Litigation Financing Agreement Template for the United Arab Emirates

A litigation financing agreement is a specialized commercial contract that allows you to secure third-party funding for your legal disputes in the United Arab Emirates. This agreement creates a legal framework where an external funder provides capital to cover litigation costs in exchange for a predetermined return from any successful outcome, enabling you to pursue claims without bearing the full financial risk upfront.

When do you need this document?

You need a litigation financing agreement when pursuing high-value commercial disputes where litigation costs exceed your available resources or when you want to transfer litigation risk to a specialized funder. This is particularly common in complex corporate disputes, international arbitration cases, insolvency-related claims, intellectual property disputes, and construction litigation where legal costs can reach substantial amounts. The agreement is also essential when you're a startup or SME with limited capital but strong legal claims, or when you want to preserve cash flow while pursuing legitimate recovery actions. In the UAE market, litigation funding is increasingly used for DIFC court proceedings and federal court cases involving international elements.

Key legal considerations

Your litigation financing agreement must carefully address several critical elements to protect both parties' interests. The success fee structure requires precise calculation methodology to avoid disputes, typically ranging from 20-50% of recovered amounts depending on case complexity and risk profile. You must define clear control mechanisms, specifying whether the funder has input on litigation strategy, settlement decisions, or legal counsel selection. Termination provisions should cover scenarios including adverse case developments, breach of funding terms, or changes in claim viability. Confidentiality clauses must protect sensitive case information while allowing necessary disclosure to the funder's advisors. Security arrangements may be required, particularly when the funder seeks protection against potential adverse cost orders or wants priority rights over recovery proceeds.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 5 of 1985 (Civil Code), your litigation financing agreement must comply with general contract formation requirements including offer, acceptance, and lawful consideration. The agreement must not violate champerty and maintenance principles, though these concepts are less restrictively applied in commercial contexts. UAE Federal Law No. 11 of 1992 (Civil Procedure Law) governs the underlying litigation process, requiring your agreement to account for local court procedures and potential cost exposure. For DIFC cases, you must ensure compliance with DIFC Law No. 1 of 2008 (Court Law) which may have different procedural requirements. Financial regulatory compliance under UAE Federal Law No. 14 of 2018 (Central Bank Law) may apply if your funder is a regulated financial institution. The agreement should address UAE-specific enforcement mechanisms and ensure any dispute resolution clauses are compatible with local arbitration laws under Federal Law No. 6 of 2018.