English common law in ADGM

A new commercial jurisdiction has two options. It can write its own code — which is what DIFC did, enacting its own civil and commercial statutes drafted along common-law lines. Or it can adopt an existing body of law wholesale.

ADGM took the second route, and the reason is the one that matters to anyone choosing between them: an adopted body of law arrives with its case law attached. Two centuries of English decisions on contractual interpretation, on when a duty of care arises, on what makes a security interest effective — all of it is immediately available as authority, without waiting for a young jurisdiction to build its own precedent.

The constitutional basis is worth knowing. UAE Federal Law No. 8 of 2004 exempts financial free zones, and the activities within them, from federal civil and commercial laws[ADGM EAO — Employment guidance]. That exemption is what makes a separate commercial law possible at all. It is an exemption from civil and commercial law — not from federal tax, immigration or criminal law, which continue to apply.

English common law, including the rules and principles of equity, applies directly[ADGM Courts — English common law], and it applies on what ADGM's own guidance calls an “evergreen” basis — as the body of English case law stands from time to time[ADGM — English law guidance].

So when the English courts develop a principle, that development is part of ADGM law without anything needing to be enacted here.

This governs the substance of most commercial disputes: contract, tort, trusts, equitable remedies, unjust enrichment, damages, conflicts of laws, security and personal property.

Practically, it means an English authority is genuinely useful in an ADGM argument in a way that a foreign authority usually is not in a codified system.

Statute behaves in the opposite way. Two groups of statute law have effect in ADGM: the 47 modified English statutes scheduled to the Application Regulations, and enactments passed by ADGM itself[ADGM — English law guidance].

The 47 have effect in their state as at the effective date of the Application Regulations. Modifications made to those statutes in England afterwards do not have effect in ADGM unless permitted by a specific ADGM enactment. Otherwise English statute law does not have effect here at all unless another ADGM enactment says so[ADGM — English law guidance].

ADGM notes that a fixed-date approach is not unusual — Australia, Hong Kong and Singapore have done comparable things — and that the 47 were selected after a review of key English commercial statutes and were publicly consulted on.

Why the distinction has teeth

If your dispute turns on a common-law principle, recent English authority is live. If it turns on a statutory provision, you need to know which version of that statute has effect in ADGM — and a 2023 English amendment probably does not.

Anyone who tells you “ADGM just uses English law” has the first half right and the second half wrong, and the difference will only surface at the point where it is expensive.

"English common law applies" is true and incomplete. It applies subject to things, and the exceptions are where advice actually gets given.

The common law received under the Application Regulations remains subject to the effect of any contrary provision of an ADGM enactment or of Applicable Abu Dhabi Law[ADGM — English law guidance]. Where they conflict, English common law yields.

What counts as Applicable Abu Dhabi Law

The term is defined, and the definition is broader than most people assume. It includes[ADGM — English law guidance]:

1. The Constitution of the UAE.
2. Laws or regulations issued under the federal Financial Free Zones Law — Federal Law No. 8 of 2004.
3. UAE federal laws that apply to ADGM by virtue of the UAE Constitution or the Financial Free Zones Law.
4. ADGM's founding law — Law No. 4 of 2013.
5. Any law issued after the Application Regulations by the Ruler of the Emirate of Abu Dhabi that expressly provides for it to apply in ADGM.

Point three is the one that catches people. Certain federal law reaches into ADGM regardless of the common law framework — which is why federal corporate tax and federal criminal law are not displaced by anything on this page.

What ADGM is not subject to

The guidance is equally direct about the other side[ADGM — English law guidance]. ADGM is not subject to:

• UAE federal civil and commercial laws; or
• any other laws of the Emirate of Abu Dhabi, except where an ADGM enactment provides that an Abu Dhabi law applies.

This is the substance of the whole arrangement. Your contracts, your company law, your security interests and your commercial disputes sit outside the federal civil and commercial code. Your tax position, your immigration status and your criminal exposure do not.

Evergreen adoption raises an obvious worry: if English case law applies automatically as it develops, what happens when an English court decides something that makes no sense for Abu Dhabi?

ADGM anticipated it. The Application Regulations empower the ADGM courts to make any necessary adaptations for the specific circumstances of the ADGM, and they are additionally empowered to depart entirely from common law precedents where the circumstances of ADGM require[ADGM — English law guidance].

ADGM's own expectation is that such departures will be rare — because most disputes are commercial in flavour, where the common law's international standards are likely to be appropriate, and because comparable carve-outs in other jurisdictions have been applied sparingly[ADGM — English law guidance].

Read that as a safety valve rather than a source of uncertainty. The default is that English precedent governs; the power to depart exists so that an unsuitable import can be refused rather than followed off a cliff.

The wider inheritance

One under-appreciated consequence of the evergreen approach: ADGM benefits not only from English judgments but from persuasive judgments of other common law jurisdictions of commercial and financial significance which the English courts take into account — ADGM names Australia, Hong Kong, New Zealand, Singapore and the United States[ADGM — English law guidance].

ADGM's stated reasoning for the whole design is worth quoting for what it implies about the alternative: giving English common law direct precedential status avoids a sui generis intermediating layer of locally codified common law[ADGM — English law guidance]. That is the choice a codifying jurisdiction makes differently — see ADGM vs DIFC.

ADGM also notes the practical draw: the four top financial centres in the world — London, New York, Singapore and Hong Kong — all apply common law[ADGM — English law guidance].

Alongside the 47 sit ADGM's own Regulations — Companies, Employment, Foundations, Commercial Licensing, Data Protection and the rest. ADGM's guidance notes these are primarily based on precedent statutes, largely from the UK, which means the case law interpreting those precedents retains value.

All of it is published in ADGM's official rulebook[ADGM Legislation]. Where a page on this site names a Regulation and a year, that is where the text lives — and checking it is a click, which is more than most jurisdictions offer.

A body of law without a court to apply it is a drafting convention. ADGM Courts are what makes this operative: independent Courts of First Instance and Appeal, proceedings in English, with judges drawn from the most senior levels of the judiciary of leading common law jurisdictions[ADGM Courts].

And note the opt-in jurisdiction: parties with no other ADGM connection can agree in writing to have the Court of First Instance determine their dispute[ADGM Courts — FAQs] — so this legal framework is available to contracts that have nothing else to do with Abu Dhabi.