19 January 2023
Mission possible: the quest for speedy dispute resolution in Dubai – 2 of 3 Insights
When negotiating a contract and seeking to agree which court or arbitral centre will have exclusive jurisdiction to resolve any dispute that might arise, there are a number of factors to consider. One of those is the speed with which a claim can be resolved, including whether a particular forum offers an expedited process or any other features which might help parties obtain an award faster than in another forum.
In this three-part series of articles, we consider Dubai’s three main dispute resolution forums, namely the Dubai Courts, the Courts of the Dubai International Financial Centre (DIFC Courts) and the Dubai International Arbitration Centre (DIAC), to consider how they may assist parties in this regard.
In this second article in the series, we look at the expedited procedures and features available in the DIFC Courts.
The Dubai International Financial Centre (DIFC) is a separate jurisdiction from the civil law jurisdiction of onshore Dubai (and the wider UAE). The DIFC has its own English language court system and body of laws based on principles of common law.
The DIFC Courts have exclusive jurisdiction to deal with all civil and commercial disputes arising from or within the DIFC. Since 2011, they have also had jurisdiction over disputes with no relation to the DIFC, but where the parties have agreed in writing to opt for the DIFC Courts’ jurisdiction. Today approximately 50% of DIFC Court claims originate from parties ‘opting in’ in this way.
The court procedure in the DIFC Courts is governed by the Rules of the DIFC Courts (the “RDC”) which closely reflect the English Civil Procedure Code and, as we will see below, has a number of features which can assist, directly and indirectly, with expediting the resolution of a claim.
The SCT looks to provide an efficient method for determining small claims valued up to AED 500,000 (or up to AED 1,000,000 if the parties have expressly agreed to that upper limit in their contract).
After filing a claim form, the Defendant has just 7 days to acknowledge the claim, challenge the SCT’s jurisdiction or, either concede the claim or file a defence. Within a further 7 days, the SCT will usually schedule a consultation where the parties will attend in private before the SCT judge to attempt to resolve their dispute. If the parties agree, this may be treated as the final hearing meaning a resolution could be reached in around two weeks.
If a defendant files a jurisdiction challenge with its acknowledgment of service, then the claimant must respond within 7 days. The challenge will then be heard by an SCT judge at a jurisdiction hearing where they may make an immediate order in respect of the challenge. If the challenge is dismissed, the SCT judge may direct that the consultation be held immediately in the presence of the parties.
If the claim is not resolved amicably at the consultation, the SCT judge will usually give directions up to and including a final hearing. Alternatively, if all parties agree, the SCT may deal with the claim without a hearing. In practice, a hearing is usually scheduled 2-3 weeks after the consultation and an order issued a few days thereafter. Overall, this results in a speedy resolution of the whole claim within approximately 4-6 weeks.
In most cases, parties must attend a jurisdiction challenge hearing, consultation and final hearing in person (at the court or remotely) and cannot be represented by a lawyer.
On some occasions, even if the value of the claim falls within the SCT threshold, the SCT may transfer the claim to the Court of First Instance (CFI) if, for example, the facts, law or evidence is or is likely to be complex or a significant amount of oral evidence may be required.
Within 14 days of a final decision by the SCT, an unsuccessful party has the right to apply to the CFI for permission to appeal on the basis that the SCT’s decision was: (1) wrong; (2) unjust because of a serious procedural or other irregularity in the proceedings; or (3) wrong in relation to any other matter provided for or under any law.
If a claim is not suitable for the SCT, a party must commence its claim in the CFI. To start a standard claim, the procedure is set out in Part 7 of the RDC. However, in some cases, a party can elect to use the alternative procedure for claims, which is set out under Part 8 of the RDC and can take as little as 3 months to obtain an order.
Similar to the payment order process in the Dubai Courts, this is a fast-track procedure and its use is limited to certain circumstances. If it is not used appropriately, there could be cost implications therefore legal advice should be sought in advance. The main condition to using Part 8 is that the claimant seeks the Court’s decision on a question which is unlikely to involve a substantial dispute of fact.
After filing the claim with supporting evidence, the defendant must acknowledge service of the claim within 14 days and, if it contends the appropriateness of using the Part 8 process, they must explain why there is a substantial dispute of fact. Importantly, a defendant ought to file any written evidence with his acknowledgment of service and the claimant may, within a further 14 days, ﬁle further evidence in reply. In practice, a defendant may be given some additional time by the court if so requested.
Within 6 weeks of receiving the defendant’s evidence (if any), the DIFC Court will schedule a Case Management Conference (“CMC”) to issue pre-trial directions and fix a hearing date to hear oral submissions and any witness evidence. If no evidence has been submitted by the defendant and/or the defendant does not partake in the proceedings, a CMC and final hearing might be dispensed with and the judge may deal with the matter on the papers. A recent Part 8 claim brought by Taylor Wessing was dealt with by Justice Sir Jeremy Cooke within 3 months (CFI 059/2022), demonstrating not only the effectiveness of the procedure but also the involvement of world class judges even in straightforward matters.
