DIFC Courts.

Its main features include:

Disclosure of the existence of funding.
Disclosure of the funder’s identity.
The possibility of further disclosure by court order.
Security for costs.
Potential costs orders against the funder.
Practitioner duties.

The ADGM Approach

The ADGM framework extends beyond procedural disclosure and regulates the funder and the funding agreement itself.

Its principal features include:

Funder eligibility.
Minimum qualifying assets.
Required agreement terms.
Conflict management.
Settlement involvement.
Dealings with lawyers.
Financial capacity to perform funding obligations.

ADGM can therefore be described as providing a more detailed regulatory framework, while DIFC provides a more focused judicial and procedural framework.

That does not mean that one jurisdiction is universally more suitable for funding. Suitability depends on jurisdiction, claim type, governing law, budget, costs and the location of the respondent’s assets.

The Difference Between DIAC and arbitrateAD

Both institutions recognise third-party funding and require disclosure, but their published wording differs.

DIAC

Article 22 requires disclosure of:

The existence of funding.
The identity of the funder.
Whether the funder has committed to adverse-cost liability.

It also expressly addresses funding arrangements that may create a conflict with the tribunal after constitution.

arbitrateAD

Article 48 requires disclosure of:

The existence of funding.
The identity of the funder.
Pre-existing funding in the Request for Arbitration.

The published wording of Article 48 does not include an equivalent express obligation to disclose adverse-cost coverage.

In either institution, a funded party should update its disclosure where a funding agreement is entered into during the arbitration or where the funder or arrangement changes.

Is Dubai or Abu Dhabi More Suitable for Litigation Funding?

The question cannot be answered simply by selecting one emirate.

The suitability of funding depends on:

The court or arbitral institution.
Jurisdiction over the dispute.
The seat of arbitration.
The law governing the underlying contract.
The law governing the funding agreement.
The location of the respondent’s assets.
Disclosure and costs rules.
Enforcement prospects.
The commercial terms offered by the funder.

An ADGM case will involve a more detailed regulatory framework concerning the funder and funding agreement. A DIFC case will involve direct procedural rules on disclosure, costs and practitioner obligations.

In DIAC or arbitrateAD arbitration, the applicable institutional rules govern minimum disclosure, while the seat and procedural law remain important in identifying the supervising courts and the framework for interim relief, challenges and annulment.

Disclosure of Funding Does Not Mean Full Disclosure of the Agreement

It is essential to distinguish between different levels of disclosure.

A party may be required to disclose:

The existence of funding.
The identity of the funder.
Whether the funder has accepted adverse-cost liability.
Specific terms concerning conflicts, control or termination.
The complete funding agreement.

A rule requiring disclosure of the existence of funding and the funder’s identity does not automatically require production of all commercial terms.

However, a court or tribunal may order wider disclosure where the agreement becomes directly relevant to matters such as:

Security for costs.
Conflicts of interest.
Control over the claim.
Priority in the distribution of proceeds.
The funder’s financial capacity.
Non-party costs liability.

Funding agreements should therefore be drafted on the basis that some provisions may become subject to procedural scrutiny.

Control of the Claim and Counsel’s Independence

Whether the dispute is in Dubai or Abu Dhabi, funding should not undermine counsel’s independence or convert the funder into the effective legal decision-maker.

A funder may ordinarily receive:

Periodic reports.
Budget information.
Notice of material developments.
Consultation rights concerning settlement.
Rights to monitor the use of capital.

The arrangement should nevertheless make clear that:

The claimant owns and controls the claim.
The claimant instructs its lawyers.
Counsel does not take directions from the funder except within clearly defined lawful and professional limits.
Settlement is governed by a mechanism that does not allow either party to act oppressively.
The funder does not provide regulated legal services.

Costs and Security for Costs

Security for costs is one of the most important procedural risks in funded disputes.

An opposing party may argue that the existence of funding indicates that the claimant lacks resources to satisfy an adverse-cost award. Funding alone does not always establish impecuniosity, however, and does not automatically result in a security order in every forum.

The parties should assess:

Whether the funder will provide security.
Whether adverse-cost insurance is available.
Whether the funder accepts direct adverse-cost liability.
Whether that commitment is capped.
What happens if the security requirement exceeds the approved budget.
Whether the funder may terminate after a security order is made.

The significance of these issues will depend on the court, tribunal, procedural rules and facts of the case.

Confidentiality and Legal Protection

Funding due diligence often requires disclosure of sensitive material, including:

Legal advice.
Internal memoranda.
Evidence.
Expert assessments.
The dispute budget.
Asset and enforcement information.
Settlement strategy.

Parties should not assume that sharing such material with a prospective funder automatically preserves every form of confidentiality, privilege or professional secrecy.

Before providing sensitive information, parties should:

Put appropriate confidentiality arrangements in place.
Limit access.
Review professional-secrecy rules.
Consider data-protection requirements.
Identify where documents will be stored.
Avoid unnecessary disclosure.
Obtain advice from the lawyers responsible for the dispute.

WinJustice’s approved guidance similarly cautions applicants against providing privileged, confidential or highly sensitive material before appropriate confidentiality arrangements and submission procedures have been confirmed.

Enforcement Is Critical in Both Dubai and Abu Dhabi

A judgment or award may be issued in Dubai while the respondent’s assets are located in Abu Dhabi or outside the UAE, and the reverse may also occur.

Funding analysis should therefore extend beyond the legal merits and consider:

Asset location.
Legal and beneficial ownership.
Existing creditors and security.
Respondent solvency.
Risk of asset dissipation.
Recognition and enforcement routes.
The New York Convention for arbitral awards.
GCC and bilateral judicial-cooperation instruments.
Insolvency risk.
The duration and cost of enforcement.

