How did the dispute between Stephenson Harwood Middle East and Mark A B Capital Investment arise, and what was the nature of the jurisdictional challenge?
The dispute originates from a professional retainer agreement between the Claimant, Stephenson Harwood Middle East LLP, a law firm licensed and established within the DIFC, and the Defendant, Mark A B Capital Investment LLC. Following the commencement of proceedings by the Claimant on 4 February 2025, the Defendant sought to challenge the Court's authority to hear the matter. The Defendant’s application, filed on 29 October 2025, sought a declaration that the DIFC Courts lacked jurisdiction or, alternatively, a stay of proceedings in favour of arbitration.
The core of the dispute involves the interpretation of Clause 31 of the retainer agreement, which grants the Claimant the unilateral option to bring proceedings in the DIFC Courts or to refer disputes to arbitration under LCIA Rules. The Defendant argued that this clause was unenforceable due to its asymmetric nature, lacking the necessary mutuality to be binding. As noted in the court's reasoning:
In the alternative, the Defendant relies on Clause 31(c) of the agreement, which provides for arbitration under the LCIA Rules with the seat in the DIFC.
The Defendant’s attempt to characterize the clause as invalid was met with a robust defense from the Claimant, who maintained that the court held clear statutory jurisdiction and that the contractual terms were fully enforceable under both English and DIFC law.
Which judge presided over the jurisdictional challenge in CFI 009/2025, and when was the order issued?
The Jurisdictional Challenge Application was determined by H.E. Justice Shamlan Al Sawalehi sitting in the DIFC Court of First Instance. The parties agreed to have the application determined on the papers without an oral hearing. The final order, accompanied by the Schedule of Reasons, was issued on 25 December 2025.
What were the specific legal arguments advanced by Stephenson Harwood Middle East and Mark A B Capital Investment regarding the validity of the asymmetric jurisdiction clause?
The Defendant argued that Clause 31 was fundamentally flawed because it lacked reciprocity. By confining the Defendant to the DIFC Courts while reserving the right for the Claimant to choose other forums or arbitration, the Defendant contended that the clause created unacceptable uncertainty and undermined the consensus ad idem required for a valid jurisdiction agreement. Consequently, the Defendant argued that the court should decline jurisdiction and stay the proceedings in favor of arbitration under Article 13 of the DIFC Arbitration Law No. 1 of 2008.
The Claimant countered by asserting that the DIFC Courts possessed clear statutory jurisdiction under Dubai Law No. 2 of 2025, given the Claimant’s establishment within the DIFC. Regarding the contractual dispute resolution mechanism, the Claimant relied on the established legal principle that asymmetric clauses are valid. As the court recorded:
In response to the Defendant’s challenge to the jurisdiction clause, the Claimant submits that asymmetric jurisdiction clauses are recognised and enforceable under both English law and DIFC law.
Furthermore, the Claimant highlighted the Defendant’s procedural failures, noting that the Defendant had already filed an Acknowledgment of Service and a Defence on the merits before attempting to challenge the court’s jurisdiction months later.
What was the precise doctrinal issue the court had to resolve regarding the Defendant's attempt to invoke RDC Part 12 after filing a defence?
The Court had to determine whether a defendant, having already submitted to the jurisdiction of the DIFC Courts by filing an Acknowledgment of Service and a full Defence on the merits, could subsequently invoke RDC Part 12 to challenge the court's jurisdiction. The doctrinal issue centered on the concept of "submission to jurisdiction" and whether the procedural requirements of the Rules of the DIFC Courts (RDC) act as a strict bar to late-stage jurisdictional challenges. The court was required to balance the Defendant's right to challenge the forum against the principle of procedural finality and the waiver of jurisdictional objections through active participation in the litigation process.
How did H.E. Justice Shamlan Al Sawalehi apply the test for submission to jurisdiction and the validity of asymmetric clauses?