Even if a standard claim is brought under Part 7 of the DIFC Court Rules, in appropriate cases, either party may file an interim application for immediate judgment against the other party on the whole of a claim, part of a claim or on a particular issue.
Amongst other things, the applicant must demonstrate that the other side has no real prospect of succeeding on the claim or successfully defending the claim, based on a point of law and/or the evidence expected to be available at trial.
By way of a recent example, in Vegie Bar LLC v Emirates NBD Properties, the Appeal Court upheld an order for immediate judgment as follows:
“ None of [the Claimant’s] causes of action has a real prospect of success. I have considered whether… further factual investigation might be warranted with the possibility of a different complexion emerging… however, it is necessary to address the causes of action as pleaded, the proper evidentiary scope is confined, and the essentials of [the Claimant’s] case can be considered. In my view, the essentials are lacking.”
If immediate judgment is granted on the whole claim, subject to any appeal, the matter comes to an end and the parties will not need to spend any further time or cost complying with the remaining procedural steps up to trial. Alternatively, if an immediate judgment dismisses parts of a claim at an early stage, this can expedite proceedings by reducing the scope of issues to be addressed during the later procedural stages, for example, in document production, expert evidence, witness statements and at trial.
Although applications for immediate judgment will not be suitable in every claim, they can offer a useful option to parties to bring a futile claim or defence to a swift end. Also, in contrast to the payment order process in the Dubai Courts, an application for immediate judgment can be deployed in a much wider variety of cases and does not require evidence that the other party has accepted liability.
A party’s ability to obtain a variety of interim remedies in the DIFC Courts can sometimes indirectly lead to a quicker resolution of the dispute.
For example, an interim order to produce documents, to deliver up goods relevant to the dispute or a search order allowing access to a premises to preserve evidence, may lead a defendant to consider that the likely evidence to be produced following those interim orders, will support the claim or be detrimental to its defence. Therefore, rather than incur the cost of fighting the claim, an early commercial settlement may be preferable thereby indirectly leading to a speedy resolution.
Similarly, as with precautionary attachment orders in the Dubai Courts, an interim freezing injunction which restricts the defendant from disposing of, dealing with or diminishing the value of certain assets, may encourage a party to settle early rather than endure a lengthy litigation while its bank accounts or other assets necessary for operating its business are frozen. Furthermore, if the litigation does run its course, the enforcement of any judgment is likely to be quicker if the defendant’s assets have already been frozen during the substantive case.
Following the impact of Covid-19 on travel, the DIFC Courts quickly moved to virtual hearings and reported that in 2021, 100% of its hearings were held remotely. Today, even without travel restrictions in place, the DIFC Courts continue to use virtual hearings, reporting in April 2022 that 95% of hearings were still being conducted remotely.
Accordingly, parties in the DIFC Courts can be confident of avoiding the delays traditionally caused by organising the attendance of a physical hearing. Virtual hearings can be organised more quickly and on shorter notice which is especially useful where the judges, representatives and witnesses might be in different places across the globe.
In the DIFC Courts, a settlement offer made by a party in accordance with Part 32 of the DIFC Court Rules can have serious cost implications for the other party if it is not accepted. For example, if a defendant does not accept a claimant’s Part 32 offer and the claimant obtains a judgment which is more advantageous, the court can order the defendant to pay:
Therefore, making a Part 32 offer before or during DIFC Court proceedings can be a potent tactical weapon by a party that is looking to bring about an early settlement and therefore expedite a resolution of the dispute.
In contrast with the Dubai Courts, judges in the DIFC Courts are empowered to award costs of and occasioned by the proceedings, including legal costs and expert fees. This can act as a deterrent for any defendant considering employing any unscrupulous tactics to unreasonably delay the proceedings.
A further benefit of the DIFC Courts is that an unsuccessful party generally has only one opportunity to appeal a judgment to the Court of Appeal. Further still, the appellant must obtain the Court’s permission to appeal before it may be heard. Parties are generally hesitant to bring opportunistic appeals with low prospects of success knowing the potential for an adverse costs order. It is therefore not a foregone conclusion that every party will always appeal a DIFC judgment issued at first instance.
By comparison, in the Dubai Courts where adverse costs orders are not available, the losing party rarely hesitates to appeal a first instance decision to the Court of Appeal and, again, to the Court of Cassation.
Among any court or arbitral centre’s principles is the aim to deal with cases expeditiously. The three main dispute resolution forums in Dubai are no different and there is a continued drive in Dubai towards faster dispute resolution.
Whilst we have covered some features here for the DIFC Courts, you can also refer to our earlier article to consider the expedited features in the Dubai Courts and our next article that focuses on features in the DIAC.
With different procedures on offer in different forums, there is no one-size-fits-all solution. It is therefore important for parties to take proper advice and give full consideration to the dispute resolution provisions at an early stage. Whilst these clauses often appear at the bottom of a contract, they should be towards the top of the priority list in any contract negotiation.
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