Litigation Funding in Abu Dhabi: ADGM, Onshore Courts and arbitrateAD

Litigation funding in Abu Dhabi cannot be understood through a single legal regime. A commercial dispute connected with the emirate may proceed before the Abu Dhabi onshore courts, the courts of Abu Dhabi Global Market—ADGM—or an arbitral tribunal administered by the Abu Dhabi International Arbitration Centre, known as arbitrateAD. Each framework raises different questions about funding agreements, disclosure, conflicts, costs, confidentiality, and enforcement.

The clearest express regulation is found in ADGM. Its Litigation Funding Rules 2019 establish a detailed framework for qualifying funders and funding agreements. arbitrateAD also expressly addresses third-party funding in Article 48 of its Arbitration Rules. By contrast, the available official materials do not establish a dedicated, comprehensive litigation-funding code for ordinary civil and commercial proceedings before the Abu Dhabi onshore courts.

The practical conclusion is that litigation funding may be available for an Abu Dhabi dispute, but its legality and structure must be assessed by reference to the precise forum, governing law, professional rules, and terms of the arrangement. ADGM requirements should not be imported automatically into onshore proceedings, and arbitrateAD disclosure rules should not be treated as rules governing every Abu Dhabi arbitration.

What Is Litigation Funding?

Litigation funding, also called third-party funding or legal finance, is an arrangement under which an independent financier pays some or all of the costs of pursuing a legal claim in exchange for an agreed return if the claim produces a recovery.

Funding may cover:

• Lawyers’ fees.
• Court or arbitral institution charges.
• Expert evidence.
• Translation and document-management expenses.
• Security for costs.
• Adverse-cost exposure.
• Asset tracing and enforcement.

Commercial litigation funding is commonly non-recourse. The funder’s return is paid from a judgment, award, or settlement, and the funder ordinarily loses its investment if the claim fails. The precise consequences remain governed by the funding agreement, including any provisions dealing with fraud, breach of warranty, material non-disclosure, or misuse of funds.

Funding is distinct from a lawyer’s success fee. The funder provides capital under a financing agreement, while counsel provides legal services under a separate engagement. Counsel remains responsible for independent legal advice and professional conduct.

Why Abu Dhabi Requires a Forum-Specific Analysis

Abu Dhabi contains legally distinct dispute-resolution systems.

Abu Dhabi onshore courts

The Abu Dhabi Judicial Department administers the emirate’s ordinary local courts within the UAE’s federal and emirate-level civil-law architecture. Funding questions may therefore engage federal contract law, civil procedure, professional regulation, public policy, confidentiality, evidence, and enforcement rules.

ADGM Courts

ADGM is a separate common-law jurisdiction with its own courts, legislation, procedural rules, and professional framework. ADGM Courts expressly recognise and regulate litigation funding through the Litigation Funding Rules 2019, as amended.

arbitrateAD proceedings

arbitrateAD administers arbitration under its own institutional rules. Article 48 of those rules imposes an express disclosure obligation where a non-party funds claims or defences.

The WinJustice research framework correctly treats these as separate systems rather than a single Abu Dhabi funding regime. The same framework cautions that express regulation, contractual permissibility, disclosure obligations, and professional requirements must be analysed independently.

Litigation Funding Before the Abu Dhabi Onshore Courts

The available official sources do not establish a comprehensive statute dedicated specifically to third-party litigation funding in Abu Dhabi onshore civil and commercial proceedings.

That absence should not be interpreted in either of two extreme ways. It does not necessarily mean that every funding agreement is prohibited. Nor does it mean that every commercial funding structure will be enforceable.

An onshore arrangement may require analysis under several overlapping legal principles.

Contractual validity

The funding agreement must satisfy applicable requirements governing contract formation, lawful purpose, certainty, performance, and public policy. Particular attention should be given to the method used to calculate the funder’s return and the circumstances in which payment becomes due.

The governing-law clause does not end the analysis. Mandatory rules of the forum, professional obligations, procedural law, and public-policy considerations may remain relevant even where the contract selects a foreign law.

