Civil Law and UAE Marketisation of Justice and Legal Outcomes

1. Introduction

Marketisation of justice refers to the increasing influence of market mechanisms, private capital, economic incentives, litigation funding, legal-service competition, arbitration, insurance, technology and cost allocation on the way civil disputes are brought, managed and resolved.

It does not mean that UAE courts literally sell justice to the highest bidder. Rather, the concept describes a situation in which access to courts and the practical pursuit of legal remedies can be influenced by economic resources and market structures.

In the UAE, this issue is particularly interesting because the legal system contains several different models:

• Federal/onshore UAE courts;
• Dubai Courts;
• Abu Dhabi courts;
• DIFC Courts;
• ADGM Courts;
• arbitration institutions;
• mediation and settlement mechanisms;
• privately funded litigation;
• legal-services markets;
• insurance and third-party risk allocation.

The strongest documented examples of marketisation appear in the DIFC legal environment, particularly through litigation funding, security for costs, sophisticated commercial litigation and cost-shifting mechanisms. These should not automatically be treated as rules of mainland UAE civil procedure.

2. Meaning of Marketisation of Justice

Marketisation of justice can be understood as:

The increasing influence of economic incentives, private funding, competition and market-based risk allocation on access to legal remedies, litigation behaviour and dispute outcomes.

Traditional civil justice is principally concerned with:

rights → wrongs → adjudication → remedy.

Marketised civil justice adds:

claim value → litigation cost → funding → expected recovery → risk → settlement value → enforcement value.

Thus, a legal claim can increasingly be viewed not only as a legal right but also as an economic asset or risk-bearing proposition.

3. Main Features

The principal features are:

1. litigation funding;
2. contingency or success-based economic arrangements;
3. security for costs;
4. professionalisation of litigation;
5. commercialisation of legal services;
6. arbitration competition;
7. mediation and private settlement;
8. insurance-backed litigation;
9. cost shifting;
10. enforcement as an economic consideration;
11. litigation portfolios;
12. technology-driven reduction of legal costs.

4. Litigation Funding as the Clearest Example

One of the clearest manifestations of marketisation is third-party litigation funding.

A funder provides money for:

• lawyers;
• experts;
• court fees;
• investigations;
• expert reports;
• arbitration;
• enforcement.

The funder generally receives a return if the litigation succeeds.

Therefore:

Claimant + Funder + Lawyers → Litigation → Recovery → Distribution

The claimant obtains access to capital, while the funder assumes litigation risk in expectation of economic return.

The DIFC Courts have directly dealt with this phenomenon.

In Vannin Capital PCC PLC v Al Khorafi [2014] DIFC CFI 036, Vannin Capital had funded litigation and sought protection of its economic interest in sums recovered by the funded claimants. The DIFC Court ordered money awarded in the underlying proceedings to be paid into court pending determination of entitlement.

This is a significant illustration of how private capital can become connected to the administration and distribution of litigation proceeds.

5. Marketisation Does Not Mean That the Funder Decides the Case

An important distinction must be maintained:

Funding a claim is not the same thing as controlling the judicial outcome.

The court remains responsible for deciding:

• liability;
• evidence;
• causation;
• damages;
• legal interpretation;
• costs.

The funder's economic interest does not become the legal rule.

This distinction is particularly important because otherwise litigation could become an investment market in which the expected financial return, rather than legal entitlement, becomes the dominant consideration.

6. Litigation Funding and Access to Justice

Marketisation can have two opposite effects.

Potential access-enhancing effect

Funding can allow a claimant who cannot afford expensive litigation to pursue a legitimate claim.

For example:

A company has a valid AED 100 million commercial claim but lacks AED 5 million needed for legal and expert expenses.

A third-party funder finances the proceedings.

Without funding:

Legal right + no resources = practically difficult enforcement

With funding:

Legal right + external capital = greater practical ability to litigate

Thus, litigation funding can reduce the economic barrier to justice.

Potential market effect

At the same time, the funder may select claims according to:

• expected damages;
• probability of success;
• duration;
• enforcement prospects;
• defendant's assets;
• legal costs;
• expected return.

