ADGM Courts Litigation Funding Rules 2019
A rule-by-rule guide to the only statutory third-party funding regime in the UAE

Abu Dhabi Global Market is the only jurisdiction in the United Arab Emirates where third-party litigation funding is regulated by a binding statutory instrument rather than by practice direction, institutional rule or silence. The regime has two limbs that have to be read together: section 225 of the ADGM Courts, Civil Evidence, Judgments, Enforcement and Judicial Appointments Regulations 2015, which makes a compliant funding agreement enforceable and imposes a notice duty on the funded party; and the ADGM Courts Litigation Funding Rules 2019, prescribed by the Chief Justice on 16 April 2019 under section 225(3)(a) and (d), which set out who may fund and what the agreement must contain.

This guide works through both, rule by rule. It also flags four points that are visible only on a close reading of the instruments side by side: that the Rules create no funder register and no approval process; that the regime reaches arbitration and contemplated disputes, not only court claims; that section 225 — unlike the conditional fee section next to it — does not declare a non-compliant agreement unenforceable; and that the 2023 amendment exists to correct a cross-reference to a statutory provision that does not exist.

1. The architecture: an enabling section and a prescribing instrument

Section 225(1) is a safe harbour. A litigation funding agreement which satisfies all of the conditions applicable to it "shall not be unenforceable by reason only of its being a litigation funding agreement". The conditions are in section 225(3):

• 225(3)(a) — the funder must be a person, of a description, prescribed by the Chief Justice.
• 225(3)(b) — the agreement must be in writing.
• 225(3)(c) — it must not relate to proceedings which cannot be the subject of an enforceable conditional fee agreement, or to proceedings of any description prescribed by the Chief Justice.
• 225(3)(d) — it must comply with such requirements, if any, as may be so prescribed.

The Litigation Funding Rules 2019 supply (a) — in Rule 4 — and (d) — in Rules 6 to 15. Writing is statutory and needs no rule. Condition (c) is discussed at section 10 below, because tracing it back produces a surprising result.

No register, no approval, no regulator

Section 225(4) expressly contemplated a gatekeeper: "Rules made under subsection (3)(a) may require a person to be approved by the Board or by a prescribed person in." (The sentence ends there in the consolidated text.) The Chief Justice did not take that power up. Rule 4 prescribes objective criteria instead of an approval process, which means there is no ADGM funder register, no licence, and no authority that confirms a funder's eligibility in advance.

The practical consequence runs through everything below: compliance is self-assessed and tested after the fact, usually when someone has an incentive to challenge it. A funded party cannot discharge its diligence by pointing to a listing, because there is none.

Why section 225 sits where it does

Part 9 of the Regulations groups the funding provisions with the other mechanisms for financing litigation: section 222 (conditional fee agreements), section 223 (supplementary), section 224 (damages-based agreements) and section 226 (pro bono costs). Reading section 225 next to section 222 matters, and section 9 below explains why.

Two housekeeping provisions complete the picture. Section 225(9) required the Chief Justice to consult before making the Rules. Section 225(10) permits court procedure rules to deal with the assessment of costs that include fees payable under a funding agreement — so a funder's return is in principle capable of being brought within the costs-assessment process where such rules are made.

2. Scope: the regime is not confined to proceedings in court

Rule 1 states that the Rules apply in relation to litigation funding agreements "as defined in section 225(2) of the Regulations". Section 225(2) defines one as an agreement under which the funder agrees to fund, in whole or in part, the provision of advocacy or litigation services — by someone other than the funder — to the litigant, and the litigant agrees to pay a sum to the funder in specified circumstances.

Then section 225(8) does the heavy lifting:

Two extensions follow, and both are substantive:

• Arbitration is inside the regime. Funding the advocacy and litigation services provided in an arbitration is funding the provision of those services in "proceedings". Very few jurisdictions place arbitration funding on a statutory footing at all; ADGM does so by a definition rather than by a separate arbitration instrument, which is why it is easy to miss.
• Pre-action funding is inside the regime. "Whether commenced or contemplated" captures the agreement signed to fund investigation, pre-action correspondence and the decision whether to sue. The Rules therefore bite before any claim form exists.

