Civil Law and UAE: Litigation Funding Disclosure Obligations

1. Introduction

Litigation funding means financing litigation or arbitration by a person or entity that is not itself a party to the dispute, usually in return for a financial benefit linked to the outcome.

In the UAE, the rules concerning disclosure of litigation funding are not uniform. The legal position depends heavily on whether the proceedings are before:

1. Onshore UAE Courts;
2. DIFC Courts;
3. ADGM Courts; or
4. an arbitration institution, such as DIAC or ArbitrateAD.

Current UAE practice distinguishes between ordinary onshore court litigation, where there is no comprehensive statutory disclosure regime, and the DIFC/ADGM and institutional arbitration regimes, where express disclosure mechanisms exist.

2. Meaning of Litigation Funding Disclosure

A disclosure obligation requires a funded party to reveal specified information concerning the existence or identity of a litigation funder.

The purpose is generally to:

• identify potential conflicts of interest;
• permit assessment of security for costs;
• ensure procedural fairness;
• identify persons with a financial interest in the litigation;
• prevent undisclosed control by funders;
• assist courts in making appropriate costs orders; and
• protect the integrity of proceedings.

Disclosure does not necessarily mean disclosure of the entire funding agreement.

This distinction is particularly important in the DIFC.

3. Onshore UAE Courts

The position in the ordinary UAE civil courts is comparatively undeveloped.

There is no comprehensive statutory regime equivalent to DIFC Practice Direction No. 2 of 2017 specifically regulating disclosure of litigation funding in ordinary civil proceedings. Current UAE legal commentary therefore describes onshore third-party funding as an area with considerably less regulatory certainty.

Consequently, an important distinction should be made:

Absence of a general statutory disclosure obligation ≠ absolute prohibition on a court considering funding-related information.

A court may encounter funding information through:

• applications for security;
• costs disputes;
• evidence concerning financial capacity;
• questions of procedural abuse;
• enforcement issues; or
• case-management directions.

General principles of UAE law, including good faith under Article 246 of the Civil Transactions Law, may also become relevant to the structure and performance of funding arrangements.

4. DIFC: Express Disclosure Regime

The DIFC has a much clearer framework.

Practice Direction No. 2 of 2017 – Third Party Funding in the DIFC Courts applies to litigation funding arrangements in DIFC proceedings.

The fundamental obligation is that a funded party must notify the other parties of:

• the existence of the litigation funding agreement; and
• the identity of the funder.

Importantly, the Practice Direction does not automatically require disclosure of the funding agreement itself or its terms. Disclosure of the agreement may be ordered by the Court where appropriate.

Timing

For Part 7 claims, disclosure is generally made through the Case Management Information Sheet before the Case Management Conference.

If funding is obtained after the CMC, notice is generally required within seven days.

For other claims, notice must be given as soon as practicable after commencement, or within seven days where the funding agreement is entered into after proceedings have commenced.

5. Why Funder Identity Matters

The identity of the funder can be relevant because the funder may have:

• a financial interest in the outcome;
• relationships with lawyers;
• relationships with arbitrators;
• an interest in settlement;
• potential exposure to costs; or
• financial capacity relevant to security for costs.

The DIFC Practice Direction expressly permits the Court to consider the fact that a party is funded when dealing with security for costs.

However, being funded is not automatically determinative of a security-for-costs application.

6. Disclosure of the Funding Agreement

The DIFC framework deliberately distinguishes between:

Mandatory basic disclosure

• existence of funding;
• identity of the funder.

Potential additional disclosure

• copy of the funding agreement;
• specific contractual terms;
• extent of adverse-costs coverage;
• financial capacity of the funder;
• other information relevant to a particular procedural application.

The Court may order further disclosure when the circumstances justify it.

This approach attempts to balance procedural transparency against confidentiality of commercial funding arrangements.

7. Security for Costs and Funding Disclosure

One of the most important practical consequences of funding disclosure is its relationship with security for costs.

Suppose:

• Claimant A has limited assets;
• Funder B finances A's litigation;
• Defendant C fears that it will not recover its costs if successful.

C may seek security for costs.