A legally strong claim may remain commercially unsuitable for funding if there is no realistic route to collection.

Which Framework Provides Greater Clarity?

Both DIFC and ADGM provide greater express clarity than the onshore frameworks, but in different ways.

DIFC provides direct procedural guidance concerning disclosure, costs and dealings with a funder before the Court.

ADGM provides a wider regulatory framework addressing funder qualification and the structure of the funding agreement.

In arbitration, DIAC and arbitrateAD both provide minimum disclosure rules, although their wording differs.

Funding before the onshore courts in Dubai and Abu Dhabi requires a more cautious contractual, procedural and professional analysis because the available official sources do not establish an equivalent comprehensive funding regime.

Forward-Looking Legal Assessment

Dubai and Abu Dhabi reflect related but distinct institutional approaches to third-party funding.

In Dubai, the framework combines a court-focused practice direction in the DIFC and a relatively detailed arbitration provision in the DIAC Rules.

In Abu Dhabi, the framework combines broader funding regulation in ADGM with an institutional disclosure rule in arbitrateAD.

Future developments may address matters including:

Funder liability for costs.
Security for costs.
Limits on funder control.
Disclosure of agreement terms.
Confidentiality protection.
Lawyers’ duties.
Enforcement funding.
Portfolio funding.
Funding of claims in insolvency.

A uniform or immediate reform should not be assumed. The correct starting point will remain the identification of the relevant court, arbitral institution, seat and governing law.

Conclusion

The comparison between litigation funding in Dubai and Abu Dhabi is not a question of identifying which emirate is generally more favourable to funding. It is a question of determining the legal and institutional framework governing the particular claim.

In Dubai, the DIFC Courts regulate funding through a practice direction focused on disclosure, costs and the funder’s role, while the DIAC Rules expressly address third-party funding and require disclosure of whether the funder has accepted adverse-cost liability.

In Abu Dhabi, ADGM provides a more detailed framework regulating the funder and funding agreement, while the arbitrateAD Rules require early disclosure of the existence and identity of the funder.

For the onshore courts of both emirates, the available official sources do not establish an equivalent comprehensive funding code. The validity and effects of a funding arrangement therefore depend on contract law, public policy, professional and procedural rules, confidentiality, control and enforcement.

The appropriate funding structure depends on jurisdiction, arbitral seat, claim type, budget, costs, asset location and the terms of the agreement—not merely on whether the dispute is connected with Dubai or Abu Dhabi.

Frequently Asked Questions

Is litigation funding regulated more clearly in Dubai or Abu Dhabi?

Both DIFC and ADGM expressly regulate litigation funding, but ADGM provides a broader framework addressing funder eligibility and agreement terms. DIFC focuses more directly on disclosure, procedure and costs before the Court.

Must funding be disclosed in DIAC and arbitrateAD arbitration?

Yes. Both institutions require disclosure of the existence of funding and the identity of the funder. DIAC also requires disclosure of whether the funder has committed to adverse-cost liability.

Must the complete funding agreement be produced?

Not automatically in every case. The applicable rule may require only disclosure of the existence of funding and the funder’s identity. A court or tribunal may nevertheless order additional disclosure where terms are relevant to conflicts, control, costs or security.

Do DIFC funding rules apply to the Dubai onshore courts?

No. The DIFC Courts form a separate judicial system, and their practice directions should not be assumed to apply to Dubai onshore proceedings.

Do ADGM funding rules apply to the Abu Dhabi onshore courts?

No. ADGM is a distinct legal jurisdiction. The scope of its rules must be verified rather than imported automatically into Abu Dhabi onshore litigation.

Does a strong claim automatically qualify for funding?

No. Funders also assess the realistic recovery, budget, duration, adverse-cost risk, respondent solvency, asset location and enforceability of any judgment or award.

References

[1] DIFC Courts, Practice Direction No. 2 of 2017 on Third Party Funding in the DIFC Courts, 14 March 2017.

[2] DIFC Court of Appeal, LXT Real Estate Broker LLC v SIR Real Estate LLC, CA 005/2025, concerning the scope of funding disclosure.

[3] Dubai International Arbitration Centre, DIAC Arbitration Rules 2022, Article 22, effective 21 March 2022.

[4] ADGM Courts, Litigation Funding Rules 2019, as amended, official legislative index.

[5] Abu Dhabi Global Market, ADGM Courts Issue Litigation Funding Rules, 16 April 2019.

[6] Abu Dhabi International Arbitration Centre, arbitrateAD Arbitration Rules 2024, Article 48, effective 1 February 2024.

[7] Abu Dhabi International Arbitration Centre, Fresh Off the Press: The Latest arbitrateAD Rules, 16 February 2024.

[8] WinJustice, DIFC, ADGM, DIAC and arbitrateAD Research Guide, addressing the need to distinguish the UAE’s judicial and arbitral frameworks.

[9] WinJustice, UAE Litigation Funding Legal Sources, addressing source hierarchy and verification of forum-specific rules.

About WinJustice

WinJustice is a UAE-based litigation funding company providing funding solutions for eligible commercial disputes, litigation, and arbitration claims.

Through legal, financial, and enforcement assessment, WinJustice seeks to support meritorious claims while helping claimants manage the cost and financial risk of pursuing legal proceedings.

For more information about litigation funding or to submit a claim for preliminary assessment, visit WinJustice.

This article is provided for general informational purposes only and does not constitute legal, financial, tax, Sharia, or investment advice. The legality, availability, and terms of litigation funding depend on the applicable jurisdiction, forum, governing law, and circumstances of each dispute. Funding remains subject to legal, financial, and enforcement assessment.