On 7 January 2026, H.E. Justice Shamlan Al Sawalehi delivered a decisive blow to a set-aside application, dismissing the challenge brought by Onorata, Opall, and Opalina against Onslowe. The dispute, which originated from a 28 January 2025 arbitral award, hinged on the Claimants' attempt to re-characterise a complex corporate governance conflict as an employment matter to escape the tribunal's jurisdiction. By the time the final costs order was issued on 11 February 2026, the Claimants were left to pay USD 30,160.37 in legal fees, reinforcing the Court’s intolerance for tactical re-characterisation of arbitral disputes.
For arbitration counsel and in-house teams operating within the DIFC, this decision serves as a critical reminder that the Court will look past the labels applied by disgruntled parties to the substance of the underlying corporate affairs. By rejecting the attempt to carve out 'employment' issues from a broader shareholder dispute, the Court has reaffirmed the sanctity of broadly drafted arbitration clauses in Articles of Association, signaling that tactical jurisdictional challenges will be met with both dismissal and significant cost consequences.
How Did the Dispute Between Onorata and Onslowe Arise?
The genesis of the conflict between Onorata, Opall, Opalina, and Onslowe lies in the complex, often overlapping legal capacities inherent to closely held corporate structures. The First Applicant, Onorata, is a company incorporated in the Dubai Multi Commodities Centre (DMCC). Within such free zone entities, the demarcation lines between a shareholder’s equity rights, a director’s fiduciary duties, and an executive’s day-to-day management responsibilities are frequently blurred. Opall, Opalina, and Onslowe were all shareholders bound together within this corporate vehicle. When their commercial relationship deteriorated, the resulting friction did not fit neatly into a single doctrinal category. Instead, the core of the battle centered squarely on the affairs and management of the company, an expansive operational umbrella that inevitably encompasses financial oversight, corporate spending, and executive remuneration.
Anticipating potential deadlocks, the parties had established a private dispute resolution mechanism. Crucially, this mechanism was not a standalone commercial contract but was woven directly into the entity's constitutional framework. The arbitration agreement was contained within the Articles of Association and Memorandum of Association. It mandated that any differences arising between the company and its shareholders touching upon the intent of the Articles, acts affecting the company, or the company's general affairs must be referred to the Dubai International Arbitration Centre (DIAC). This broad, inclusive drafting is standard practice for DMCC entities seeking to keep sensitive internal governance disputes out of the public courts and within a confidential arbitral forum.
The DIAC proceedings ran their full course, culminating in a final Award dated 28 January 2025. The tribunal ruled decisively on the financial management issues, fashioning remedies that directly impacted corporate funds and shareholder entitlements. Dissatisfied with the substantive outcome, Onorata, Opall, and Opalina initially attempted to re-litigate the merits before the arbitrators themselves, raising post-award queries. When the tribunal declined to amend or vary the Award, the Claimants shifted their strategy from the arbitral forum to the supervisory jurisdiction of the DIFC Courts.
Onorata and its co-claimants filed their Set Aside Application on 9 July 2025. Their primary weapon was Article 41(2)(a)(iii) of DIFC Law No. 1 of 2008 (the DIFC Arbitration Law). They argued that the tribunal had exceeded its mandate by deciding matters outside the scope of the submission to arbitration. Specifically, the Claimants attempted a sophisticated tactical pivot: they sought to re-characterize the dispute over corporate funds and management as an "employment" dispute.
The strategic rationale behind deploying the "employment" label is well understood in UAE jurisprudence. Employment disputes often trigger mandatory local court jurisdiction or specific statutory regimes that cannot be easily contracted out of via a general corporate arbitration clause. By labeling the conflict over executive financial management as an employment issue, the Claimants hoped to render the dispute non-arbitrable, thereby nullifying the award entirely. It is a jurisdictional torpedo designed to sink an unfavorable ruling by attacking the foundational competence of the tribunal.
H.E. Justice Shamlan Al Sawalehi, however, was entirely unpersuaded by this artificial bifurcation of legal capacities. The Court recognized that in closely held companies, a shareholder managing corporate funds is inextricably linked to the broader governance of the entity. The judge's reasoning strikes at the heart of tactical set-aside applications, focusing on the substantive reality of the conflict rather than the semantic labels applied post-defeat:
In my view, the key point for Article 41(2)(a)(iii) is not whether one could label the dispute with an “employment” description.
The question is whether the tribunal was deciding a dispute about the affairs of the company and shareholder entitlement that the parties had submitted to arbitration.
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If a party could escape an arbitral award simply by applying a different legal label to the same set of underlying facts, the finality of arbitration would be rendered illusory. The Respondent, Onslowe, correctly identified that the Claimants were attempting to draw sharp distinctions between different legal capacities that were fundamentally inconsistent with the substance of the referred disputes. The tribunal had not strayed into an unrelated employment tribunal mandate; it had resolved exactly what it was empaneled to resolve. H.E. Justice Shamlan Al Sawalehi confirmed this assessment:
Based on the submissions, I am not satisfied that the Applicants have demonstrated that the tribunal decided a distinct employment dispute separate from the shareholder or company affairs dispute.
The Court placed significant weight on the expansive drafting of the Shareholder's Agreement. The arbitration clause was deliberately designed to capture any friction touching upon the company's operations. When parties agree to such broad language, they empower the tribunal to look at the corporate relationship holistically.
Having regard to the breadth of the clause and the manner in which the parties themselves conducted the arbitration, I am of the view that the disputes placed before the tribunal fall squarely within the scope of disputes contemplated by the arbitration agreement.
Furthermore, the Claimants' procedural conduct undermined their jurisdictional challenge. The principle of kompetenz-kompetenz and the requirement to raise jurisdictional objections promptly are bedrock elements of the DIFC Arbitration Law. A party cannot fully participate in an arbitration, await the outcome, and only then claim the tribunal lacked the authority to hear the matter because it was secretly an employment dispute all along.
The Respondent further relies on Articles 9 and 23 of the DIFC Arbitration Law, submitting that the Applicants waived any jurisdictional objections by participating in the arbitration without timely objection, and that the tribunal properly ruled on its own jurisdiction.
The Claimants' secondary line of attack relied on Article 41(2)(b)(iii), arguing that the Award conflicts with the public policy of the UAE. They also alleged the tribunal determined the rights of non-parties, a common grievance when corporate funds are redirected or frozen in shareholder disputes. Onslowe dismantled this argument by pointing out that the tribunal merely fashioned remedies as between the parties to the arbitration, a necessary function of resolving financial mismanagement claims. Furthermore, Onslowe noted the glaring lack of specificity in the Claimants' public policy argument.
The Respondent also submits that the Applicants have not identified any fundamental principle of UAE public policy that is infringed by the Award, and that any issues of practical implementation are matters for enforcement, not annulment.
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The reality of the Set Aside Application was laid bare by the Respondent: it was an appeal on the merits disguised as a jurisdictional challenge. The DIFC Courts have consistently maintained a high threshold for interference under Article 41, refusing to act as an appellate body for disgruntled litigants.
The Respondent contends that the Applicants’ complaints are disagreements with the tribunal’s reasoning and choice of remedies. Such disagreements, as it is submitted, do not engage Article 41 and cannot justify setting aside an arbitral award.