Professional independence

A funder is not the claimant’s advocate or legal representative. The claimant’s lawyer must continue to exercise independent professional judgment and comply with the rules governing legal practice.

The agreement should not grant the funder powers that effectively displace the client, direct counsel improperly, or allow a commercial financier to perform regulated legal services.

Control and settlement

A funder has a legitimate economic interest in the proceedings and may require information and consultation rights. Those rights should be distinguished from ultimate control.

A well-structured agreement should specify:

• Who instructs counsel.
• Who decides procedural strategy.
• How budgets are approved.
• How settlement offers are evaluated.
• Whether an independent mechanism resolves settlement disagreements.
• When either party may terminate the agreement.

Unclear control provisions may create contractual disputes at precisely the stage when the claimant needs stable financing.

Confidentiality and professional secrecy

Funding due diligence normally requires disclosure of pleadings, evidence, legal advice, budgets, damages analyses, and enforcement information.

Parties should not assume that providing sensitive material to a prospective funder will preserve every form of confidentiality or legal protection automatically. Appropriate confidentiality agreements, controlled data access, and legal advice concerning privilege, professional secrecy, and data protection should be obtained before disclosure.

Costs and procedural consequences

A claimant must assess not only its own costs but also the possible consequences of an adverse judgment, security application, counterclaim, or enforcement dispute.

Where no express onshore funding rule answers a particular question, the parties should not assume that the position will mirror ADGM or another common-law court. The procedural response may depend on the specific case and applicable legislation.

Litigation Funding in ADGM Courts

ADGM provides the most developed express funding framework in Abu Dhabi.

The Litigation Funding Rules 2019 were issued to regulate third-party financing of proceedings and provide greater certainty regarding the enforceability and operation of funding agreements. ADGM’s current legislation index records both the original Rules and Amendment No. 1 of 2023.

ADGM described the Rules as a comprehensive framework designed to balance access to finance, the commercial interests of funders, and transparency regarding the funder’s role.

Which proceedings may be covered?

The ADGM framework was designed in relation to funding for dispute-resolution proceedings and has been described by ADGM as applying to court and arbitral proceedings within its scope.

The exact application of the Rules must still be tested against the particular proceeding, funding agreement, and relevant definitions. Parties should not assume that every arbitration seated in Abu Dhabi, or every dispute involving an ADGM entity, automatically falls within the Rules.

Requirements concerning the funder

ADGM’s official explanation of the framework states that a qualifying funder’s principal business must involve funding proceedings to which it is not a party and that the funder must hold qualifying assets of at least USD 5 million.

This capital requirement serves a different function from ordinary contractual due diligence. It is intended to support the funder’s capacity to meet its obligations and reduce the risk that funding disappears during the proceedings.

Claimants should nevertheless examine more than the formal threshold. Relevant questions include:

• Whether the capital is immediately available.
• Whether funds are committed for the full approved budget.
• Whether the funder may reserve capital across multiple cases.
• Whether enforcement costs are included.
• What happens if the budget increases.
• Whether the funder maintains adequate resources throughout the case.

Minimum content of the funding agreement

ADGM’s official materials state that funding agreements must contain prescribed minimum terms. These address matters including conflicts of interest, settlement involvement, and the funder’s dealings with lawyers.

The agreement should therefore be treated as a regulated risk-allocation instrument, not merely a commercial promise to pay invoices.

Important provisions commonly include:

• The approved budget and funding limit.
• The definition of a successful recovery.
• The calculation and priority of the funder’s return.
• Information and reporting obligations.
• Conflicts procedures.
• Settlement consultation.
• Counsel’s independence.
• Termination rights.
• Consequences of termination.
• Dispute resolution between claimant and funder.

Control must remain appropriately allocated

Funding necessarily gives the financier a financial interest in the outcome. That does not mean the funder should become the legal decision-maker.

The claimant should remain the party to the proceedings, while counsel owes professional duties to the claimant. Any rights of consultation or budget supervision must be structured consistently with that relationship.

This distinction becomes especially important when the claimant and funder disagree about settlement. A claimant may prioritise speed, confidentiality, business relationships, or non-monetary relief. A funder may focus more heavily on financial return. The agreement should address that tension before it arises.

