Anna Mkrtchyan February 27, 2026 Unilateral dispute resolution clauses are common in cross-border trading and finance documents, particularly where one party has stronger bargaining leverage. The typical structure is that both parties are directed to one forum (often arbitration), but one party retains an option to sue in court (or to choose between arbitration and litigation). An already well-known 2024 decision of the Dubai Court of Cassation materially increased the risk of such drafting, at least where the “option” operates as a unilateral choice between arbitration and litigation on the merits, and where it is relied upon to argue that the onshore state courts lack jurisdiction. This article (i) summarizes the onshore position following Cassation Appeal No. 735 of 2024, (ii) contrasts it with the approach of the DIFC Courts, and (iii) provides practical drafting guidance to maximize enforceability. The onshore UAE approach after Cassation Appeal No. 735 of 2024 In Cassation Appeal No. 735 of 2024 (Commercial), the Court considered a clause giving one party the sole power to choose whether disputes would be heard in arbitration or in the onshore courts. The Court held that such a clause did not amount to a binding arbitration agreement capable of excluding the jurisdiction of the onshore courts. In particular, the Court held (among other things) that: Any arbitration clause that appears alongside the jurisdiction of state courts or offers a choice between them without definitively agreeing on arbitration alone and adhering to its binding force is not considered obligatory. The argument that the contract granted only one party the right to choose between the onshore courts and arbitration was rejected, because it prevents the other party from resorting to any forum at the outset and compels it to await the other party’s election. Such a unilateral arbitration clause is insufficient to divest the onshore courts of jurisdiction. An arbitration clause must reflect a clear and explicit agreement to oust the courts’ jurisdiction. The Court reaffirmed a familiar but critical point: a valid arbitration agreement must be (i) in writing; (ii) exclusive and clear in its intent to oust court jurisdiction; and (iii) reflect a mutual and unequivocal intention by both parties to resolve disputes through arbitration. Key points onshore courts are likely to rely on: Two practical points are worth keeping front-of-mind when assessing enforceability risk before the onshore courts of the United Arab Emirates: Writing is necessary, but not sufficient: Article 7 of the UAE Arbitration Law (Federal Law No. 6 of 2018) requires an arbitration agreement to be in writing, failing which it is null and void. But Appeal No. 735/2024 underlines that even a written clause can fail if it is not mutually binding and exclusive in substance. The forum applies its own procedural/jurisdictional rules (lex fori). Article 21 of the UAE Civil Code provides that jurisdictional rules and procedural matters are governed by the law of the state where proceedings are brought. The practical implication is that, even if the contract is governed by foreign law or the arbitral seat is overseas, an onshore court seized of the dispute will still test whether the arbitration clause is sufficiently certain and binding under UAE law to decline jurisdiction. The DIFC approach: asymmetry is not automatically invalid, but clarity and construction are decisive In contrast, the DIFC, i.e., the common-law ecosystem of the Dubai International Financial Centre, has tended to treat asymmetry as a matter of party autonomy and contractual construction, rather than as a validity “killer”. In short, in the DIFC, asymmetry is not automatically impermissible, but the drafting will be construed strictly. Three DIFC decisions illustrate the prevailing approach: Khoury v Mashreq Bank PSC (DIFC CA 007/2022): The clause was asymmetric and bank-favouring. The DIFC Court of Appeal did not treat asymmetry alone as rendering the clause invalid; rather, it focused on proper interpretation and whether the clause created a sufficiently clear “opt-in” basis for DIFC jurisdiction. ARB 018/2023 Nuriel v Nuzhat & Ors: The DIFC Arbitration Division acknowledged that asymmetrical dispute resolution “architecture” can be valid, and focused on whether the relevant arbitration agreement was clear and operative on the facts. In a very recent decision in CFI 009/2025 Stephenson Harwood Middle East LLP v Mark A B Capital Investment LLC, the DIFC Court of First Instance rejected an argument that asymmetry/lack of reciprocity makes a jurisdiction clause unenforceable as a matter of principle, confirming that such clauses can be recognised under DIFC law. Practical DIFC takeaway In the DIFC, the battleground is usually: Construction: who has what option, and is it expressed with precision? Operability: does the clause create contradictory forums, or can it be applied coherently? Opt-in and gateways: particularly where one party is onshore and the clause is said to “opt in” to DIFC jurisdiction. Accordingly, while the DIFC is more comfortable with asymmetry than onshore Dubai, “sloppy” drafting still carries real risk, just a different kind of risk (operability rather than invalidity). In practical drafting terms, where there is any realistic prospect of onshore proceedings or onshore enforcement, and arbitration is intended to be the preferred forum, the safest course is to adopt an exclusive arbitration agreement and to confine any recourse to the courts to arbitration-supportive interim relief only (for example, urgent protective or conservatory measures), while avoiding wording that dilutes the exclusivity of the arbitration agreement. A “safe” structure therefore begins with an unequivocal commitment that all disputes shall be finally resolved by arbitration (not “may”), supported by clear mechanics identifying the applicable rules or institution, the seat, the number of arbitrators, and the language, so that the parties’ shared intention to arbitrate is unmistakable and the clause is readily operable in practice. If commercial teams nonetheless insist on retaining a litigation option, it is preferable to avoid any structure that permits one-way merits litigation. Although optionality will inevitably introduce additional risk, particularly from an onshore perspective, that risk can sometimes be reduced (though not eliminated) by ensuring mutuality (i.e., both parties have the same election right) and/or by implementing a clean election mechanism, under which either party may elect arbitration by written notice and, once elected, arbitration becomes exclusive and any court proceedings are to be stayed or discontinued to the extent permissible. This approach directly addresses the concern identified in Appeal No. 735/2024, namely that the non-benefiting party should not be left unable to commence proceedings and compelled to await the other party’s unilateral choice of forum. Finally, parties should avoid language stating that a party may sue in court “notwithstanding” the arbitration agreement. As a matter of practical risk management, such wording undermines the premise that arbitration is binding and exclusive and is likely to be treated by an onshore court as an invitation to characterize the arbitration clause as non-exclusive, and therefore not effective to oust the court’s jurisdiction, particularly where onshore enforceability is in view.