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This dynamic—where a losing party attempts to re-litigate the merits under the guise of a jurisdictional or public policy challenge—is a recurring theme in the DIFC Courts. Similar to the procedural maneuvers seen in ARB-027-2024: ARB 027/2024 Nalani v Netty, the Court demonstrated zero tolerance for attempts to undermine the arbitral process through creative re-characterization. The ruling confirms that when an arbitration clause is drafted broadly to cover the "affairs of the company," the DIFC Courts will interpret that mandate expansively, protecting the tribunal's jurisdiction over the inevitable financial and managerial disputes that arise between shareholders. The decision aligns with the principles explored in ARB-004-2022: Muzama v Mihanti [2022] DIFC ARB 004, reinforcing the strict boundaries of what constitutes a legitimate jurisdictional challenge versus mere dissatisfaction with an arbitrator's findings. By dismissing the application, H.E. Justice Shamlan Al Sawalehi preserved the integrity of the corporate arbitration mechanism, ensuring that shareholders cannot weaponize the "employment" label to escape the consequences of their own constitutional agreements.
How Did the Case Move From the Set Aside Application to the Final Costs Order?
The trajectory of Onorata v Onslowe from the issuance of the underlying arbitral award to the final quantification of costs provides a textbook demonstration of the DIFC Courts’ procedural efficiency. The underlying Dubai International Arbitration Centre (DIAC) arbitration culminated in a final award dated 28 January 2025. Rather than immediately seeking recourse from the supervisory court, the Claimants—Onorata, Opall, and Opalina—first engaged in a preliminary skirmish before the arbitral tribunal itself. They raised post-award queries on substantially the same grounds that would later form the basis of their set-aside application, attempting to persuade the tribunal to amend or vary the award. When the tribunal declined to alter its findings, the Claimants formally initiated their challenge before the DIFC Court of First Instance, filing their Arbitration Claim on 9 July 2025.
The July 2025 filing sought not only the annulment of the award under Articles 41 and 44 of the DIFC Arbitration Law but also a stay of enforcement pending the determination of the challenge. This dual-track approach—seeking to freeze the award's effect while simultaneously attacking its jurisdictional basis—is a common tactical maneuver in post-award litigation, echoing the procedural friction seen in cases like Eava v Egan [2014] ARB 005. However, the DIFC Courts have consistently maintained a high threshold for interfering with arbitral outcomes, particularly where the challenge appears to be a disguised appeal on the merits. The matter was swiftly listed for a hearing, ensuring that the cloud of uncertainty hanging over the January 2025 award would not linger indefinitely.
The substantive battle lines were drawn at the Claim Hearing on 19 December 2025 before H.E. Justice Shamlan Al Sawalehi. The Claimants advanced a bifurcated attack designed to unravel the tribunal's mandate. First, they invoked Article 41(2)(a)(iii) of the DIFC Arbitration Law, arguing that the tribunal had exceeded its jurisdiction by deciding matters outside the scope of the arbitration agreement. Specifically, the Claimants attempted to re-characterise the conflict as an "employment" dispute, arguing that such matters fell outside the corporate governance framework submitted to arbitration. Second, they relied on Article 41(2)(b)(iii), asserting that the award conflicted with the public policy of the United Arab Emirates.
The Respondent, Onslowe, countered that the arbitration agreement, embedded within the First Applicant's Articles of Association and Memorandum of Association, was deliberately drafted in broad terms. The Respondent maintained that the dispute fundamentally concerned the affairs and management of the company, and that the Claimants were merely dissatisfied with the tribunal's choice of remedies. Furthermore, the Respondent argued that the Claimants had actively participated in the arbitration without raising timely jurisdictional objections, thereby waiving their right to complain under Articles 9 and 23 of the DIFC Arbitration Law.
Justice Al Sawalehi’s analysis during the December hearing cut through the Claimants' attempt to artificially segment the dispute. The Court recognized that re-characterising a shareholder conflict over corporate funds as an "employment" issue was a semantic exercise designed to manufacture a jurisdictional defect. The judge firmly rejected this approach, focusing instead on the commercial reality of the parties' relationship and the expansive wording of the arbitration clause. The Court refused to allow the Claimants to escape the consequences of an arbitration they had willingly participated in by retroactively applying narrow labels to broad corporate disputes.
Having regard to the breadth of the clause and the manner in which the parties themselves conducted the arbitration, I am of the view that the disputes placed before the tribunal fall squarely within the scope of disputes contemplated by the arbitration agreement.
The Court similarly dismantled the public policy arguments. The Claimants failed to identify any fundamental principle of UAE public policy that the award actually infringed. The Court accepted the Respondent's position that any practical difficulties in implementing the tribunal's fashioned remedies were matters for the enforcement stage, not valid grounds for annulment. By holding jurisdictional arguments in reserve and attempting to deploy them only after an adverse outcome, the Claimants ran afoul of the waiver principles enshrined in the DIFC Arbitration Law. Consequently, on 7 January 2026, Justice Al Sawalehi issued an order dismissing the set-aside application in its entirety.
The 7 January 2026 dismissal order did not merely end the substantive challenge; it immediately triggered the costs phase of the litigation, demonstrating the Court's proactive case management. Rather than allowing the costs assessment to drag on through protracted submissions and satellite litigation, Justice Al Sawalehi imposed a strict, expedited timetable. The directive was unambiguous and designed to force immediate closure:
The Defendant shall file and serve their Statement of Costs not exceeding 3 pages within 5 days of this Order.
This aggressive scheduling forced immediate compliance. The Defendant met the deadline, filing a Statement of Costs dated 12 January 2026. The statement detailed professional fees incurred by a team of fee earners, culminating in a total claim of USD 37,700.46. The swift transition from the substantive dismissal to the quantification of costs underscores a broader judicial policy within the DIFC: unsuccessful challenges to arbitral awards will carry immediate and quantifiable financial consequences, a principle similarly reinforced in ARB 027/2024 Nalani v Netty.
The final chapter of the litigation unfolded a month later. On 11 February 2026, Justice Al Sawalehi issued the final costs order. The Court first confirmed the foundational principle under Rule 38.7 of the Rules of the DIFC Courts (RDC) that the successful party in a set-aside application is entitled to its costs in principle. However, the Court did not simply rubber-stamp the Defendant's claimed amount. Exercising his discretion under RDC 38.8 and 38.23, the judge applied the standard basis of assessment to ensure the final figure was both reasonable and proportionate to the complexity of the application.
The Court determined that a 20% reduction was appropriate to guard against any excess in time spent by the Defendant's legal team. This standard haircut reflects the Court's balancing act: fully compensating the successful party for defending a meritless challenge while maintaining strict oversight over the proportionality of legal spend in summary proceedings. The reduction ensures that while the victorious party is made whole, the costs awarded do not become punitive beyond the actual requirements of the litigation.
I consider that an award of 80% of the total costs claimed appropriately reflects the Defendant’s efforts while addressing proportionality and the need to guard against any excess in time spent.
The resulting arithmetic left the Claimants liable for a precise sum. The Court ordered the Claimants to pay USD 30,160.37, being 80% of the total costs claimed. To ensure finality and prevent further foot-dragging, the 11 February 2026 order imposed a strict 14-day deadline for payment pursuant to RDC 38.40. The Court further fortified this deadline with a coercive mechanism: failure to remit the funds within the two-week window would trigger default interest at a rate of 9% per annum, calculated from the date payment fell due until full realization, in accordance with Practice Direction No. 4 of 2017.