The Court may then need information about:

• who the funder is;
• whether the funding arrangement actually exists;
• how much funding is available;
• whether the funder has sufficient assets;
• whether the funder has undertaken to cover adverse costs; and
• whether the agreement contains limitations or conditions.

The recent DIFC jurisprudence demonstrates that merely saying "we have a funder" may not resolve the security question.

8. Arbitration Disclosure in the UAE

The position is particularly important in arbitration.

The DIAC Arbitration Rules 2022 contain an express third-party-funding disclosure mechanism. A funded party must disclose the funding arrangement and relevant information concerning the funder, including its identity and whether the funder has undertaken responsibility for adverse costs.

Similarly, ArbitrateAD Arbitration Rules 2024 contain third-party funding disclosure requirements.

The ADGM Arbitration Regulations also expressly address third-party funding. Section 37 requires notification to the other parties and tribunal of the existence of a third-party funding agreement.

Thus, arbitration can have a considerably clearer disclosure regime than ordinary onshore civil litigation.

9. Case Law

Because UAE onshore jurisprudence on litigation funding remains limited, much of the developed case law comes from the DIFC Courts. The following decisions are therefore particularly useful.

Case 1: Vannin Capital PCC PLC v Al Khorafi & Others — DIFC CFI 036/2014

This is one of the important early DIFC cases involving litigation funding.

Vannin Capital had entered into a funding agreement with the claimants. A dispute subsequently arose concerning the funder's financial interest in proceeds recovered from the litigation.

The funder sought protection over substantial sums awarded to the claimants, and the DIFC Court ordered money to be paid into court pending determination of the competing entitlements.

Significance

The case demonstrates that a litigation funder can have legally significant interests connected with litigation proceeds and that the DIFC Court can intervene to protect those interests.

It also illustrates why transparency concerning funding arrangements can become important where proceeds of litigation are being distributed.

10. Case 2: Al Khorafi & Others v Bank Sarasin-Alpen (ME) Ltd & Another — CFI 026/2009

This underlying DIFC litigation involved third-party litigation funding.

The claimants had obtained funding, and the funder subsequently commenced proceedings concerning approximately US$11.4 million representing amounts connected with damages and costs.

The DIFC Court ordered the relevant money to be paid into court and held pending further directions concerning the competing rights of the parties and funder.

Significance

The case illustrates the practical importance of the funding relationship after judgment.

It also demonstrates why the court may need to understand the relationship between:

claimant → lawyer → funder → litigation proceeds.

The funding agreement can therefore become relevant to the administration and protection of litigation proceeds even where its complete terms are not ordinarily disclosed.

11. Case 3: LXT Real Estate Broker LLC v SIR Real Estate LLC — CFI 073/2024

This is particularly significant for modern UAE litigation-funding disclosure.

The claimant relied upon a litigation funder while the defendant sought security for costs.

The Court examined issues including:

• identity of the funder;
• financial statements;
• financial strength of the funder;
• extent of funding;
• availability of funds for adverse costs;
• ambiguity concerning the funding entities; and
• the relationship between the funding agreement and security.

The Court ultimately ordered security for costs of approximately US$250,499.26.

The Court also observed that the existence of the funding arrangement and the financial position of the funder were relevant to the security analysis.

Significance

This case demonstrates that disclosure can become practically important even where the funding agreement itself is not automatically disclosable.

A party may have to provide sufficient information to establish that its funder is genuinely capable of supporting the litigation.

12. Case 4: LXT Real Estate Broker LLC v SIR Real Estate LLC — CA 005/2025

The matter subsequently reached the DIFC Court of Appeal.

The appellate proceedings considered whether the existence of a litigation funder should automatically reduce the amount of security for costs.

The Court emphasized that funding should not be treated as an automatic discount to security.

Instead, the court should undertake a fact-sensitive assessment, including consideration of:

• the substance of the funding arrangement;
• the funder's financial capacity;
• the extent of the funder's commitment;
• the actual risk of non-payment; and
• prejudice to the opposing party. 

Significance

This is highly relevant to disclosure obligations.

A disclosure regime is not merely designed to identify a funder. Information concerning the funder may become relevant to substantive procedural decisions.