Consequently, economically attractive claims may receive greater access to litigation capital than claims with low monetary value.

This creates an important theoretical question:

Should access to justice depend partly on whether a claim is commercially fundable?

7. Security for Costs

A second major market mechanism is security for costs.

The DIFC Rules expressly permit defendants to seek security for litigation costs in specified circumstances. The court considers matters such as the claimant's ability to pay, location of assets and enforceability of a future costs order.

This creates an economic balancing mechanism:

Claimant's right to litigate

versus

Defendant's protection against unrecoverable litigation costs.

The court must therefore balance legal access with economic protection.

8. Litigation Funding and Security for Costs

The connection between the two mechanisms is particularly important.

A funded claimant may have sufficient resources to continue the case but may still lack assets against which an adverse costs order can readily be enforced.

The DIFC rules expressly contemplate security-for-costs applications against persons other than the claimant in certain circumstances, including persons who contribute to litigation costs in return for a share of recovery.

Therefore:

Funding → changes litigation economics → may affect security for costs → may affect litigation strategy.

9. Case Law: Vannin Capital PCC PLC v Al Khorafi

Vannin Capital PCC PLC v Rafed Abdel Mohsen Bader Al Khorafi & Others [2014] DIFC CFI 036

This is one of the most important UAE/DIFC cases for understanding the marketisation of litigation.

Vannin had funded the underlying litigation.

After the funded parties obtained substantial monetary relief, Vannin sought protection of its contractual entitlement under the funding agreement.

The DIFC Court ordered sums to be paid into court rather than simply released to the funded parties. The court also considered jurisdiction and costs.

Significance

The case demonstrates:

• litigation can have an external capital structure;
• litigation proceeds can have competing economic interests;
• funding agreements can become legally significant;
• the court can protect economic interests connected with litigation;
• litigation outcomes can therefore involve more participants than merely claimant and defendant.

10. Case Law: Vannin Capital — Later Proceedings

The Vannin Capital litigation continued through several procedural orders.

In 2016, the DIFC Court considered applications concerning distribution of sums preserved in court and the rights of the funder and lawyers following the successful underlying proceedings.

The court subsequently made orders providing for distribution and preservation of amounts under the relevant arrangements.

Importance

The case illustrates a transformation of litigation proceeds into something resembling an economic distribution pool involving:

• claimant;
• funder;
• lawyers;
• judgment debtor;
• court.

This is a classic example of the financialisation of litigation outcomes.

11. Case Law: LXT Real Estate Broker LLC v SIR Real Estate LLC

LXT Real Estate Broker L.L.C v SIR Real Estate LLC [2025] DIFC CFI 073; [2025] DIFC CA 005

This litigation is particularly important for modern litigation funding.

The claimant pursued a very substantial claim and was funded by a third-party litigation financier.

The security-for-costs proceedings required the DIFC Court to consider:

• the claimant's financial position;
• third-party funding;
• ability to satisfy an adverse costs order;
• risk of stifling a genuine claim;
• proportionality;
• prejudice to the defendant.

The Court of Appeal subsequently emphasised that the mere existence of a litigation funder does not automatically justify reducing security for costs. The court must examine the actual funding arrangement and the funder's financial capacity and commitment.

Significance

This case demonstrates an important principle:

Litigation funding is relevant to the economics of litigation, but it does not replace judicial assessment of justice and proportionality.

12. Case Law: Five Real Estate Development LLC v Reem Emirates Aluminium LLC

Five Real Estate Development LLC v Reem Emirates Aluminium LLC [2022] DIFC TCD 009

The DIFC Court ordered the claimant to provide AED 1.21 million as security for costs, together with a payment on account of costs.

Importance

The case demonstrates how the cost consequences of litigation can materially influence the ability and manner in which parties pursue commercial claims.

It shows that litigation has an economic dimension beyond the ultimate damages award.