Looking at the timeline holistically, the progression from the July 2025 filing to the February 2026 final costs order illustrates a highly functional supervisory jurisdiction. In exactly seven months, the DIFC Court of First Instance processed a complex set-aside application involving jurisdictional and public policy arguments, conducted a substantive hearing, issued a reasoned dismissal, and fully quantified the resulting cost liabilities. This chronological efficiency deprives recalcitrant award debtors of the oxygen of delay, ensuring that the fruits of a January 2025 arbitral victory are not indefinitely suspended by tactical litigation. The handling of Onorata v Onslowe serves as a clear procedural blueprint, confirming that the DIFC Courts will aggressively manage post-award challenges from inception to the final allocation of costs.
What Is the 'Substance Over Label' Doctrine in DIFC Arbitration?
In the high-stakes arena of corporate divorces, the artificial fragmentation of a dispute is a familiar tactic deployed to defeat arbitral jurisdiction. When a shareholder is simultaneously an employee, director, or manager, conflicts over financial mismanagement inevitably blur the lines between their various legal capacities. In Onorata v Onslowe [2026] DIFC ARB 026, the DIFC Court of First Instance confronted exactly this strategy. The Claimants—Onorata, Opall, and Opalina—sought to annul a final arbitral award dated 28 January 2025 by arguing that the Dubai International Arbitration Centre (DIAC) tribunal had impermissibly strayed into employment law, thereby exceeding the scope of the shareholder arbitration agreement.
The underlying conflict involved a company incorporated in the Dubai Multi Commodities Centre (DMCC). The arbitration agreement governing the parties was embedded within the company's Articles of Association and Memorandum of Association. It mandated that any differences touching upon the intent and consequences of the Articles, acts affecting the company, or the affairs of the company must be referred to arbitration.
Despite this broad mandate, the Claimants invoked Article 41(2)(a)(iii) of DIFC Law No. 1 of 2008 (the DIFC Arbitration Law), contending that the Award dealt with a dispute not contemplated by the submission to arbitration. By attempting to re-characterise the corporate governance and financial mismanagement claims as an "employment" dispute, the Claimants hoped to trigger a jurisdictional exception, theoretically placing the conflict outside the scope of the shareholder agreement. If successful, this "label over substance" argument would provide a blueprint for disgruntled shareholders across the UAE to evade arbitral awards by simply re-characterising the underlying conduct to fit a non-arbitrable or out-of-scope legal category.
H.E. Justice Shamlan Al Sawalehi firmly dismantled this approach, establishing what can be termed the 'Substance Over Label' doctrine in DIFC set-aside applications. The Court's inquiry is strictly factual and commercial, prioritising the economic reality of the conflict over the semantic packaging presented by the losing party. Addressing the Claimants' attempt to carve out an employment dispute, H.E. Justice Al Sawalehi held:
The tribunal was tasked with resolving a fundamental breakdown in corporate governance. The Respondent correctly identified the core issue, stripping away the Claimants' artificial employment narrative to reveal the true nature of the conflict. As the Court noted:
The Respondent characterises it as a dispute concerning corporate funds and financial management within the affairs of the company.
The attempt to slice a director or shareholder's actions into distinct, hermetically sealed "capacities"—arguing that an individual was acting strictly as an employee rather than a shareholder when misappropriating funds or mismanaging the business—is a common feature of DMCC corporate disputes. However, the DIFC Courts consistently reject such rigid compartmentalisation when interpreting broadly drafted arbitration clauses. The Respondent's defence, which the Court ultimately adopted, directly attacked this artificial fragmentation:
The Respondent submits that the Applicants’ attempt to draw sharp distinctions between different legal capacities is inconsistent with the substance of the disputes that were referred.
The Court's refusal to entertain this jurisdictional slicing aligns with its historical trajectory of protecting arbitral mandates from procedural obstruction. Much like the robust defence of arbitral autonomy seen in ARB-027-2024: ARB 027/2024 Nalani v Netty, the Court in Onorata refused to let creative pleading rewrite the parties' original commercial bargain. The arbitration clause was drafted to capture any differences touching upon the company's affairs. This wide wording is standard in sophisticated joint ventures precisely to prevent the kind of jurisdictional evasion attempted by Onorata, Opall, and Opalina.
In assessing whether the tribunal had exceeded its mandate, the Court examined both the breadth of the clause and the actual conduct of the parties during the DIAC proceedings. The evidentiary burden in a set-aside application under Article 41 is notoriously high, and the Applicants failed to prove that the tribunal had embarked on a frolic of its own into distinct employment law territories. H.E. Justice Al Sawalehi concluded:
The strategic implications for cross-border practitioners are significant. When drafting dispute resolution clauses in joint venture agreements or DMCC Articles of Association, the inclusion of phrases like "affairs of the company" provides a wide jurisdictional net that the DIFC Courts will actively defend. The Court's refusal to entertain the "employment" label reinforces the DIFC's broader pro-arbitration jurisprudence. Just as the Court in ARB-003-2013: Banyan Tree Corporate PTE Ltd v Meydan Group LLC established a robust framework for enforcing awards without requiring a geographic nexus, Onorata establishes a robust framework for protecting the substantive scope of an award from semantic attacks.
Beyond the jurisdictional scope argument, the Claimants attempted a secondary attack, arguing the award conflicted with the public policy of the UAE under Article 41(2)(b)(iii). This, too, was a thinly veiled attempt to re-litigate the merits of the corporate dispute. The threshold for a public policy challenge in the DIFC is exceptionally high; it requires the identification of a fundamental principle of law that has been violated, not merely a complaint about how the tribunal weighed the evidence or fashioned its remedies. The Respondent successfully neutralized this ground:
The Respondent also submits that the Applicants have not identified any fundamental principle of UAE public policy that is infringed by the Award, and that any issues of practical implementation are matters for enforcement, not annulment.
The Court's approach reinforces the principle that disagreements with the tribunal’s reasoning do not engage Article 41. The supervisory jurisdiction of the DIFC Courts is not an appellate mechanism designed to correct perceived errors of fact or law. The Claimants' dissatisfaction with the tribunal's choice of remedies could not justify setting aside the award.
Furthermore, the issue of waiver played a crucial role in defeating the set-aside application. Parties cannot participate in an arbitration, wait for an adverse award, and then suddenly discover a jurisdictional objection that they failed to raise during the proceedings. This "keep it in the back pocket" strategy is consistently penalized by the DIFC Courts. The Respondent relied heavily on the statutory framework governing waiver:
The Respondent further relies on Articles 9 and 23 of the DIFC Arbitration Law, submitting that the Applicants waived any jurisdictional objections by participating in the arbitration without timely objection, and that the tribunal properly ruled on its own jurisdiction.
Ultimately, the attempt to re-characterise the commercial reality of the dispute failed on all fronts. The Set Aside Application was dismissed in its entirety. The Court's intolerance for such tactical maneuvering was reflected in the immediate costs order against the Claimants, with the Defendant directed to file a Statement of Costs not exceeding 3 pages within five days. By prioritising the substance of the corporate conflict over the artificial labels applied by the losing party, the DIFC Court of First Instance has sent a clear message: broad arbitration clauses will be interpreted broadly, and the commercial reality of a dispute will always trump creative legal characterisation.
