Jurisdiction clauses are fundamental to commercial agreements, offering parties clarity and predictability by identifying the forum for resolving future disputes. Yet a critical question arises: when parties agree to confer jurisdiction on a particular court, does that court automatically acquire the authority to decide the matter?

 

In the UAE, jurisdiction over commercial matters is governed by Federal Decree Law No. 42 of 2022 (Civil Procedure Law). Under Article 33(3), a court will have jurisdiction if one of the following conditions is met:

  • The court is located in the area where the agreement was made;
  • The court is located in the area where the agreement was performed, in whole or in part;
  • The court is located in the area of the defendant’s domicile; or
  • The court is located in the area where the agreement was intended to be performed.

 

In addition, Article 33(5) allows parties to agree, in advance, to the jurisdiction of a specific court to resolve future commercial disputes—effectively granting that court jurisdiction by mutual consent. However, this discretion is not without limits.

 

A key exception arises in matters involving commercial transactions related to real property. Under Article 34 of the Civil Procedure Law, any legal proceedings concerning real estate must be brought before the court with territorial jurisdiction over the property’s location—regardless of any prior agreement to the contrary.

 

This gives rise to a pivotal question: while Article 33(5) permits jurisdiction by agreement, are parties truly free to select any court in practice? The answer lies in a careful reading of the UAE’s judicial structure and constitutional framework.

 

The UAE judicial system comprises both federal and local judicial authorities:

  • Sharjah, Fujairah, Umm Al-Quwain, and Ajman fall under the Federal Judicial Authority.
  • Dubai, Abu Dhabi, and Ras Al Khaimah operate independent local judicial authorities.

 

According to Article 104 of the UAE Constitution, as amended by Federal Law No. 1 of 2023, local courts have jurisdiction over “all judicial matters not assigned to the federal courts under the Constitution.” This constitutional provision places clear limits on the authority of local courts, preventing them from assuming jurisdiction over matters reserved for the federal system. It affirms a fundamental principle of UAE law: jurisdiction is a matter of public order—not subject to the whims of private agreement, however mutual.

 

Consequently, parties may only designate a court that falls within the same judicial system in which the contract was concluded or to which it maintains a territorial connection. For example, parties residing in Sharjah who execute a contract there may not assign jurisdiction to the Dubai Courts, as Dubai operates under a separate and independent judicial authority. However, they may validly choose the courts of Fujairah, Umm Al-Quwain, or Ajman, all of which—like Sharjah—are part of the Federal Judicial Authority.

 

This position was reinforced by the Commission for the Unification of Federal and Local Judicial Principles in its decision in Application No. 2 of 2023, issued during its session on 21 December 2023 at the Federal Supreme Court in Abu Dhabi. The Commission stated:

 

“As pursuant to article 104 of the Constitution states that the local judicial authorities in each Emirate shall have the jurisdiction in all judicial matters not assigned to the UAE courts under the provisions of the Constitution. Which indicates that each emirates has its own judiciary independent of other Emirate, except for judicial matters that entrusted to the federal judiciary in accordance with the provisions of the Constitution. Therefore, the jurisdiction of each of these judicial bodies is limited to a specific geographic scope, which is the borders of the Emirate in which it exercises its jurisdiction and does not extend beyond it to other emirates. Thus, the judiciary in each Emirate constitutes a judicial body independent of the judiciary in the rest of the emirates. Determining jurisdiction in this manner was a matter derived from the Constitution, as it is related to public order, and it is not permissible to agree to violate it.”

 

The Commission further clarified that the application of Article 33(5)—which permits parties to agree on a forum for resolving disputes—is not absolute. Rather, it is circumscribed by principles of public policy and the constitutional allocation of judicial authority, which cannot be overridden by private agreement.

 

Conclusion

 

Briefly and in sum: Although UAE law—under Article 33(5)—permits parties to designate a specific court to resolve future commercial disputes, this contractual freedom is not without limit. Any such agreement must respect the constitutional and territorial contours of the UAE’s judicial framework, particularly the divide between federal and local courts. A jurisdiction clause that extends beyond the bounds of the competent judicial authority risks being rendered unenforceable—not for lack of intent, but for conflict with public order.