ADGM Court Confirms Mandatory Seat Law Overrides Arbitration Rules in US$250 Million Freezing Order Case

The ADGM Court of Appeal has confirmed that mandatory arbitration law at the seat prevails over institutional rules, granting a US$250 million worldwide freezing order despite non-compliance with LCIA procedures. The decision underscores the strategic importance of choosing ADGM as an arbitration seat for effective interim relief and enforcement in the Middle East.

Arbitration is widely regarded as a predictable and party-driven method of dispute resolution. When selecting an arbitral institution, parties often assume that the institutional rules they choose will govern the process comprehensively, including access to interim relief. A recent decision by the Abu Dhabi Global Market (ADGM) Court of Appeal challenges that assumption and offers an important reminder for businesses operating in the Middle East: when arbitration rules conflict with the mandatory law of the seat, the law of the seat will prevail.

In A30 v E30 [2025] ADGMCA 0003, the Court of Appeal granted a worldwide freezing order of up to US$250 million in support of an ongoing arbitration, despite the applicant’s failure to comply with the relevant institutional rules.

We explore the main implications of this decision for foreign investors, lenders, and corporates that rely on arbitration clauses in cross-border Middle East transactions.

Arbitration and the growing importance of the seat

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Arbitration is the preferred dispute resolution mechanism for many transactions in the Middle East, particularly in project finance, infrastructure development, banking, and joint ventures involving foreign investors. While commercial parties devote considerable attention to governing law and arbitral institution, the seat of arbitration is often treated as a secondary or even boilerplate choice.

This decision underlines why that approach can be risky. The seat of arbitration determines which courts have supervisory jurisdiction and which mandatory provisions of local arbitration law apply. These provisions can override both institutional rules and party agreement.

As arbitration hubs such as ADGM continue to attract international disputes, understanding the legal consequences of the seat is increasingly important for businesses operating in the region.

Background to the dispute

The case arose from the financing of a major development project by a consortium of banks led by A30. Under the financing arrangements, the banks issued guarantees in favour of counterparties connected to the project. In return, the respondents were required to channel all relevant payments into a designated collection account held with A30.

When the guarantees were enforced against the bank, the lenders sought reimbursement from the collection account. They then discovered that the respondents had diverted funds away from the account in breach of the financing arrangements. The banks commenced arbitration under the rules of the London Court of International Arbitration to recover the guaranteed amounts and the misdirected funds.

During the arbitration, the banks learned that the respondents were about to receive further payments. There was a real concern that these funds would also be dissipated before any arbitral award could be enforced. To prevent this, the banks applied directly to the ADGM courts, the supervisory courts of the arbitration, seeking a worldwide freezing order.

The procedural conflict: Institutional rules versus mandatory law

The difficulty facing the banks was procedural. Article 25.3 of the LCIA Rules requires parties to obtain the tribunal’s consent before applying to a court for interim relief. The banks had not sought such consent. On that basis, the ADGM Court of First Instance refused the application, holding that the parties were bound by their agreement to arbitrate under the LCIA Rules.

On appeal, however, the Court of Appeal took a different view. It focused on section 31 of the ADGM Arbitration Regulations 2015, which grants ADGM courts the power to order interim measures before or during arbitration. Crucially, section 31 is expressly listed as a mandatory provision, meaning it applies “notwithstanding any agreement to the contrary”.

Although section 31 limits court intervention to circumstances where the tribunal lacks power or cannot act effectively, the Court accepted that seeking tribunal consent in this case would have been futile. Any such application would have alerted the respondents and created a serious risk that the assets would be dissipated before relief could be granted. In those circumstances, the Court held that it was appropriate to intervene and granted a worldwide freezing order of up to US$250 million.

Why the decision matters for businesses

The decision carries several practical lessons for foreign businesses and investors operating in the Middle East.

First, it confirms that institutional arbitration rules are not absolute. Even widely used and well-regarded rules such as those of the LCIA do not displace mandatory provisions of the law of the seat. Parties cannot rely on institutional rules alone to predict how interim relief will be handled.

Second, the ruling demonstrates the ADGM courts’ willingness to act decisively in support of arbitration where enforcement is at risk. Freezing orders and other interim measures are often essential to ensure that an eventual award is effective rather than merely symbolic. The Court of Appeal’s readiness to grant urgent, ex parte relief reinforces ADGM’s reputation as an enforcement-oriented jurisdiction.

Third, the case highlights that court intervention is not necessarily inconsistent with a pro-arbitration stance. On the contrary, the Court framed its intervention as necessary to protect the integrity of the arbitral process. For commercial parties, this provides reassurance that selecting ADGM as a seat does not mean sacrificing effective judicial support in urgent situations.

Drafting and structuring implications

For businesses structuring transactions in the Middle East, the decision has clear drafting and risk-management implications.

Arbitration clauses should be approached holistically. Parties should assess not only the governing law and institutional rules but also the mandatory provisions of the seat’s arbitration legislation. Treating the seat as a neutral or technical choice may lead to incorrect assumptions about court powers and procedural constraints.

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In finance and guarantee structures, parties should assume that courts at the seat may intervene without tribunal consent where assets are at risk. This has implications for both enforcement strategy and compliance planning. In-house counsel should factor local court powers into dispute preparedness and asset protection assessments from the outset of a transaction.

Conclusion

The A30 v E30 decision sends a clear message to the market: in arbitration, the seat matters. The ADGM courts have confirmed that mandatory provisions of local arbitration law will prevail over institutional rules where the two conflict, particularly in cases involving urgent asset preservation.

For foreign investors and businesses operating in the Middle East, the ruling strengthens confidence in ADGM as a seat that combines arbitration-friendly principles with robust judicial support. At the same time, it underscores the need for careful arbitration planning that fully accounts for the legal consequences of the chosen seat.

See also: UAE Civil Transactions Law Updates: Age Limits, Contracts, Expats Assets Implications

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