How Did Justice Al Sawalehi Reach the Decision to Dismiss the Challenge?
H.E. Justice Shamlan Al Sawalehi anchored his dismissal of the set-aside application in a rigorous, text-first reading of the underlying arbitration agreement, coupled with an unforgiving assessment of how the parties actually conducted themselves during the Dubai International Arbitration Centre (DIAC) proceedings. The Claimants—Onorata, Opall, and Opalina—mounted a dual-pronged attack under the DIFC Arbitration Law (DIFC Law No. 1 of 2008). They relied on Article 41(2)(a)(iii) to allege the tribunal exceeded its mandate by deciding matters outside the scope of the submission, and Article 41(2)(b)(iii) to allege that the resulting award breached the public policy of the United Arab Emirates. The Court systematically dismantled both arguments by prioritizing the substantive commercial reality of the dispute over the Claimants' post hoc legal categorizations.
The central pillar of the Claimants' jurisdictional challenge rested on an attempt to bifurcate the conflict. They argued that the tribunal had improperly waded into an "employment" dispute, which they contended fell outside the shareholder-focused arbitration agreement. Justice Al Sawalehi rejected this formalistic slicing of the corporate relationship. The Court scrutinized the foundational documents, noting that the arbitration agreement was contained in the company’s Articles of Association and Memorandum of Association. These constitutional documents were designed to capture any differences touching upon the affairs of the Dubai Multi Commodities Centre (DMCC) incorporated entity.
The Respondent, Onslowe, successfully argued that the arbitration clause was intentionally expansive, designed precisely to prevent the kind of jurisdictional fragmentation the Claimants were attempting to engineer.
The Respondent submits that the arbitration agreement was deliberately drafted in broad terms and was intended to encompass disputes concerning the affairs of the company.
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Justice Al Sawalehi’s analysis of the Article 41(2)(a)(iii) challenge reveals a deep skepticism toward tactical re-characterization in post-award challenges. The Court refused to allow the Claimants to escape the tribunal's jurisdiction simply by slapping an "employment" label onto what was fundamentally a fight over corporate governance and financial control. The judgment makes clear that the nomenclature deployed by a disgruntled party cannot rewrite the jurisdictional boundaries established by the parties' initial consent. The Court recognized that in closely held entities, the roles of shareholder, director, and employee frequently overlap, and disputes inevitably bleed across these technical capacities.
In my view, the key point for Article 41(2)(a)(iii) is not whether one could label the dispute with an “employment” description.
The question is whether the tribunal was deciding a dispute about the affairs of the company and shareholder entitlement that the parties had submitted to arbitration.
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The Court looked directly at the financial mechanics of the underlying DIAC arbitration. The Respondent had consistently framed the conflict not as a mere breach of an employment contract, but as a broader struggle over corporate assets. Justice Al Sawalehi agreed with this characterization. The tribunal had been tasked with resolving a holistic breakdown in the management of the DMCC entity, and the financial remedies it awarded were inextricably linked to the parties' roles as shareholders governing the company's operations. The Court found that the Claimants' attempt to draw sharp distinctions between their various legal capacities was entirely artificial.
The Respondent submits that the Applicants’ attempt to draw sharp distinctions between different legal capacities is inconsistent with the substance of the disputes that were referred.
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Based on the submissions, I am not satisfied that the Applicants have demonstrated that the tribunal decided a distinct employment dispute separate from the shareholder or company affairs dispute.
Beyond the text of the Articles of Association, Justice Al Sawalehi placed immense weight on the Claimants' own conduct during the arbitration. The DIFC Courts have consistently held that parties cannot actively participate in arbitral proceedings, test the waters of the tribunal's merits determination, and then cry foul on jurisdiction only after receiving an adverse award. This principle, echoing the strict procedural boundaries seen in cases like ARB-027-2024: ARB 027/2024 Nalani v Netty, requires timely objections to jurisdictional overreach. A party cannot reserve a jurisdictional objection as an insurance policy against a loss on the merits.
Here, the Respondent heavily relied on the statutory waiver provisions of the DIFC Arbitration Law, pointing out that the Claimants had fully engaged with the tribunal's process without raising these specific scope objections at the appropriate juncture.
The Respondent further relies on Articles 9 and 23 of the DIFC Arbitration Law, submitting that the Applicants waived any jurisdictional objections by participating in the arbitration without timely objection, and that the tribunal properly ruled on its own jurisdiction.
The Court found that the combination of the broad drafting of the arbitration agreement and the parties' active, unreserved participation in the DIAC proceedings was fatal to the set-aside application. Justice Al Sawalehi crystallized this dual rationale, confirming that the tribunal had not strayed into matters beyond the scope of that submission.
Having regard to the breadth of the clause and the manner in which the parties themselves conducted the arbitration, I am of the view that the disputes placed before the tribunal fall squarely within the scope of disputes contemplated by the arbitration agreement.
The Claimants also attempted to argue that the tribunal had exceeded its jurisdiction by determining the rights of non-parties. This is a common tactic used to attack awards involving complex corporate structures where funds flow through various entities, similar to the jurisdictional overreach arguments frequently deployed and dismissed in cases like ARB-004-2022: Muzama v Mihanti [2022] DIFC ARB 004. Justice Al Sawalehi swiftly dismantled this argument. The Court accepted the Respondent's position that the tribunal had not legally bound or stripped the rights of any external actors.
The Respondent further submits that the tribunal did not determine the rights of any non-party, but merely fashioned remedies as between the parties to the arbitration.
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The distinction between an award that practically impacts a corporate structure and one that legally determines a non-party's rights is a crucial boundary in DIFC arbitration jurisprudence. The tribunal here stayed firmly on the correct side of the line, ensuring its remedies were strictly inter partes.
Having failed on the scope of the submission, the Claimants' reliance on Article 41(2)(b)(iii)—the public policy exception—fared no better. The threshold for setting aside an award on public policy grounds in the UAE is notoriously high, requiring the identification of a fundamental, mandatory principle of law that the award egregiously violates. The Claimants failed to clear this hurdle. They could not point to any specific UAE public policy that was offended by the tribunal's resolution of the shareholder dispute. Instead, they attempted to use the public policy mechanism as a backdoor to challenge the tribunal's substantive findings.
The Respondent also submits that the Applicants have not identified any fundamental principle of UAE public policy that is infringed by the Award, and that any issues of practical implementation are matters for enforcement, not annulment.
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Justice Al Sawalehi treated the Claimants' public policy and jurisdictional arguments as what they truly were: an attempt to appeal the merits of the tribunal's decision. The DIFC Courts do not operate as an appellate body for arbitral awards. When the Claimants previously raised these exact issues with the tribunal itself, the arbitrators rightly declined to amend or vary the Award. Bringing those same substantive grievances to the Court under the guise of an Article 41 challenge was a fundamental misapplication of the annulment regime.
The Respondent contends that the Applicants’ complaints are disagreements with the tribunal’s reasoning and choice of remedies. Such disagreements, as it is submitted, do not engage Article 41 and cannot justify setting aside an arbitral award.
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The dismissal of the set-aside application was absolute, culminating in a swift and punitive costs order. The Claimants had initially sought a stay of enforcement pending determination, a request that evaporated alongside their substantive arguments. Justice Al Sawalehi directed that the Claimants bear the financial burden of their failed challenge, ordering the Defendant to quantify their legal spend immediately.