13. Case Law: KBC Aldini Capital Ltd v Baazov

KBC Aldini Capital Limited v David Baazov & Others [2020] DIFC CFI 002

The DIFC Court considered security for costs and ordered substantial security for future costs.

The court declined to order security for past costs but required security for future litigation costs.

Importance

This illustrates the distinction between:

• protection against future litigation expenditure; and
• retrospective punishment for costs already incurred.

The case therefore demonstrates judicial management of the economic risk of ongoing litigation.

14. Case Law: Al-Mojil v Protiviti

Mohammad Bin Hamad Abdul-Karim Al-Mojil & Another v Protiviti Member Firm (Middle East) Ltd [2017] DIFC CFI 020

The claimants agreed to provide AED 7.35 million as security for the defendant's costs. The amount was payable in three tranches.

Significance

This demonstrates how a large commercial claim can generate substantial financial obligations during the litigation itself.

Thus:

Litigation ≠ merely paying a court filing fee.

It can involve:

• lawyers;
• experts;
• security;
• costs;
• financing;
• adverse-cost exposure.

15. Case Law: Nitin Kedarnath Gupta v Rohit Kedarnath Gupta

Nitin Kedarnath Gupta v Rohit Kedarnath Gupta [2024] DIFC CFI 059

In proceedings concerning the validity of a will, the defendant sought security for costs. The application was ultimately dismissed and the claimant's claim was also dismissed, with costs of the claim ordered against the claimant.

Importance

This illustrates that security for costs is not an automatic consequence of a party's financial circumstances.

The court retains a discretionary judicial role.

That is important for preventing a purely economic conception of justice.

16. Marketisation Through Legal Services

Modern UAE commercial litigation is supported by an increasingly sophisticated legal-services market.

Large disputes can involve:

• specialist law firms;
• forensic accountants;
• valuation experts;
• maritime experts;
• construction experts;
• technology experts;
• e-discovery providers;
• litigation funders;
• insurers;
• arbitration specialists.

This can improve the quality of dispute resolution but can also increase the financial complexity of litigation.

17. Justice as an Economic Asset

A major theoretical consequence of marketisation is that a legal claim may be viewed as an economic asset.

Suppose:

Claim value = AED 100 million
Estimated probability of success = 60%
Estimated recovery = AED 60 million
Litigation expenditure = AED 10 million

An investor could analyse the claim in financial terms.

The claim becomes similar to an investment proposition:

Expected recovery − litigation expenditure − financing cost = expected economic return

However, the court does not decide the case using this calculation.

The judicial question remains:

What does the applicable law require on the established facts?

18. Litigation as a Tradable Risk

Marketisation can also transform litigation risk.

Different parties may bear different parts of the risk:

The economic risk can therefore be distributed among multiple actors.

This resembles risk-spreading mechanisms found elsewhere in civil law.

19. Insurance and Marketisation

Insurance can also marketise legal risk.

Examples include:

• professional indemnity insurance;
• directors' and officers' insurance;
• marine insurance;
• construction insurance;
• liability insurance;
• legal expenses insurance.

Instead of the defendant personally bearing the entire economic consequences of liability:

Risk → insurance premium → insurer → claim payment

The civil justice system therefore operates alongside private risk-transfer markets.

20. Arbitration as a Competitive Justice Market

Arbitration is another important dimension.

Commercial parties can select:

• institution;
• seat;
• procedural rules;
• arbitrators;
• confidentiality arrangements;
• specialist expertise.

The UAE has developed major arbitration centres and arbitration-friendly legal infrastructure.

This creates a degree of competition between dispute-resolution mechanisms.

Commercial parties may compare:

court litigation vs arbitration vs mediation vs negotiated settlement.

The economic considerations may include:

• speed;
• cost;
• confidentiality;
• enforceability;
• expertise;
• procedural flexibility.

21. Mediation and Settlement

Settlement also has a market dimension.

A party may calculate:

Expected litigation recovery

against

Certain settlement amount + avoided litigation costs.