Adverse costs and security for costs

Funding does not eliminate procedural cost risk. A claimant may face an application for security for costs, and the eventual costs allocation may affect the economics of the matter.

The funding package should clarify whether the funder will finance:

• Security ordered by the court.
• Adverse-cost insurance.
• Direct adverse-cost exposure.
• Costs incurred in resisting a security application.
• Additional capital needed after an interlocutory ruling.

A funding proposal that covers only counsel’s fees may leave a substantial part of the claimant’s procedural risk unaddressed.

Litigation Funding in arbitrateAD Arbitration

The arbitrateAD Arbitration Rules came into effect on 1 February 2024 and include an express provision on third-party funding.[3]

Article 48 requires a party, as soon as reasonably possible, to inform the Case Management Office, all other parties, and the tribunal—if already constituted—of the existence and identity of any non-party that has agreed to fund claims or defences. Where the claimant entered into the arrangement before commencing the arbitration, the information must be included in the Request for Arbitration.

What Article 48 requires

The express requirement concerns:

• The existence of third-party funding.
• The identity of the non-party funder.
• Timely disclosure to the institution, other parties, and tribunal.
• Inclusion in the Request where the claimant was already funded before commencement.

Article 48 does not state that the entire funding agreement must invariably be produced. Disclosure of the existence and identity of a funder should therefore be distinguished from disclosure of all commercial terms.

A tribunal may nevertheless consider particular terms relevant to conflicts, security for costs, allocation of costs, or another procedural issue. Whether further production is required will depend on the applicable law, tribunal powers, party submissions, and circumstances of the case.

Why early disclosure matters

A funder may have commercial or professional relationships with arbitrators, counsel, experts, related entities, or other participants. Early disclosure allows potential conflicts to be identified before they undermine the tribunal’s constitution or the enforceability of the award.

It also prevents a claimant from treating funding as purely private where the institutional rules expressly require transparency.

The arbitral seat remains important

Under the arbitrateAD Rules, ADGM is the default seat where the parties have not agreed another seat, subject to the institutional court’s authority under the Rules.

The seat determines the procedural law and the courts with supervisory jurisdiction over the arbitration. It may therefore affect interim measures, challenges, annulment proceedings, and judicial support.

The institutional rules, seat, governing law of the funding agreement, and place of enforcement should be considered together. They answer different legal questions.

Is ADGM Funding Regulation the Same as arbitrateAD Disclosure?

No.

The ADGM Litigation Funding Rules regulate the funder and the funding agreement within their scope. They address matters such as funder qualifications, financial capacity, conflicts, settlement, and dealings with lawyers.

Article 48 of the arbitrateAD Rules is primarily a procedural disclosure provision. It requires parties to reveal the existence and identity of the non-party funder.

An arbitration may therefore involve more than one layer of analysis:

1. Whether Article 48 requires disclosure.
2. Whether the ADGM Litigation Funding Rules apply.
3. Whether the funding agreement is enforceable under its governing law.
4. Whether the tribunal may order further disclosure.
5. Whether funding affects security for costs or cost allocation.
6. Whether professional rules impose additional obligations on counsel.

Compliance with Article 48 does not, by itself, establish compliance with every other applicable funding rule.

Which Abu Dhabi Claims Are Commercially Fundable?

Legal merits are only one part of a funder’s decision.

A claim may be legally arguable but unsuitable for commercial funding because the expected recovery is too low, the legal budget is disproportionate, enforcement is uncertain, or the respondent lacks collectible assets.

A funder will ordinarily examine:

Merits and evidence

The funder will assess the causes of action, contractual terms, defences, limitation issues, documentary evidence, witness availability, expert requirements, and procedural posture.

Quantum

The pleaded amount is not necessarily the realistic recovery. Funding analysis focuses on recoverable loss, evidential support, contractual caps, contributory conduct, interest, costs, and the range of plausible outcomes.