The Defendant shall file and serve their Statement of Costs not exceeding 3 pages within 5 days of this Order.
This strict timeline and the ultimate dismissal reinforce the DIFC Courts' unwavering commitment to arbitral finality. By refusing to entertain the artificial separation of employment and shareholder capacities in a closely held corporate dispute, the Court protected the integrity of broad arbitration clauses and penalized the tactical deployment of annulment proceedings. The ruling confirms that where a dispute concerns the affairs and management of the company, the DIFC Courts will look to the substance of the commercial relationship and the conduct of the parties, rather than the creative labels applied by a losing party seeking to evade enforcement.
How Does the DIFC Approach Compare to International Standards on Arbitral Finality?
The architecture of the Dubai International Financial Centre (DIFC) as a premier seat for international dispute resolution rests heavily on its fidelity to global arbitral standards. By adopting the UNCITRAL Model Law on International Commercial Arbitration almost wholesale through DIFC Law No. 1 of 2008 (the DIFC Arbitration Law), the jurisdiction committed itself to a strictly pro-enforcement regime. The judgment of H.E. Justice Shamlan Al Sawalehi in Onorata v Onslowe [2026] DIFC ARB 026 serves as a rigorous application of these principles, demonstrating the Court’s refusal to entertain merits-based appeals disguised as jurisdictional or public policy challenges.
The Applicants’ strategy in Onorata is a familiar one in international arbitration: attempting to bypass the finality of an award by shoehorning substantive grievances into the narrow statutory grounds for annulment. Specifically, the Applicants relied on Article 41(2)(a)(iii) of the DIFC Arbitration Law, arguing that the tribunal exceeded its mandate, and Article 41(2)(b)(iii), alleging that the award conflicts with the public policy of the UAE. These provisions directly mirror Article 34 of the UNCITRAL Model Law and Article V of the New York Convention. The international consensus on these provisions is clear: they are to be construed narrowly, and courts must not review the tribunal’s findings of fact or law.
Justice Al Sawalehi’s approach aligns perfectly with this international consensus. The Court recognised that the Applicants’ challenge, while framed as a jurisdictional excess, was fundamentally a dispute over how the tribunal interpreted the facts and applied the law. The Respondent correctly identified this tactical manoeuvring, a position the Court ultimately endorsed:
The Respondent contends that the Applicants’ complaints are disagreements with the tribunal’s reasoning and choice of remedies. Such disagreements, as it is submitted, do not engage Article 41 and cannot justify setting aside an arbitral award.
By rejecting the Applicants' attempt to re-litigate the merits, the DIFC Courts reinforce a critical pillar of international arbitration: the tribunal is the final arbiter of the substantive dispute. When parties agree to arbitrate, they accept the risk that the tribunal might get the facts or the law wrong. Disappointment with the outcome, or disagreement with the specific remedies fashioned by the arbitrators, does not constitute an excess of jurisdiction. The Court's ruling ensures that the DIFC remains a hostile environment for sore losers seeking a second bite at the cherry.
A central element of the Applicants' challenge was their attempt to re-characterise the nature of the dispute. They argued that the tribunal had improperly decided an "employment" matter, which they claimed fell outside the scope of the arbitration agreement contained in the Articles of Association of the company, which was incorporated in the Dubai Multi Commodities Centre. This artificial slicing of the dispute into distinct legal capacities—shareholder versus employee—is a common tactic used to manufacture jurisdictional defects.
Justice Al Sawalehi dismantled this argument by focusing on the substance of the conflict rather than the labels attached to it by the losing party. The true nature of the conflict concerned the affairs and management of the company, a matter squarely within the contemplation of the arbitration clause. The Court’s reasoning on this point is instructive for practitioners drafting or litigating corporate arbitration agreements:
In my view, the key point for Article 41(2)(a)(iii) is not whether one could label the dispute with an “employment” description.
The question is whether the tribunal was deciding a dispute about the affairs of the company and shareholder entitlement that the parties had submitted to arbitration.
This pragmatic, substance-over-form approach is a hallmark of sophisticated arbitration jurisdictions. It prevents parties from escaping their arbitration agreements through clever pleading. When an arbitration clause is drafted broadly to cover any dispute "touching upon" the affairs of the company, tribunals and supervisory courts will give effect to that broad commercial intent. Justice Al Sawalehi confirmed that the tribunal's jurisdiction was securely anchored in the parties' own contractual language:
Having regard to the breadth of the clause and the manner in which the parties themselves conducted the arbitration, I am of the view that the disputes placed before the tribunal fall squarely within the scope of disputes contemplated by the arbitration agreement.
The reference to "the manner in which the parties themselves conducted the arbitration" brings us to another crucial alignment between the DIFC and international standards: the doctrine of waiver. Under Article 4 of the UNCITRAL Model Law, a party who knows that a provision of the law or a requirement under the arbitration agreement has not been complied with, and yet proceeds with the arbitration without stating their objection without undue delay, is deemed to have waived their right to object. This principle is codified in Articles 9 and 23 of the DIFC Arbitration Law.
In Onorata, the Applicants fully participated in the Dubai International Arbitration Centre (DIAC) proceedings. Only after the final award was issued on 28 January 2025 did they mount a sustained attack on the tribunal's jurisdiction. The procedural history shows that the Applicants raised post-award queries with the arbitral tribunal on the same grounds they later used in their set-aside application. When the tribunal declined to alter the award, they filed their claim in the DIFC Courts, requesting (among other relief) a stay of enforcement pending determination.
The Respondent weaponised the Applicants' own procedural conduct against them, arguing that their delayed jurisdictional challenge was procedurally barred:
The Respondent further relies on Articles 9 and 23 of the DIFC Arbitration Law, submitting that the Applicants waived any jurisdictional objections by participating in the arbitration without timely objection, and that the tribunal properly ruled on its own jurisdiction.
The enforcement of waiver provisions is vital for the integrity of the arbitral process. It prevents the "ambush" tactic, where a party keeps a perceived jurisdictional defect in reserve as an insurance policy, only deploying it if the substantive outcome is unfavourable. By upholding the waiver principle, the DIFC Courts align themselves with the pro-arbitration jurisprudence of leading seats like London, Paris, and Singapore, ensuring that jurisdictional challenges are raised and resolved at the earliest possible stage.
This robust defence of arbitral finality is not an isolated incident but part of a long-standing doctrinal trajectory in the DIFC. The jurisdiction's reputation as a safe harbour for award creditors was cemented in foundational cases such as ARB-003-2013: Banyan Tree Corporate PTE Ltd v Meydan Group LLC, where the Court demonstrated its willingness to enforce awards even in complex, politically sensitive contexts. Onorata v Onslowe builds upon this legacy, clarifying that the Court's pro-enforcement stance applies equally to domestic corporate disputes seated within the UAE.
Furthermore, the Applicants' reliance on the public policy exception under Article 41(2)(b)(iii) highlights the strict parameters the DIFC Courts apply to such claims. In international arbitration practice, the public policy ground is notoriously difficult to satisfy. It is reserved for awards that violate the most basic notions of morality and justice in the forum state. The Applicants in Onorata failed to identify any fundamental principle of UAE law that was breached by the tribunal's decision regarding corporate funds and shareholder entitlements. The Court's dismissal of this ground reaffirms that public policy cannot be used as a backdoor for merits review. The DIFC Courts recognise that the practical implementation of an award—such as the mechanics of transferring shares or distributing corporate funds—is a matter for the enforcement stage, not a basis for annulment.