For example:

Expected recovery from litigation = AED 8 million

Expected litigation cost = AED 2 million

Settlement offer = AED 6.5 million

The economically rational decision may differ depending upon:

• probability of success;
• enforcement risk;
• duration;
• financing cost;
• reputational consequences.

But courts do not transform these calculations into legal entitlement.

22. Court Costs as a Behavioural Mechanism

Costs serve several purposes.

They can:

• compensate successful parties;
• discourage abusive litigation;
• encourage reasonable settlement;
• control unnecessary procedural steps;
• protect defendants from unrecoverable expenditure.

The DIFC security-for-costs rules expressly require consideration of whether ordering security is just, and the rules discourage extensive investigation of the merits merely at the security stage.

Thus, cost rules are not purely financial rules. They are also procedural justice mechanisms.

23. Risk of Inequality

Marketisation creates an important civil-law concern.

Two parties may possess identical legal rights but substantially different financial resources.

For example:

Party A

• AED 500 million assets;
• specialist lawyers;
• experts;
• litigation funding.

Party B

• AED 500,000 assets;
• limited legal budget;
• no funding.

Formal equality before the law does not necessarily produce identical practical litigation capacity.

This creates the distinction between:

Formal access to justice

Everyone can theoretically bring a claim.

Effective access to justice

A person has a realistic ability to pursue and enforce the claim.

Marketisation can therefore simultaneously:

• expand access through funding; and
• increase inequality through differences in financial capacity.

24. Wealth and Legal Outcomes

It is important not to confuse:

economic advantage

with

legal entitlement.

A wealthy party does not legally deserve a better judgment merely because it can afford better lawyers.

The judicial system is supposed to determine rights according to:

• applicable law;
• evidence;
• procedure;
• jurisdiction;
• contractual obligations;
• established facts.

Marketisation becomes problematic if economic power begins to determine substantive outcomes independently of legal merit.

25. The Role of Judicial Discretion

Judicial discretion acts as a counterweight to marketisation.

For example, in security-for-costs cases, the court does not simply apply:

"No money = no justice."

Instead, the court considers the circumstances and justice of the case.

The LXT litigation is particularly illustrative: the Court of Appeal held that the existence of third-party funding was not automatically determinative of the amount of security; the court must examine the actual circumstances and funding arrangement.

26. Marketisation and Procedural Efficiency

Market mechanisms can also encourage efficiency.

A funder may refuse to finance:

• weak claims;
• unnecessary applications;
• excessive expert evidence;
• economically irrational litigation.

Similarly, cost consequences can discourage:

• frivolous applications;
• procedural abuse;
• unreasonable delay.

This can reduce unnecessary judicial expenditure.

But it creates a difficult question:

Should the economic attractiveness of a claim influence whether it receives litigation resources?

That question is particularly important for low-value but socially significant civil claims.

27. Marketisation and Access to Small Claims

Large commercial disputes are more attractive to funders because they may generate substantial returns.

Small claims may be less commercially attractive.

Consequently:

High-value claim → greater possibility of funding

while:

Low-value claim → potentially lower funding availability.

This may produce a structural gap between commercially valuable justice and socially important but economically small disputes.

The UAE's small-claims mechanisms and simplified procedures can partially address this problem by reducing procedural costs.

28. Marketisation and Technology

Technology can reinforce marketisation.

Examples include:

• online filing;
• electronic case management;
• AI-assisted legal research;
• automated document review;
• e-discovery;
• online dispute resolution;
• digital evidence;
• legal analytics;
• automated contract analysis.

If technology lowers the cost of legal services, it can potentially make justice more accessible.

However, technology can also produce a competitive advantage for parties able to afford sophisticated systems.

Thus:

Legal technology can either democratise legal access or widen technological inequality.

29. Marketisation and Legal Outcomes

The phrase "marketisation of legal outcomes" requires special care.

Courts do not ordinarily determine the winner by market value.

However, market forces may influence the path to the judgment through:

• choice of lawyer;
• funding;
• expert availability;
• ability to conduct discovery;
• settlement capacity;
• ability to enforce judgments;
• arbitration selection;
• insurance coverage.