Therefore:

Disclosure of the funder's identity can be the starting point for further examination where security for costs is genuinely in issue.

13. Case 5: Trafigura Pte Ltd & Trafigura India Pvt Ltd v Prateek Gupta & Ginni Gupta — CFI 040/2025

This is a particularly recent DIFC decision.

In September 2026, the DIFC Court considered an application seeking disclosure concerning the source of funds used to pay legal fees.

The claimants sought information concerning the defendants' funding of their legal representation. The Court ultimately dismissed the application for further disclosure concerning the source of the legal funding.

Significance

This decision is important because it demonstrates that:

The existence of litigation or legal-fee funding does not automatically entitle an opposing party to unrestricted disclosure of the funding source.

The court must consider the procedural and evidential justification for the requested disclosure.

It therefore provides an important counterbalance to the broader disclosure principles.

14. Case 6: Neven v Nole — ARB 010/2024

In Neven v Nole, the DIFC Court considered circumstances in which the claimant was waiting for third-party funders or insurers to decide whether to finance proposed arbitration proceedings.

The claimant argued that the anticipated funding affected the timing of pursuing arbitration.

The Court rejected the proposition that waiting for funding justified failing to pursue available arbitral remedies, including possible emergency arbitration relief.

Significance

Although the decision was not principally a disclosure case, it demonstrates that funding arrangements do not displace procedural obligations.

A party cannot necessarily rely upon the absence or uncertainty of funding as a justification for procedural delay.

15. Case 7: Vannin Capital PCC PLC v Al Khorafi & Others — Funding-Agreement Enforcement Context

The Vannin proceedings also provide a useful second analytical dimension.

The funder's attempt to protect its contractual interest in litigation proceeds required the DIFC Court to consider the relationship between the funding contract and the underlying proceedings.

Significance

The case shows why funding disclosure can matter beyond security for costs:

• enforcement of contractual funding rights;
• distribution of damages;
• protection of proceeds;
• competing claims over recovered money; and
• jurisdictional questions concerning the funding agreement.

16. Core Legal Principles

The UAE position can therefore be summarized as follows:

The DIFC Practice Direction specifically gives the Court inherent jurisdiction to make costs orders against third parties, including funders, where appropriate.

17. Confidentiality and Privilege

Disclosure of funding information raises a further issue: confidentiality.

A funding agreement can contain:

• financial information;
• investment terms;
• return percentages;
• litigation strategy;
• adverse-cost provisions;
• settlement provisions;
• termination rights; and
• information obtained during due diligence.

Therefore, the mere existence of a disclosure obligation does not mean that every commercially sensitive provision must be disclosed.

The DIFC approach is particularly clear: identity and existence are ordinarily disclosed, while the agreement itself requires a further court order.

18. Conflict of Interest

Disclosure also serves an important conflict-management function.

Suppose the funder has a relationship with:

• an arbitrator;
• an expert;
• a law firm;
• another party;
• a shareholder; or
• another entity involved in the dispute.

Without knowledge of the funder's identity, such relationships may remain invisible.

Disclosure therefore protects the neutrality and integrity of adjudication.

This is particularly important in arbitration because arbitrator independence and impartiality are fundamental procedural requirements.

19. Funder Control

Disclosure can also help identify whether a funder is exercising excessive control.

A legitimate commercial funder normally finances litigation but should not improperly take over:

• legal strategy;
• settlement decisions;
• appointment of counsel;
• procedural decisions; or
• the client's ultimate control of the dispute.

The DIFC and ADGM frameworks therefore seek to accommodate funding while preserving the autonomy of the litigant and professional independence of counsel.

20. Relationship with Security for Costs

The strongest practical connection is between funding disclosure and security for costs.

A court may ask:

1. Who is funding the claimant?
2. Is the funder financially substantial?
3. How much funding is available?
4. Does the funder cover adverse costs?
5. Is that commitment legally enforceable?
6. Is the funder within the court's jurisdiction?
7. Can the defendant realistically recover its costs?
8. Would security stifle the claim?
9. Does the funding arrangement create any additional procedural risk?