Ultimately, the Applicants' challenge was confined to specific parts of the Award, yet their arguments struck at the very heart of the tribunal's authority to resolve the commercial reality of the dispute. Justice Al Sawalehi’s decisive rejection of these arguments sends a clear message to the international legal community: the DIFC Courts will rigorously defend the finality of arbitral awards. They will look past artificial legal characterisations, enforce broad arbitration agreements according to their commercial intent, and penalise parties who attempt to game the system through delayed jurisdictional objections. In doing so, the DIFC maintains its position in the top tier of global arbitration seats, offering practitioners and commercial parties the certainty and predictability required for cross-border dispute resolution.
Which Earlier DIFC Cases Frame This Decision?
The DIFC Courts have spent over a decade constructing a formidable pro-arbitration framework, systematically dismantling attempts by disappointed litigants to relitigate arbitral findings under the guise of jurisdictional or public policy challenges. H.E. Justice Shamlan Al Sawalehi’s ruling in Onorata v Onslowe sits squarely within this established doctrinal trajectory, reinforcing the Court’s role as a protector of the arbitral seat against tactical interference. The Application to set aside a final arbitral award represents a classic iteration of a well-worn strategy: attempting to fracture a unified commercial dispute into distinct legal categories to escape the reach of a broadly drafted arbitration clause.
The Claimants’ primary line of attack relied upon Article 41(2)(a)(iii) of DIFC Law No. 1 of 2008 (the DIFC Arbitration Law), which permits the annulment of an award if it deals with a dispute not contemplated by, or not falling within the terms of, the submission to arbitration. The underlying contract in this matter was the First Applicant’s Articles of Association and Memorandum of Association, which mandated that differences arising between the company and shareholders be referred to the Dubai International Arbitration Centre (DIAC).
Faced with an adverse award, the Claimants sought to re-characterise the conflict. They argued that the tribunal had improperly waded into an "employment" dispute, thereby exceeding its mandate which was ostensibly limited to shareholder and corporate governance matters. In complex corporate structures within the Dubai Multi Commodities Centre (DMCC) or the DIFC, individuals frequently wear multiple hats simultaneously—acting as founders, shareholders, directors, and employees. If the Court permitted a party to surgically extract the "employment" elements of a broader corporate fallout and use them to annul an award, the commercial efficacy of shareholder arbitration agreements would be severely compromised.
H.E. Justice Shamlan Al Sawalehi firmly rejected this artificial bifurcation, focusing instead on the commercial reality of the conflict. The Court’s reasoning cuts through the formalistic labels applied by the Claimants:
In my view, the key point for Article 41(2)(a)(iii) is not whether one could label the dispute with an “employment” description.
The question is whether the tribunal was deciding a dispute about the affairs of the company and shareholder entitlement that the parties had submitted to arbitration.
By refusing to be distracted by the "employment" label, the Court aligned its analysis with the substantive nature of the conflict. The Respondent characterises it as a dispute concerning corporate funds and financial management within the affairs of the company. This approach mirrors the long-standing common law presumption—often associated with the English Fiona Trust principles and implicitly adopted across DIFC jurisprudence—that rational businesspeople intend for all disputes arising out of their relationship to be decided in the same forum. The Court found that the arbitration agreement was deliberately drafted in broad terms and was intended to encompass disputes concerning the affairs of the company.
Consequently, the Court concluded that the tribunal had not strayed beyond its jurisdictional boundaries:
Having regard to the breadth of the clause and the manner in which the parties themselves conducted the arbitration, I am of the view that the disputes placed before the tribunal fall squarely within the scope of disputes contemplated by the arbitration agreement.
The Court’s refusal to entertain the Claimants' re-characterisation strategy is further evidenced by its finding on the substantive evidence. Based on the submissions, I am not satisfied that the Applicants have demonstrated that the tribunal decided a distinct employment dispute separate from the shareholder or company affairs dispute. The Respondent submits that the Applicants’ attempt to draw sharp distinctions between different legal capacities is inconsistent with the substance of the disputes that were referred.
Beyond the scope of the arbitration agreement, the Claimants mounted a second attack based on Article 41(2)(b)(iii) of the DIFC Arbitration Law, arguing that the Award conflicts with the public policy of the UAE. This represents another frequent, yet rarely successful, tactic in the DIFC Courts. Historically, onshore UAE courts have sometimes entertained expansive interpretations of public policy to annul arbitral awards, particularly concerning issues of signatory authority or unregistered property rights. The DIFC Courts, however, have consistently ring-fenced DIFC-seated arbitrations from such expansive challenges, applying a highly restrictive, internationally aligned definition of public policy.
In Onorata v Onslowe, the Claimants attempted to conflate the practical difficulties of implementing the tribunal's remedies with a breach of fundamental public policy. The Court swiftly dismantled this conflation, endorsing the Respondent's position:
The Respondent also submits that the Applicants have not identified any fundamental principle of UAE public policy that is infringed by the Award, and that any issues of practical implementation are matters for enforcement, not annulment.
This distinction is critical for practitioners advising on post-award strategies. A party cannot use anticipated friction in executing an award at the enforcement stage as a backdoor mechanism to have the award set aside at the seat. The annulment court is concerned with the fundamental integrity of the arbitral process and the legality of the award's core findings, not the mechanical logistics of how corporate funds or shares will ultimately be transferred. Furthermore, the Court noted that the tribunal did not determine the rights of any non-party, but merely fashioned remedies as between the parties to the arbitration, thereby neutralizing any argument that the award improperly bound third parties in violation of due process.
The decision in Onorata v Onslowe also highlights the Court's deep skepticism toward parties who participate fully in an arbitration, only to raise jurisdictional objections after receiving an unfavorable result. The Respondent further relies on Articles 9 and 23 of the DIFC Arbitration Law, submitting that the Applicants waived any jurisdictional objections by participating in the arbitration without timely objection, and that the tribunal properly ruled on its own jurisdiction. The strategy of raising post-award queries with the arbitral tribunal on the exact same grounds later used in a set-aside application, followed immediately by a request for a stay of enforcement pending determination, is a procedural maneuver that the DIFC Courts view with increasing impatience. The Respondent contends that the Applicants’ complaints are disagreements with the tribunal’s reasoning and choice of remedies. Such disagreements, as it is submitted, do not engage Article 41 and cannot justify setting aside an arbitral award.
This robust defense of the arbitral process echoes the principles laid down in earlier foundational cases, such as Giacinta v Gilam LLC [2016] DIFC ARB 004, where the Court similarly deployed a jurisdictional shield against parallel annulment tactics designed to frustrate the enforcement of valid awards. The message to the market remains unequivocal: the DIFC Courts will not permit the set-aside mechanism to function as an appellate review of a tribunal's factual findings or its commercial application of the law.
The summary dismissal of the Claimants' application was accompanied by a strict and accelerated costs timeline, further penalizing the tactical deployment of unmeritorious challenges. The Court ordered that the Defendant shall file and serve their Statement of Costs not exceeding 3 pages within 5 days of this Order. This aggressive costs management aligns with the Court's broader approach to post-award litigation, as recently analyzed in ARB/031/2025 Olen v Oreta, ensuring that parties who successfully defend arbitral awards are not subjected to protracted secondary litigation over the recovery of their legal fees. By enforcing strict page limits and tight deadlines, the Court ensures that the finality of the arbitral process is preserved not just in legal doctrine, but in commercial reality.