Therefore:

Markets may influence litigation inputs without legally determining judicial outputs.

This is one of the most important distinctions.

30. UAE Civil-Law Perspective

The UAE civil-law tradition places significant emphasis on:

• legislation;
• contractual obligations;
• good faith;
• public order;
• protection of rights;
• compensation;
• judicial adjudication.

Marketisation therefore operates within a legal framework, rather than replacing the legal framework.

A commercial contract may allocate economic risks, but it cannot necessarily override mandatory statutory rules.

Similarly, a litigation funder can finance litigation, but it does not become the judge.

31. Mainland UAE vs DIFC

This distinction is essential.

Mainland UAE

Civil litigation is principally governed by:

• Federal legislation;
• Civil Transactions legislation;
• Civil Procedure legislation;
• Evidence legislation;
• Commercial legislation;
• sector-specific legislation.

DIFC

The DIFC has its own:

• Court Law;
• procedural rules;
• commercial laws;
• costs rules;
• litigation-funding framework;
• common-law-influenced jurisprudence.

Consequently, DIFC case law should not be presented as automatically binding precedent for UAE Federal Courts.

The cases above are therefore most useful for illustrating the development of market-oriented commercial justice in the UAE, particularly within the DIFC, unless the relevant DIFC law applies.

32. Six Major Case Laws at a Glance

33. Advantages and Risks

These are structural effects, not a conclusion that any particular UAE court outcome was improperly determined by money.

34. Core Legal Principles

Principle 1 — Justice is not a commodity

A court's legal determination should remain based on law and evidence.

Principle 2 — Litigation has an economic dimension

Legal proceedings involve substantial financial resources.

Principle 3 — Funding can facilitate access

Third-party funding can allow a party without sufficient resources to pursue a substantial claim.

Principle 4 — Funding creates new interests

The funder may acquire contractual economic rights connected with the litigation proceeds.

Principle 5 — Security for costs protects defendants

It protects against the risk of unrecoverable litigation expenditure.

Principle 6 — Funding does not automatically reduce security

The LXT Court of Appeal specifically rejected an automatic discount merely because a party has a funder.

Principle 7 — Judicial discretion remains central

The court must ultimately apply legal standards rather than purely economic calculations.

35. Conceptual Model

The marketisation process can be represented as:

Legal Right

↓

Economic Value of Claim

↓

Funding / Insurance / Own Capital

↓

Lawyers + Experts + Litigation Costs

↓

Settlement or Adjudication

↓

Judgment / Award

↓

Enforcement

↓

Distribution of Recovery

This demonstrates why modern commercial litigation can involve a sophisticated economic ecosystem surrounding the underlying legal dispute.

36. Conclusion

Marketisation of justice in UAE civil law describes the increasing interaction between the administration of civil justice and economic mechanisms such as litigation funding, security for costs, insurance, professional legal services, arbitration, settlement and technological legal services.

The phenomenon is particularly visible in the DIFC Courts, where the jurisprudence on third-party funding and security for costs demonstrates that litigation can involve substantial private capital and sophisticated allocation of litigation risk. Vannin Capital v Al Khorafi is particularly significant because the court had to deal directly with the relationship between a litigation funder and sums recovered in the underlying litigation.

At the same time, cases such as LXT v SIR demonstrate that market mechanisms remain subject to judicial control: the existence of funding does not automatically determine security for costs, and the court must undertake a fact-sensitive assessment.

The central theoretical distinction is therefore:

Marketisation may influence who can finance litigation, how litigation risk is distributed and how disputes are economically managed; it does not convert the legal right to a judicial determination into a purely market-priced entitlement.

Short Revision Formula

Marketisation of Justice =

Legal Rights + Private Capital + Litigation Funding + Cost Allocation + Insurance + Arbitration + Settlement + Technology

but

Judicial Outcome = Law + Evidence + Procedure + Judicial Determination

Thus, in UAE civil law, the principal challenge is maintaining effective access to justice and procedural fairness while allowing legitimate commercial mechanisms to finance and manage increasingly complex civil disputes.