Justice Al Sawalehi’s reasoning focused on the procedural history of the case. Because the Defendant had already engaged with the merits of the claim, the Court found that the attempt to challenge jurisdiction was procedurally barred. The judge emphasized that parties cannot treat the court's jurisdiction as optional once they have actively participated in the proceedings. The reasoning was clear:
A party cannot, having taken substantive steps in the proceedings, later seek to invoke RDC Part 12 as a means of undoing the process.
Regarding the substantive validity of the clause, the Court affirmed that asymmetric jurisdiction clauses are standard and enforceable. The judge concluded that the clause provided a valid basis for jurisdiction under the New Court Law, rejecting the Defendant's argument that a lack of mutuality rendered the agreement void. The Court held:
I am satisfied that the jurisdiction clause is valid and enforceable and provides a further basis for jurisdiction pursuant to Article 14(B) of the New Court Law.
Which specific statutes and RDC rules were central to the Court’s decision in CFI 009/2025?
The Court’s decision was grounded in the following legal framework:
* DIFC Arbitration Law No. 1 of 2008, Article 13: Cited by the Defendant to argue for a mandatory stay of proceedings in favour of arbitration.
* Dubai Law No. 2 of 2025, Article 14(A)(1): Relied upon by the Claimant to establish the Court’s statutory jurisdiction based on the Claimant’s DIFC licensing.
* New Court Law, Article 14(B): Used by the Court to affirm the validity of the jurisdiction agreement between the parties.
* RDC Part 12 (specifically RDC 12.4): The procedural rules governing the timing and manner of challenging the Court’s jurisdiction, which the Defendant failed to satisfy.
How did the Court interpret the interaction between the DIFC Arbitration Law and the parties' retainer agreement?
The Court examined the Defendant’s reliance on Article 13 of the DIFC Arbitration Law No. 1 of 2008. The Defendant argued that Clause 31(c) of the retainer constituted a binding arbitration agreement. However, the Court found that the statutory requirements for a stay were not met. The Claimant successfully argued that because the arbitration option was unilateral and had not been exercised by the Claimant, the Defendant could not unilaterally force the dispute into arbitration. The Court noted:
The Claimant submits that jurisdiction arises pursuant to Article 14(A)(1) of Dubai Law No. 2 of 2025, on the basis that the Claimant is established and licensed in the DIFC.
Consequently, the Court determined that the arbitration agreement did not override the Claimant’s right to pursue litigation in the DIFC Courts, as the conditions for arbitration had not been triggered.
What was the final disposition of the Jurisdictional Challenge Application and the order regarding costs?
The Court dismissed the Defendant’s Jurisdictional Challenge Application in its entirety, finding it "procedurally barred, legally misconceived, and without merit." The Court ordered the Defendant to pay the Claimant’s costs associated with the application. The Claimant was directed to submit a statement of costs, not exceeding three pages, within five days of the Order.
What are the wider implications of this judgment for practitioners drafting asymmetric jurisdiction clauses in the DIFC?
This judgment serves as a strong reminder that the DIFC Courts will strictly enforce procedural timelines under RDC Part 12. Practitioners must ensure that any jurisdictional challenges are raised at the earliest possible stage, ideally before filing an Acknowledgment of Service or a Defence. Failure to do so will be viewed as a submission to the court's jurisdiction, effectively waiving the right to challenge the forum. Furthermore, the decision reaffirms the validity of asymmetric jurisdiction clauses, providing certainty to parties who utilize such clauses in professional services retainers. Litigants should anticipate that the DIFC Courts will not allow parties to use jurisdictional challenges as a tactical delay mechanism once they have already engaged with the merits of a claim.
Where can I read the full judgment in Stephenson Harwood Middle East v Mark A B Capital Investment [2025] DIFC CFI 009?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0092025-stephenson-harwood-middle-east-llp-v-mark-b-capital-investment-llc
Legislation referenced:
- DIFC Arbitration Law No. 1 of 2008, Article 13
- Dubai Law No. 2 of 2025, Article 14(A)(1)
- New Court Law, Article 14(B)
- Rules of the DIFC Courts (RDC), Part 12, RDC 12.4