What Does This Mean for Practitioners Seeking to Recover Costs?
The transition from a substantive victory to the recovery of legal fees is often where the true commercial value of a judgment is realized. In the context of arbitration enforcement within the Dubai International Financial Centre (DIFC), the Court’s approach to cost assessment serves as a powerful deterrent against meritless set-aside applications. When parties attempt to deploy tactical arguments—such as re-characterising a shareholder dispute as an employment matter to evade an arbitral tribunal's jurisdiction—they expose themselves to significant financial consequences. The costs order issued by H.E. Justice Shamlan Al Sawalehi on 11 February 2026 provides a clear blueprint for how the DIFC Courts quantify and enforce these consequences, reinforcing the sanctity of arbitral awards.
The foundation of the Court's approach lies in the strict application of the "loser pays" principle, codified in Part 38 of the Rules of the DIFC Courts (RDC). Following the substantive ruling that dismissed the Claimants’ Set Aside Application, the Defendant, Onslowe, immediately moved to recover the expenses incurred in defending the arbitral award. The Court's starting point is unambiguous: the successful party in a set-aside application is entitled to costs in principle. H.E. Justice Shamlan Al Sawalehi articulated this baseline entitlement without hesitation:
For the reasons set out in that Order, I found that the Defendant was the successful party in the Set Aside Application and is therefore entitled to costs in principle pursuant to RDC 38.7.
This strict adherence to RDC 38.7 is not merely procedural; it is a substantive policy choice by the DIFC Courts to protect the finality of arbitration. By ensuring that parties who successfully defend an award are not left out of pocket, the Court actively discourages speculative challenges. Practitioners advising clients on potential set-aside applications must factor this near-certainty of adverse costs into their risk assessments. The threshold for challenging an award is high, and the financial penalty for failing to meet that threshold is swift and predictable.
Once the principle of entitlement is established, the battleground shifts to the quantum of recovery. Onslowe submitted a comprehensive breakdown of the legal fees incurred during the defense. The scale of the claim reflects the complexity of responding to jurisdictional challenges that attempt to weave corporate governance issues into the fabric of employment law.
In the Statement of Costs dated 12 January 2026, the Defendant seeks a total of USD 37,700.46 in legal costs. These costs comprise professional fees incurred by a team of fee earners.
The assessment of these costs is governed by the standard basis of assessment, as dictated by RDC 38.8 and 38.23. Under the standard basis, the Court will only allow costs that are proportionately and reasonably incurred, and proportionate and reasonable in amount. Crucially, any doubt as to whether costs were reasonably incurred or reasonable and proportionate in amount is resolved in favor of the paying party. This creates a rigorous filter through which the receiving party's legal bills must pass.
H.E. Justice Shamlan Al Sawalehi applied this filter to Onslowe's claim, recognizing the need to balance the Defendant's right to recovery against the imperative to prevent over-lawyering. The Court must ensure that the final figure is reasonable and proportionate in all circumstances. In this instance, the Court determined that a 20% reduction was appropriate to account for potential inefficiencies or excess time spent by the team of fee earners.
I consider that an award of 80% of the total costs claimed appropriately reflects the Defendant’s efforts while addressing proportionality and the need to guard against any excess in time spent.
For practitioners, an 80% recovery rate on a standard basis assessment is a highly favorable outcome. It signals that the Court viewed the bulk of the Defendant's work as entirely necessary to defeat the Claimants' tactical maneuvers. In many commercial disputes, standard basis assessments can result in haircuts of 30% to 40%, particularly where multiple fee earners are involved, leading to allegations of duplication of effort. The relatively modest 20% reduction here underscores the Court's recognition of the legitimate burden placed on Onslowe by the meritless set-aside application. This dynamic echoes the principles discussed in ARB-031-2025: ARB/031/2025 Olen v Oreta, where the proportionality threshold acts as a critical mechanism for calibrating post-award costs recovery, ensuring that successful parties are adequately compensated without endorsing blank-check litigation strategies.
The resulting financial obligation placed on the Claimants—Onorata, Opall, and Opalina—was substantial. The Court crystallized the liability, translating the percentage into a hard currency figure that must be satisfied to close the enforcement loop.
The Claimants shall therefore pay the Defendant the sum of USD 30,160.37, being 80% of the total costs claimed.
Securing a costs order is only half the battle; enforcing it requires strict adherence to the Court's timelines. The DIFC Courts do not allow losing parties to languish in satisfying their cost obligations. RDC 38.40 imposes a default deadline, which H.E. Justice Shamlan Al Sawalehi explicitly incorporated into the order, mandating payment within 14 days from the date of this Order. This tight turnaround prevents the losing party from utilizing the costs award as a de facto interest-free loan while they contemplate further appeals or restructuring.
To give teeth to this 14-day deadline, the Court leverages the punitive interest rates established by Practice Direction No. 4 of 2017. Failure to pay costs within the prescribed period triggers a significant financial penalty, transforming a static debt into a rapidly compounding liability. Specifically, the order stipulated that if the Claimants failed to pay the Costs Award within 14 days of the date of the Order, interest would accrue on the unpaid sum at the rate of 9% per annum from the date payment fell due until payment in full, in accordance with Practice Direction No. 4 of 2017.
The imposition of a 9% per annum interest rate is a critical tool in the DIFC Courts' enforcement arsenal. In a commercial environment where the cost of capital is a constant consideration, a 9% penalty rate is designed to make delayed payment economically irrational. For the receiving party, it provides comfort that any delay in enforcement will be adequately compensated. For the paying party, it creates an immediate and pressing imperative to settle the account.
The architecture of this costs order—from the strict application of RDC 38.7 to the 80% standard basis recovery and the 9% interest penalty—delivers a cohesive message to the arbitration community. The DIFC Courts will rigorously defend the integrity of arbitral awards against creative but ultimately flawed jurisdictional challenges. When parties attempt to re-characterize disputes to escape arbitration, they do so at their own financial peril. The Court's willingness to award a high percentage of claimed costs, coupled with strict payment deadlines and punitive interest rates, ensures that the tactical deployment of set-aside applications remains a high-risk strategy. Practitioners must advise their clients that the DIFC Courts view the costs regime not merely as an administrative afterthought, but as a primary mechanism for maintaining the efficiency, finality, and commercial reliability of the jurisdiction's arbitration framework.
What Issues Remain Unresolved in the Wake of Onorata?
The dismissal of the set-aside application in Onorata v Onslowe [2026] DIFC ARB 026 provides immediate finality for the litigating parties, but H.E. Justice Shamlan Al Sawalehi’s reasoning exposes a persistent fault line in DIFC arbitration practice. The core tension lies in the characterisation of disputes involving individuals who wear multiple hats—simultaneously acting as shareholders, directors, and employees. While the Court firmly rejected the Claimants' attempt to re-label a corporate governance conflict as an employment dispute to evade the tribunal's jurisdiction, the judgment leaves open the precise boundaries of what constitutes corporate affairs when employment rights are inextricably linked to shareholder entitlements. The ruling confirms that the dispute concerns the affairs and management of the company, but the analytical framework for separating these intertwined capacities remains underdeveloped.