The LXT litigation illustrates this approach particularly well. The DIFC Court of Appeal emphasized that the existence of a funder alone does not establish the appropriate level of security; the court must consider the actual funding arrangement and financial capacity.

21. Difference Between Disclosure and Inspection

An important examination distinction is:

Disclosure

Giving notice that funding exists and identifying the funder.

Inspection

Providing the underlying funding document or its terms.

These are not the same thing.

Under DIFC PD 2/2017, ordinary notification does not itself require production of the LFA. Further disclosure can occur if the Court orders it.

22. Non-Disclosure and Consequences

Failure to comply with a funding disclosure obligation can create procedural problems.

Potential consequences may include:

• adverse procedural orders;
• costs consequences;
• further disclosure orders;
• security for costs;
• examination of the funder's financial capacity;
• questions concerning conflicts;
• potential third-party costs orders; and
• adverse inferences where appropriate.

The precise consequence depends upon the relevant jurisdiction, applicable rules and facts.

23. Important Distinction: Litigation vs Arbitration

It is incorrect to treat UAE litigation funding as governed by one unified rule.

Ordinary UAE civil litigation

The framework is comparatively uncertain and there is no comprehensive statutory disclosure regime.

DIFC litigation

There is an express disclosure framework under PD 2/2017.

ADGM litigation

The ADGM has a developed statutory and procedural framework for litigation funding. The ADGM Courts introduced dedicated Litigation Funding Rules in 2019.

DIAC arbitration

Third-party funding disclosure is specifically addressed by the DIAC Rules 2022.

ArbitrateAD arbitration

The 2024 Rules also contain funding disclosure provisions.

ADGM arbitration

Section 37 of the ADGM Arbitration Regulations provides for notification of third-party funding agreements.

24. Civil-Law Perspective

From a broader UAE civil-law perspective, litigation funding disclosure reflects a tension between two principles.

Party autonomy

A claimant should generally be able to arrange financing for legitimate litigation.

Procedural integrity

The opposing party and tribunal/court must have sufficient information to protect:

• fairness;
• impartiality;
• costs recovery;
• independence;
• transparency; and
• proper administration of justice.

The UAE's different jurisdictions resolve this tension differently.

25. Key Case-Law Principles

For revision, the major principles from the cases can be remembered as follows:

1. Vannin Capital v Al Khorafi — funding agreements can generate enforceable interests in litigation proceeds.
2. Al Khorafi v Bank Sarasin — courts can protect disputed litigation proceeds where a funder's contractual interest is asserted.
3. LXT Real Estate Broker v SIR, CFI 073/2024 — funding information can become important in security-for-costs proceedings.
4. LXT Real Estate Broker v SIR, CA 005/2025 — the mere existence of a funder does not automatically determine the level of security; the actual funding arrangement and funder's financial capacity matter.
5. Trafigura v Gupta, CFI 040/2025 — a request for the source of legal funding is not automatically granted; further disclosure must be justified.
6. Neven v Nole, ARB 010/2024 — funding uncertainty does not necessarily justify procedural delay in pursuing an available arbitral remedy.

26. Conclusion

UAE litigation-funding disclosure obligations are jurisdiction-specific.

The ordinary UAE courts do not presently have the same comprehensive disclosure framework found in the DIFC and ADGM. By contrast, DIFC Practice Direction No. 2 of 2017 expressly requires funded parties to notify other parties and the Court of the existence of funding and the identity of the funder, while generally preserving the confidentiality of the funding agreement unless further disclosure is ordered.

The modern DIFC decisions, particularly LXT Real Estate Broker v SIR and Trafigura v Gupta, show that disclosure is not merely administrative. It can become important when the court considers security for costs, financial capacity, costs protection and requests for information concerning litigation financing.

Accordingly, the central principle is:

UAE law increasingly recognizes litigation funding, but transparency obligations depend upon the forum, the applicable procedural rules, and the specific procedural issue before the court or tribunal.

The most important distinction for examination purposes is “disclosure of the existence and identity of funding” versus “production of the funding agreement and its commercial terms.” The former may be mandatory under applicable DIFC/ADGM or arbitral rules; the latter generally requires a stronger procedural justification or specific order.