The limit is the extent provision

Rule 3(1) provides that the Rules "may be cited as the Litigation Funding Rules 2019 and shall apply in the whole of Abu Dhabi Global Market". That territorial extent, not the subject matter, is the operative limit. How it applies to an arbitration seated in ADGM but heard elsewhere, or to an ADGM-incorporated claimant funding a dispute in another forum, has not been settled in a published ADGM judgment. Treat it as a structuring question to be addressed in the agreement rather than an answered one.

Rule 3(2) adds that the Rules came into force on publication and that nothing in them has retrospective effect. A funding agreement made before 16 April 2019 is not rendered non-compliant by the Rules.

Insolvency funding is expressly contemplated

Rule 2(d) defines "Funded Party" as a litigant within section 225(2)(a) and includes a liquidator or judicial manager. That is a deliberate inclusion. An ADGM liquidator or judicial manager funding recovery proceedings — against former management, a connected party or a third party — is squarely within the regime and takes the benefit of section 225(1) if the Rules are met. It also means the office-holder, rather than the estate's creditors, is the counterparty the Rules protect.

3. Who may fund: Rule 4 and the US$5 million test

Rule 4(1) imposes two requirements, and imposes them twice over — the funder must satisfy them "at the time the Litigation Funding Agreement is made, and continue to satisfy" them:

• Rule 4(1)(a) — the funder "must carry on as a principal business the funding of proceedings to which the Funder is not a party".
• Rule 4(1)(b) — the funder "must have qualifying assets of not less than US$5 million or the equivalent amount in foreign currency".

The principal-business test excludes most occasional funders

Rule 4(1)(a) is a test about what the funder is, not what it is doing on this case. On its terms it excludes a parent company funding its subsidiary's claim, a trade creditor financing a debtor's recovery action, a family office writing a single cheque, and a special purpose vehicle incorporated for one case with no funding business behind it. Each of those may still fund — nothing makes the arrangement unlawful — but the agreement will not attract the section 225(1) protection.

Note the indefinite article: "a principal business", not its only business. A diversified funder that also writes insurance or manages unrelated credit strategies can satisfy the test, provided funding third-party proceedings is genuinely one of its principal businesses rather than an incidental activity.

"Qualifying assets" means cash, and that is narrower than it looks

Rule 4(2) defines qualifying assets as "cash and cash equivalents including, without limitation":

• monies and assets contracted to the funder under a contract for fund management; and
• in the case of an incorporated company, paid-up share capital.

Three consequences for diligence:

1. Assets under management is not the test. A headline AUM figure, a fund size or a committed-capital number is not evidence of cash or cash equivalents. Ask which instrument holds the US$5 million and in what form.
2. Uncalled commitments are the live question. Many funders hold capital as callable commitments from limited partners rather than as cash. Limb (a) rescues some of that — "monies and assets contracted to the Funder under a contract for fund management" — but an uncalled subscription under a limited partnership agreement is not self-evidently a contract for fund management. Where the funder relies on limb (a), read the contract, not the fund deck.
3. Paid-up, not authorised. Limb (b) is paid-up share capital. An authorised capital figure in a certificate of incorporation does not engage it.

The threshold is continuing, which is the part most templates miss

Because Rule 4(1) requires the funder to "continue to satisfy" both limbs, a funder that drops below US$5 million in qualifying assets, or that winds down its funding business, puts the safe harbour in issue for the remaining life of every agreement it holds. There is no grace period in the instrument and no cure mechanism. The only machinery the Rules provide is the notification duty in Rule 14, discussed at section 5.

4. Who may not: lawyer ownership and the referral-fee ban

Rule 5 — ownership, but conditionally

Rule 5(1) provides that the funder must not be owned — "whether wholly or partly, and whether directly or indirectly, and whether by way of shares or otherwise" — by a lawyer or law firm:

• who has introduced or referred the funder to a client in relation to the proceedings; or
• whose client has a litigation funding agreement in force with the funder in relation to ongoing proceedings.

