From Funding to Finality: Assignment, Third-Party Funding, and Appellate Limits in a Landmark Dubai Court of Cassation Judgment

In a notable development for arbitration and commercial litigation in the United Arab Emirates, the Dubai Court of Cassation on 23 February 2026 delivered an important judgment addressing the interaction between assignment of rights and arbitration agreements, as well as the procedural limits of intervention at the appellate stage.  

The Court ultimately set aside the appealed judgment and dismissed the claim on the basis of a binding arbitration clause. In doing so, it provided valuable clarification on the transfer of arbitration agreements through assignment, the strict standard for waiver of arbitration, and the boundaries of appellate procedure. Notably, the dispute itself arose out of a third-party funding arrangement, under which the underlying claim was financed in exchange for a share of the proceeds and subsequently assigned to the claimant. This factual background underscores the Court’s analysis of assignment and the transfer of arbitration agreements. 

Arbitration Clauses Follow the Assigned Right 

One of the central principles reaffirmed by the Court is that an arbitration clause constitutes an integral component of the assigned right. 

The Court confirmed that, upon assignment, the right transfers to the assignee together with all its attributes, including guarantees, defenses, and ancillary obligations. This necessarily includes the arbitration agreement. Accordingly, the assignee becomes bound by the arbitration clause, and the debtor retains the right to invoke arbitration against the assignee in relation to the assigned claim. 

This principle reflects the broader doctrine that assignment does not create a new legal relationship but rather substitutes one party for another within the existing contractual framework. 

Relativity of Contracts Preserved 

The Court further clarified that any agreement between the assignor and assignee purporting to alter the agreed dispute resolution mechanism cannot bind the debtor in the absence of its consent. 

In the case at hand, reliance was placed on arrangements suggesting that jurisdiction had shifted from arbitration to the state courts. The Court rejected this position, holding that such modification could not be enforced against the debtor, who was not a party to that arrangement. 

This reinforces the principle of relativity of contracts, ensuring that third parties are not subjected to altered obligations without their express or implied acceptance. 

Waiver of Arbitration Requires Clear and Unequivocal Conduct 

The Court also addressed the question of whether the arbitration clause had been waived through email correspondence. 

It rejected the lower court’s finding of waiver and emphasised that waiver of arbitration must be established through clear, unequivocal, and unambiguous conduct. General communications, discussions regarding payment, or informal exchanges do not suffice to demonstrate an intention to abandon the arbitration agreement. 

The judgment underscores that courts must exercise caution before concluding that a party has relinquished its right to arbitrate. 

Assignment Does Not Create New Obligations 

A further important clarification concerns the legal nature of assignment. 

The Court reaffirmed that assignment operates as a mechanism for transferring an existing obligation rather than creating a new one. As such, the debtor remains entitled to rely on all defenses arising under the original contract, including the arbitration clause. 

This ensures continuity in the legal position of the parties and prevents the debtor from being placed in a less favourable position as a result of the assignment. 

Appellate Intervention: A Strict Procedural Boundary 

In addition to the substantive issues, the Court addressed the limits of intervention before the Court of Appeal. 

It reaffirmed the distinction between supportive (joinder) intervention and offensive intervention involving independent claims. While supportive intervention is permissible at the appellate stage, offensive intervention is not. 

In the present case, the intervening party had joined solely to support the claimant without asserting an independent right. However, the Court of Appeal nonetheless granted relief in its favour. The Court of Cassation held that this constituted a violation of the principle of two-tier litigation and could not be sustained. 

A Clear Pro-Arbitration and Procedurally Disciplined Approach 

This judgment is not merely a correction of error but a reaffirmation of key principles governing arbitration and civil procedure in the UAE. 

It demonstrates a judiciary that is: 

1. Committed to preserving the integrity of arbitration agreements,  
2. Protective of the principle of contractual relativity, and  
3. Disciplined in enforcing procedural boundaries at the appellate level.  

By confirming that arbitration clauses follow assigned rights, rejecting attempts to infer waiver from ambiguous conduct, and strictly limiting the scope of appellate intervention, the Dubai Court of Cassation has delivered a decision that will serve as an important reference in future disputes involving assignment structures and arbitration agreements.

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Disclaimer: This article is made available for educational purposes only. The contents expressed within are those of the author and do not constitute legal advice and should not relied upon as legal advice. The author accepts no responsibility for the continuing accuracy of the contents