The Claimants—Onorata, Opall, and Opalina—relied heavily on the statutory grounds for annulment, arguing that the tribunal had strayed beyond the scope of the submission to arbitration by adjudicating matters they characterised as employment-related. First, they rely on Article 41(2)(a)(iii) of DIFC Law No. 1 of 2008 (the "DIFC Arbitration Law"), attempting to weaponise the jurisdictional limits of the arbitration agreement. The Respondent, Onslowe, countered that the arbitration agreement, embedded within the company's Articles of Association and Memorandum of Association, was designed to capture all disputes touching upon the company's financial and operational reality. H.E. Justice Al Sawalehi cut through the formalistic labeling, focusing entirely on the substantive nature of the conflict:
49.
This formulation is pragmatically robust but doctrinally open-ended. By focusing on the substance of the dispute—specifically, whether it concerns shareholder entitlement—the Court effectively neutralises tactical re-characterisation. However, future cases will inevitably test the exact point where employment disputes become genuinely inseparable from shareholder conflicts. Consider a scenario where a founder's employment is terminated for cause, triggering a mandatory transfer of their shares at a heavily discounted valuation under a bad-leaver provision. Is the underlying dispute regarding the validity of the termination an employment matter (potentially subject to exclusive onshore labor court jurisdiction) or a dispute about shareholder entitlement? Onorata suggests that if the ultimate relief sought relates to the shareholder agreement, the tribunal retains jurisdiction. Yet, the evidentiary threshold for proving a distinct employment dispute remains undefined, leaving practitioners to guess how far a tribunal can wade into employment facts to resolve a corporate claim.
The Respondent successfully argued that the Claimants were attempting to artificially bifurcate a singular commercial conflict. By dissecting the capacities of the individuals involved, the Claimants hoped to find a jurisdictional exit ramp. The Court, however, accepted the Respondent's holistic view of the conflict:
The Respondent submits that the Applicants’ attempt to draw sharp distinctions between different legal capacities is inconsistent with the substance of the disputes that were referred.
28.
The Respondent characterises it as a dispute concerning corporate funds and financial management within the affairs of the company.
48.
The interaction between free zone-specific regulations and DIFC arbitration law represents another fertile ground for future litigation left largely unmapped by the immediate holding. The First Applicant is a corporate entity incorporated in the Dubai Multi Commodities Centre ("DMCC"). DMCC company regulations contain specific, mandatory provisions regarding director duties, shareholder rights, and employee relations. When a dispute arises within a DMCC entity but is arbitrated under DIAC rules with a DIFC seat, the tribunal must navigate the substantive law of the UAE (and DMCC regulations) through the procedural lens of the DIFC Arbitration Law. The Claimants' attempt to carve out specific issues as beyond the tribunal's mandate implicitly relied on the assumption that certain statutory rights or capacities cannot be subsumed into a general shareholder arbitration clause.
The Court's rejection of this premise reinforces the pro-arbitration stance of the DIFC Courts, echoing the resistance to procedural obstruction seen in cases like ARB 027/2024: Nalani v Netty. Yet, the judgment does not provide a comprehensive framework for how tribunals should handle mandatory onshore employment provisions when they intersect with broad corporate arbitration clauses. If a DMCC regulation mandates a specific forum or procedure for an employment grievance, at what point does a DIFC-seated tribunal overstep by adjudicating the financial fallout of that grievance under the guise of "corporate funds and financial management"? The Onorata decision prioritises the arbitration agreement's breadth, but the friction between DMCC regulatory mandates and DIFC arbitral autonomy will undoubtedly surface again.
A third unresolved issue centers on the invocation of UAE public policy as a ground for annulment. The Claimants argued that the Award conflicted with the public policy of the UAE, a notoriously high hurdle in DIFC jurisprudence. The Respondent's defense highlighted a critical distinction between the substantive content of an award and the mechanics of its execution, effectively shielding the tribunal's findings from public policy scrutiny at the annulment stage:
The Respondent also submits that the Applicants have not identified any fundamental principle of UAE public policy that is infringed by the Award, and that any issues of practical implementation are matters for enforcement, not annulment.
31.
The Court's dismissal of the public policy challenge without extensive elaboration on what would constitute a valid public policy violation leaves practitioners searching for the evidentiary floor. While it is well-established that mere errors of law or fact by a tribunal do not violate public policy, the Claimants' argument likely hinged on the assertion that the tribunal's remedies somehow contravened mandatory UAE corporate or labor regulations. By accepting the Respondent's position that practical implementation issues belong at the enforcement stage, the Court effectively deferred the public policy debate.
This deferral raises a strategic question for future litigants: if a tribunal orders a remedy that is practically impossible to execute under onshore commercial registry rules (such as a forced share transfer that the DMCC authority refuses to register), does that impossibility render the award contrary to public policy at the annulment stage, or must the prevailing party first attempt and fail enforcement? The Onorata decision suggests the latter, placing the burden squarely on the enforcement process. The Claimants had previously sought a stay of enforcement pending determination of the set-aside application, a move that highlights the tactical interplay between annulment and execution. By insulating the arbitral award from premature set-aside applications based on execution difficulties, the Court forces parties to litigate public policy at the enforcement threshold, where the standard for refusal is arguably even more stringent.
The sheer breadth of the arbitration agreement in Onorata proved to be the Claimants' ultimate undoing. The clause covered differences touching upon the intent and consequences of the Articles, acts affecting the company, or the affairs of the company. H.E. Justice Al Sawalehi found that the disputes placed before the tribunal fell squarely within the scope of this broad language. However, the reliance on the breadth of the clause masks a deeper analytical challenge. If an arbitration clause is drafted broadly enough to encompass "acts affecting the company," it theoretically captures almost any action by a shareholder-employee, from misappropriation of corporate funds to a simple breach of an employment contract's non-compete clause.
The Court may eventually need to articulate a limiting principle to prevent corporate arbitration clauses from swallowing all collateral disputes between connected parties. Similar boundary disputes regarding the scope of arbitration clauses and counterclaims were scrutinized in Muzama v Mihanti [2022] DIFC ARB 004, where the Court had to carefully parse which claims truly belonged before the tribunal. In Onorata, the Claimants had previously raised post-award queries with the arbitral tribunal on substantially the same grounds, but the tribunal declined to amend or vary the Award. This sequence demonstrates the difficulty of challenging a tribunal's jurisdictional self-determination once a broad clause is invoked.
Ultimately, Onorata v Onslowe reinforces the primacy of the arbitration agreement's text and the commercial reality of the dispute over formalistic legal labels. Yet, by declining to draw a bright line between employment and corporate affairs, the Court ensures that this boundary will continue to be tested. Drafters of shareholder agreements for UAE-based entities, particularly those in free zones like the DMCC, must take heed. If the intention is to exclude employment disputes from the ambit of a corporate arbitration clause, that exclusion must be explicit and meticulously drafted. Absent such clarity, the DIFC Courts will presume that a dispute concerning corporate funds, financial management, and shareholder entitlements falls within the tribunal's jurisdiction, regardless of the employment status of the individuals involved. The burden of proving a distinct employment dispute separate from the shareholder or company affairs dispute remains a formidable, and largely undefined, challenge for future applicants seeking to escape the arbitral forum.