Dubai’s Digital Economy Court: How does it work and what cases will it look after?

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Dubai International Financial Center (DIFC) Courts last month announced the launch of the world’s first international Digital Economy Court; a specialized court aimed at providing the best legislative environment to boost the growth and sustainability of digital economy enterprises.

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The new rules, known as ‘Part 58’ of the DIFC Courts Rules, have been overseen by a panel of international lawyers and experts in the industry and created to facilitate the efficient resolution of digital economy disputes. It also aims to standardize the use of smart forms to provide information through a dynamic, artificial intelligence-driven platform.

But how does it operate?

The DEC Division was first established in 2021 to oversee sophisticated national and transnational disputes related to current and emerging technologies across areas ranging from big data, blockchain, AI, fintech, and cloud services, to disputes also involving unmanned aerial vehicles (UAVs), 3D printing, and robotics.

The new rules were subject to a 30-day public consultation and finalized under the supervision of Justice Michael Black, who was appointed by Dubai’s ruler and UAE Prime Minister Sheikh Mohammed Bin Rashid Al Maktoum.

Al Arabiya English spoke to a Dubai-based legal expert to weigh in on how the new specialized court will deal with such disputes beyond traditional public court services.

William Prasifka, Senior Associate at Dubai-based law firm BSA, said that he believes the new rules will deal with digital economy disputes with more in-depth expertise and efficiency, therefore innovating the legal system to deal with complex national and transnational disputes.

“The new rules provide a procedural framework that allows technology to be used throughout the proceedings. Pursuant to the new rules, the default position is that all trials are held remotely, with the pretrial exchange of documents taking place electronically,” Prasifka told Al Arabiya English.

“Documents can be served by email as well as through social media. This will obviously facilitate litigants and witnesses who are not resident in Dubai. The new rules also make provision for the use of smart forms and decision tree software in legal proceedings. While further practice directions will be published on these topics, it may be possible to develop an algorithm that guides parties through the litigation process.”

This is in line with the Dubai government and the Court’s paperless mandate, aiming to reduce the environmental impact of court proceedings.

“The new rules provide the Digital Economy Court will express powers with respect to digital assets. For example, pursuant to Part 58.11 of the new rules the Digital Economy Court can order a party “to operate, modify, sign or cancel any digital asset using any digital signature, cryptographic key, password or other digital access or control mechanism available to it,”” he explained, adding that the DIFC Courts did not have such an express power before DEC was established.

“As far as I am aware, the Digital Economy Court is the first court in the world dedicated to the digital economy. The DIFC Court is therefore a leader in dispute resolution services in the digital economy.”

In 2022, the DIFC courts issued a landmark judgement in one of the first cryptocurrency disputes in the region, addressing crucial issues including the safe transfer of cryptocurrency between buyer and seller, as well as the obligations of a custodian for cryptocurrency.

The case of Gate MENA DMC v. Tabarak Investment Capital Limited examined the legal duties involved in storing cryptocurrencies.

“The claimants alleged that 300 bitcoins had been stolen from a Trezor Wallet while it was in the defendant’s custody. The claimants sued the defendant on various backgrounds including negligence and breach of contract. The claim failed as the DIFC Court found that the defendants did not owe the claimants any legal duties. Importantly the court ruled that Bitcoin constituted property,” Prasifka explained, in reference to the October 2022 case.

The new rules are a part of the DIFC Court’s mission of building a court system that not only absorbs current dispute resolution needs but can flex to address and resolve new emerging disputes.

Prasifka added that the new rules would enable “the appointment of a single judge” in charge of the DEC.

“This new judge will be an expert in emerging technologies who will closely supervise all Digital Economy Court Claims.

“The new court will be able to use international best practice in streamlining the litigation process.”

Keeping up with pace of rapidly evolving tech

Rapid developments in technology might mean that the Court will have to consistently update its legal framework.

Prasifka believes that it the Court will continue to update its framework to “clarify questions regarding the proprietary nature of cryptocurrencies, the legal duties of custodians, and the apportionment of liability with respect to technologies governed by AI.”

“To take the relatively simple example of driverless cars, who will be liable in respect of an accident? Should the manufacturer be liable? What if the accident is caused by a software malfunction? Should software developers (who may be based in locations ranging from Shanghai to San Francisco) be liable to compensate UAE road users? Or is it more appropriate to make the car owner liable when he or she is not necessarily at fault? Should a no-fault compensation scheme be developed?

“Policy makers will have to grapple with these challenges in the years to come.”

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