Budget proportionality

The expected recovery must justify the cost and risk of the proceedings. A high-value claim may still be unattractive if it requires unusually extensive evidence or enforcement across several jurisdictions.

Respondent and enforcement

An award has commercial value only if it can be collected. The funder will consider:

• The respondent’s solvency.
• Location and ownership of assets.
• Existing security and creditors.
• Risk of dissipation.
• Sovereign or state-related issues.
• Recognition and enforcement routes.
• Potential annulment or public-policy objections.

Duration

Funding capital may remain exposed for years. The duration of merits proceedings, appeals or challenges, settlement negotiations, and enforcement will affect the required return.

A funding refusal therefore does not establish that the claim is legally weak. It may reflect economics, timing, budget, or enforcement risk.

Confidentiality, Privilege and Funding Due Diligence

Claimants often approach funders before proceedings commence. At that stage, the funder may request sufficient information to form an independent view of merits, damages, cost, and enforcement.

Disclosure should proceed in stages.

An initial assessment can often be based on a concise case summary, key documents, estimated budget, respondent information, and enforcement outline. More sensitive material may be provided only after appropriate confidentiality arrangements and professional advice.

Applicants should not assume that submitting information creates a lawyer-client relationship with a funder or guarantees finance. The approved WinJustice confidentiality language similarly cautions against submitting privileged or highly sensitive material before appropriate arrangements and procedures have been confirmed.

Practical Issues in an Abu Dhabi Funding Agreement

A claimant and its advisers should address at least the following matters.

Funding scope

The agreement should identify which proceedings, claims, appeals, counterclaims, and enforcement steps are covered. A narrow definition can create a funding gap if the dispute develops unexpectedly.

Budget increases

Complex cases frequently exceed initial estimates. The agreement should explain whether additional funding is discretionary, mandatory within an agreed tolerance, or subject to renewed approval.

Return and payment waterfall

The claimant should model early settlement, partial recovery, full success, delayed enforcement, and recovery below the amount claimed.

The agreement should state clearly which amounts are deducted first and how proceeds are distributed among the claimant, funder, lawyers, insurers, and other stakeholders.

Termination

The funder may seek termination rights if prospects deteriorate materially. The claimant should understand whether termination leaves it able to continue the proceedings and whether the funder retains rights over a later recovery.

Settlement

A clear procedure should apply if the claimant wishes to accept an offer that the funder considers inadequate, or if the funder favours settlement while the claimant wishes to proceed.

Competing interests in proceeds

Banks, shareholders, insolvency office-holders, insurers, lawyers, and other creditors may have rights affecting recoveries. Existing security and negative pledges should be reviewed before the claimant grants the funder an interest in proceeds.

Funding Insolvent or Financially Constrained Claims

Litigation funding can be particularly relevant where a company holds a valuable cause of action but lacks the liquidity to pursue it.

In an insolvency or restructuring context, additional questions arise:

• Who has authority to enter the agreement?
• Is approval required from creditors, a court, or an office-holder?
• Does the claim form part of the insolvent estate?
• How are recoveries distributed?
• Does the funder obtain priority?
• Are related-party or antecedent transaction issues relevant?
• Is the arrangement in creditors’ interests?

Funding may unlock value that would otherwise remain unrealised, but it must be integrated with the applicable insolvency and governance framework.

Enforcement Should Be Assessed Before Funding

An Abu Dhabi claim may involve assets located elsewhere in the UAE, the GCC, or internationally. Enforcement should therefore be considered at the beginning rather than after an award is obtained.

The assessment may include:

• The legal seat of an arbitration.
• The jurisdiction issuing the judgment.
• The New York Convention for arbitral awards.
• UAE enforcement procedures.
• Applicable GCC or bilateral judicial-cooperation instruments.
• Asset ownership and beneficial control.
• Interim or conservatory measures.
• Competing claims and insolvency.
• The cost and duration of foreign proceedings.

A legally strong claim with no credible collection strategy may not be commercially fundable.

Forward-Looking Legal Assessment

Abu Dhabi already contains two significant express approaches to third-party funding.