Read what this is not. It is not a blanket prohibition on lawyers or law firms owning litigation funders. The prohibition is conditional: it bites where the owning firm made the introduction on this matter, or where that firm has a client with a live funding agreement with the same funder. A firm may hold an interest in a funder that has no relationship with that firm's own clients' cases.

Rule 5(2) carves out discretionary portfolio management: where a stockbroker or other professional investment manager deals in the funder's securities for an individual "without instruction from or prior reference to that individual", that is not ownership for Rule 5(1) purposes. The practical beneficiary is the partner whose portfolio is blind-managed and happens to hold the funder's listed equity.

Rule 13 — no referral fee, in any form

Rule 13(1) prohibits the agreement from resulting from or involving "any commission, fee or share of proceeds being paid to a lawyer or law firm in relation to the introduction or referral of a client to the Funder by that lawyer or law firm". There is no de minimis, no disclosure-and-consent route and no client-waiver mechanism. Rule 13(4) applies the same securities carve-out to proceeds.

Rule 13(2) preserves the obvious: nothing stops a firm charging its client fees, disbursements and expenses for legal services. Rule 13(3) adds a catch-all — neither the agreement nor anything the funder does under it may cause a lawyer or firm to breach the ADGM Court Rules of Conduct 2016.

Rule 13(5) — a conflicts check that reaches the tribunal

Rule 13(5) is the provision practitioners most often overlook. The agreement must require the funder to take reasonable steps to satisfy itself that no circumstances arising from the funding "might give rise to any reasonably foreseeable conflicts of interest" — and it specifies the field of enquiry:

A funder must therefore run its conflicts check against the opposing side and against the court or tribunal. Links between funders and arbitrators are a live challenge ground in international practice; in ADGM the obligation to look for them is written into the funding agreement by rule, and the record of having looked is the funder's own. For a funded party, that record is worth asking for before the tribunal is constituted, not after a challenge is threatened.

5. What the agreement must say: Rules 6 to 8 and 10 to 15

Rules 6 to 15 are drafting requirements. Each one is a term the agreement must contain; several are also substantive restraints on what the funder may do.

6. Control and settlement: how Rule 9 and Rule 10 fit together

Rule 9(1) prohibits two categories of term. The agreement must not contain any terms that:

• (a) could induce the funded party's lawyer or firm to breach their professional duties owed to the funded party or to ADGM Courts, including under the Rules of Conduct 2016; or
• (b) "subject to paragraph 10 below", allow the funder to influence the lawyer or firm so that it takes control of the dispute or assumes conduct of it.

The cross-reference in limb (b) is the key to the whole provision. Rule 10 requires the agreement to include provisions as to the funder's role in settlement decisions. So the instrument does not prohibit the funder from having a settlement role — it compels the parties to deal with it, and then carves that dealing out of the anti-control prohibition.

The drafting question for a funded party is therefore not whether the funder has a say on settlement but where on the spectrum its say sits:

• Consultation and reasons. A right to be consulted, and to receive the lawyers' reasoned view, before a settlement is accepted or rejected. Comfortably within Rule 9(1)(b).
• Independent referral. A right to require that a settlement the funder considers inadequate be referred to jointly instructed independent counsel, with the opinion binding or advisory. Also within Rule 9(1)(b), and the common commercial landing point.
• Veto. A right to refuse a settlement the funded party and its lawyers recommend. This is where Rule 9(1)(b) is tested — particularly if the same agreement gives the funder rights of direction over the lawyers, because the two together are close to assuming conduct of the dispute.

Rule 9(2) adds that agreements with more than one funded party must include provisions for managing conflicts of interest between the funder, the funded parties and the lawyers. In a group claim or a funded portfolio, allocation of settlement authority and of proceeds between co-funded claimants is the recurrent flashpoint. Rule 9(2) makes addressing it mandatory rather than a matter of good practice.