ADGM regulates funding through a detailed framework directed at funders and agreements. arbitrateAD addresses procedural transparency through an express disclosure provision. The onshore position remains less codified in the official materials reviewed for this article.

These frameworks should not be forced into artificial uniformity. Their differences reflect distinct institutional functions. ADGM’s rules regulate a funding relationship within a common-law financial free-zone environment. arbitrateAD’s rule protects the integrity of arbitral proceedings by requiring disclosure. Onshore courts operate within a broader federal and local civil-law framework.

Future legislation, court decisions, or institutional guidance may clarify issues such as disclosure, security for costs, funder liability, control, privilege, and the enforceability of particular return structures. Until then, careful classification and forum-specific drafting remain more reliable than broad statements about whether funding is generally “permitted in Abu Dhabi”.

Conclusion

Litigation funding in Abu Dhabi is legally and institutionally differentiated.

ADGM has an express and comparatively detailed funding framework. Its Litigation Funding Rules regulate funder qualifications, financial capacity, agreement terms, conflicts, settlement involvement, and dealings with lawyers.

arbitrateAD expressly requires disclosure of the existence and identity of a third-party funder under Article 48 of its Arbitration Rules. That obligation promotes transparency and conflict management but does not necessarily require automatic production of the complete funding agreement.

For Abu Dhabi onshore proceedings, the available official sources do not establish an equivalent dedicated funding code. Funding arrangements must therefore be assessed through the applicable contractual, procedural, professional, confidentiality, public-policy, and enforcement rules.

The central legal question is not simply whether litigation funding is available in Abu Dhabi. It is which Abu Dhabi forum is involved, which rules apply, how the agreement allocates control and risk, what must be disclosed, and whether the claim offers a credible path to recovery and enforcement.

Frequently Asked Questions

Is litigation funding legal in Abu Dhabi?

ADGM expressly regulates litigation funding, and the arbitrateAD Rules expressly recognise third-party funding through a disclosure provision. The position for Abu Dhabi onshore litigation requires case-specific analysis because the official materials reviewed do not establish a single comprehensive onshore funding statute.

What must be disclosed in an arbitrateAD arbitration?

Article 48 requires disclosure of the existence and identity of any non-party funding claims or defences. Disclosure must be made as soon as reasonably possible to the Case Management Office, the other parties, and the tribunal if constituted. Pre-existing claimant funding must be disclosed in the Request for Arbitration.

Must the full funding agreement be disclosed?

Article 48 of the arbitrateAD Rules does not state that the full agreement must always be produced. A tribunal may nevertheless order further disclosure where particular terms are relevant to conflicts, costs, security, or another procedural matter.

Does ADGM require funders to meet financial requirements?

ADGM’s official explanation of the Litigation Funding Rules states that a qualifying funder must have qualifying assets of at least USD 5 million and that its principal business must involve funding proceedings to which it is not a party.

Can litigation funding cover enforcement?

Potentially. The scope depends on the agreement. Claimants should verify expressly whether asset tracing, recognition proceedings, execution measures, challenges, appeals, and foreign counsel are included.

Does a strong Abu Dhabi claim automatically qualify for funding?

No. Funders consider legal merits together with quantum, budget, duration, respondent solvency, asset location, enforcement prospects, and the likely return relative to capital at risk.

References

[1] Abu Dhabi Global Market Courts, Litigation Funding Rules 2019, effective 2019, and Litigation Funding Rules 2019—Amendment No. 1 of 2023. Official ADGM legislation index.

[2] Abu Dhabi Global Market Courts, ADGM Courts Issue Litigation Funding Rules, 16 April 2019. Official explanation of the framework, funder qualification requirements, and minimum agreement terms.

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

[4] Abu Dhabi International Arbitration Centre, Fresh Off the Press: The Latest arbitrateAD Rules, 16 February 2024. Discussion of Article 48 and the default seat under Article 22.

[5] WinJustice, DIFC, ADGM, DIAC and arbitrateAD Research Guide. Institutional framework and mandatory separation of UAE dispute-resolution regimes.

[6] WinJustice, UAE Litigation Funding Legal Sources. UAE research hierarchy and verification framework.

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.