7. Notice to the other side: section 225(6)–(7) and the seven-day window

This duty sits in the Regulations, not the Rules, which is why it is sometimes missed by parties who have read the Rules carefully. Section 225(6) provides that a litigant who enters into a funding agreement in respect of proceedings must put every other party to the relevant dispute on written notice of the fact that it has done so. Section 225(7) sets the timing:

• Where proceedings have yet to be commenced — as soon as practicable after the commencement of those proceedings.
• Where the agreement was entered into after commencement — within 7 days of the date of the litigation funding agreement.

Five points on the notice duty

1. It runs to the parties, not to the court. Section 225(6) requires notice to "every other party to the relevant dispute". There is no filing step in the section. In a multi-defendant claim, each defendant is entitled to notice.
2. What is disclosed is the fact, and only the fact. The section requires notice "of the fact that he has entered into a litigation funding agreement". It does not require the terms, the quantum, or — on its face — the funder's identity. That is a deliberate contrast with the DIFC Courts practice direction, which does require the funder to be identified. A funded party in ADGM should give notice of the fact and resist a request for more absent an order.
3. Seven days runs from signature. Not from commencement, not from the first draw, not from the funder's credit approval. Where proceedings are already on foot the clock starts on the date of the agreement, and seven days is short enough that the notice should be drafted before the agreement is signed.
4. Pre-commencement funding gets the softer test. If the agreement pre-dates the claim, the obligation is to notify as soon as practicable after commencement — which is a judgement, not a deadline, and should be recorded as one.
5. The section states no sanction. Failure to give notice is not declared to invalidate the agreement. The exposure is practical: a party in admitted breach of an express statutory notice duty is poorly placed on a later security-for-costs or non-party costs application, and the breach is a matter of record.

8. Adverse costs, security for costs, and reaching the funder

Three provisions combine into the costs position, and they do not pull in the same direction:

• Rule 8 requires the agreement to state who bears adverse costs and who pays any insurance premium. It does not allocate them.
• Section 225(6) tells the opponent that funding exists.
• Rule 15 obliges the funder to submit to ADGM Courts' jurisdiction on costs — and to do so expressly for the benefit of the funded party and any other party to the funded proceedings.

Rule 15 is a mandatory term in the opponent's favour

This is the most commercially significant provision in the instrument, and it runs against the funder. By rule, the funding agreement must confer a benefit on the funded party's opponent: a contractual submission to ADGM Courts for disputes relating to costs as between the funded party and any other party.

The drafting formula — "expressly for the benefit of … any other party" — is the language of third-party rights, and it lands in a jurisdiction equipped to give effect to it. The Contracts (Rights of Third Parties) Act 1999 is item 46 in the schedule of English statutes applied in ADGM by the Application of English Law Regulations 2015. A respondent that has received a section 225(6) notice therefore has both the knowledge that a funder stands behind the claim and a route to hold that funder to its submission on costs.

Note the boundary. Rule 15 is drafted by reference to "proceedings before ADGM Courts". It does not, on its face, give the respondent in a funded arbitration the same submission — even though, as section 2 showed, the arbitration itself is within the regime. Where the funded proceedings are arbitral, the costs position has to be built by agreement rather than taken from the rule.

What each side should do

For a funded claimant: if the agreement leaves adverse costs with you, the section 225(6) notice hands the respondent the foundation for a security application. Have the answer ready before the notice goes out — adverse-costs insurance, a funder indemnity, or a deed in the respondent's favour — rather than assembling it under time pressure after the application is issued.

For a respondent: the notice is the trigger. Ask whether the funder has accepted adverse-costs liability and whether insurance is in place. Because Rule 8 requires the agreement to state both, the funded party is not being asked to speculate, and an evasive answer is itself informative. Then consider security for costs on the footing that the claim is externally financed, and preserve the Rule 15 position.

Section 225(10) is worth keeping in view on both sides: it permits court procedure rules to deal with the assessment of costs that include fees payable under a funding agreement.

9. Non-compliance: what actually falls away

Put section 225(1) next to section 222(1), the conditional fee provision four sections earlier, and the difference is immediate.

Section 222(1) carries an express sanction. Section 225(1) has no equivalent second limb. A funding agreement that fails a condition is therefore not declared unenforceable by the Regulations; it loses a statutory shield rather than acquiring a statutory defect.

What it is then exposed to is the ordinary law of ADGM. English common law and the rules and principles of equity apply directly in ADGM under the Application of English Law Regulations 2015, and the common-law public-policy doctrine that grew out of maintenance and champerty is part of what a counterparty would invoke against a funding arrangement stripped of its statutory protection. How an ADGM court would apply that doctrine to an agreement that, for example, misses the US$5 million test by a margin — or that complied on signature and ceased to comply two years later — is genuinely open: there is no published ADGM authority on the point.

That uncertainty is the reason to treat Rule 4 as a hard gate rather than a representation, to re-test it at each tranche, and to make the Rule 14 notification duty operative rather than decorative.

10. Two artefacts in the drafting worth knowing about

(a) The 2023 amendment corrects a reference to a provision that does not exist

As enacted, Rule 7(d) required the agreement to state the funder's recovery "in accordance with section 225(3)(e) of the Regulations". Section 225(3) has four paragraphs — (a), (b), (c) and (d). There is no paragraph (e).

The Litigation Funding Rules 2019 Amendment No 1 of 2023, enacted 13 December 2023, does one thing: in Rule 7(d) it deletes the words "in accordance with section 225(3)(e) of the Regulations" and replaces them with "under the Agreement". The amendment has a single operative line and makes no other change to the instrument.

The practical point for anyone working from a template: a funding agreement drafted to the letter of the pre-2023 Rule 7(d) pointed at nothing. The requirement is now self-contained — state the funder's recovery under the agreement. Any ADGM funding precedent built between April 2019 and December 2023 should be checked against the current consolidated text.

(b) Section 225(3)(c) imports an exclusion list that has not been made

Condition (c) is that the agreement "must not relate to proceedings which cannot be the subject of an enforceable conditional fee agreement or to proceedings of any such description as may be prescribed by the Chief Justice". Follow the first limb back and it leads to section 222(3)(b), which states the same condition for conditional fee agreements in the same circular terms — a conditional fee agreement "must not relate to proceedings which cannot be the subject of an enforceable conditional fee agreement".

No instrument in the published ADGM rulebook prescribes a description of excluded proceedings for either section. As matters stand, therefore, ADGM has no subject-matter carve-out for funded claims — nothing resembling the family and criminal exclusions familiar from the English conditional fee regime.

Two observations follow. First, that is a notably permissive position, and it is deliberate in the sense that the Chief Justice has twice had the power to narrow it and has not. Second, it is narrowable at any time: a rule prescribing excluded descriptions of proceedings would take effect without any amendment to the Regulations, so the absence of a list is a current fact rather than a structural feature.

11. How ADGM compares with DIFC and onshore UAE

The structural difference is worth stating plainly. ADGM regulates the funder and the agreement, prospectively, by rule. It is the only UAE jurisdiction with a capital test, the only one that prescribes the content of the funding agreement, and the only one whose regime reaches arbitration on its own terms. DIFC regulates the relationship and its disclosure by practice direction, requires the funder to be named, and keeps the remedy in the Court's hands through its non-party costs jurisdiction.

Neither is simply stricter than the other. A funder clears a lower eligibility bar in DIFC but is identified to the opponent; in ADGM it stays unnamed under the statutory notice but has to meet a capital test continuously and submit to the Court on costs for the opponent's benefit. For a party choosing between the two forums with funding in prospect, that trade-off belongs in the jurisdiction analysis rather than being discovered after the clause is agreed.

12. Checklists by role

Funded party — before signing

• Confirm the funder carries on funding third-party proceedings as a principal business, on its constitutional and regulatory documents rather than on a website claim.
• Ask for evidence of US$5m in cash or cash equivalents and identify the instrument that holds it. An assets-under-management or fund-size figure does not engage Rule 4(2).
• Run Rule 5: did your own firm introduce this funder, and does your firm hold any interest in it, directly or indirectly?
• Read Rule 7 against the term sheet. Scope, amount, the timing of each tranche and the funder's recovery must all be in the agreement — and limb (d) should read "under the Agreement", not to a pre-2023 cross-reference.
• Answer the Rule 8 question before signing: who bears adverse costs, and who pays any insurance premium?
• Locate the funder's settlement role and test it against Rule 9(1)(b) — consultation and independent referral are safe; a veto coupled with rights of direction is not.
• Check that the termination grounds are enumerated. Rule 11 means an unlisted ground is unavailable to the funder.
• Scope the information flow so Rule 12 is satisfied by design, with written consent where privileged material is involved.
• Take the independent advice Rule 6 contemplates before signing the written confirmation that you have taken it.
• Diarise the section 225(7) notice on the signature date: 7 days if proceedings are already on foot.

Funder

• Re-test Rule 4 at each tranche, not only at signature. Both limbs are continuing obligations.
• Build the Rule 14 notification into your own monitoring with a defined internal trigger, so "expeditiously" is measurable.
• Run the Rule 13(5) conflicts check across the opposing parties, their lawyers, and the court or tribunal — and keep the record of having run it.
• Confirm no commission, fee or share of proceeds has passed to any lawyer in the referral chain (Rule 13(1)). There is no consent route.
• Include the Rule 15 submission to ADGM Courts expressly and for the benefit of the other parties. It is a mandatory term, not a negotiating concession.

Opposing party — on receiving a notice of funding

• Record the date of the notice and whether it fell within the section 225(7) window.
• Ask whether the funder has accepted adverse-costs liability and whether insurance is in place. Rule 8 means the agreement states the answer.
• Consider security for costs on the footing that the claim is externally financed.
• Preserve the Rule 15 position — the funder is required to have submitted to ADGM Courts on costs expressly for your benefit.
• Test the funder's eligibility if the point is worth taking. Rule 4 is self-assessed and there is no register to rely on.

Primary sources

Every provision quoted above is taken from the instruments below. Links go to the official consolidated text, not to secondary commentary.

• ADGM Courts Litigation Funding Rules 2019 — consolidated text — Parts 1 to 3, Rules 1 to 15; enacted 16 April 2019
• Litigation Funding Rules 2019 Amendment No 1 of 2023 — enacted 13 December 2023; amends Rule 7(d) only
• Section 225, ADGM Courts, Civil Evidence, Judgments, Enforcement and Judicial Appointments Regulations 2015 — the enabling section, including the notice duty at 225(6)–(7) and the extended definition of proceedings at 225(8)
• Section 222, ADGM Courts Regulations 2015 — conditional fee agreements — the comparison that shows what section 225(1) does not say
• Section 224, ADGM Courts Regulations 2015 — damages-based agreements — the adjacent funding mechanism in Part 9
• ADGM Court Rules of Conduct 2016 — cross-referred by Rules 9(1)(a) and 13(3)
• Application of English Law Regulations 2015 — consolidated text and schedule of applied statutes — English common law and equity apply directly; the Contracts (Rights of Third Parties) Act 1999 is item 46
• DIFC Courts Practice Direction No. 2 of 2017 on Third Party Funding — the DIFC comparison used in section 11
• ADGM Courts — the English common law system — ADGM's own statement of the direct application of English common law

Questions we are asked

Related guides in the library

• Costs and Third-Party Funding in UAE Arbitration
• DIFC Courts vs ADGM Courts — 2026 Comparison
• Enforcing Foreign Arbitral Awards Through ADGM
• ADGM Jurisdiction Clauses and Costs

Published 2026-10-01. General information only — not legal advice. Contact us for matter-specific advice.