The DIFC Courts has extended the jurisdiction of its Small Claims Tribunal (SCT) to include entities based outside the free zone.
Since expanding its jurisdiction, the SCT recently heard and resolved its first non-DIFC related case. The case — related to the non-payment of an invoice, involved two Dubai-based small and medium enterprises (SMEs).
The settlement followed mutual selection by both parties of the DIFC Courts' mediation process and the SCT. Both parties accepted the DIFC Courts jurisdiction and subsequently reached a settlement on December 29.
"The process was extremely efficient and transparent and I am currently working through two similar debt repayment cases with the SCT," the claimant, Rajesh, an operations manager with a Dubai-based furniture trading company, said.
The SCT — which caters mostly to SMEs — hears disputes in which the value of the claim does not exceed Dh500,000. Lawyers are not permitted to represent parties before the SCT and the time taken for judgments to be handed down is also significantly reduced. On average, such cases are resolved in less than a month.
"One of the great things of the SCT is that everything can be heard in English, which is the international business language; the judges are international and have better experience; and the way arguments are heard from both sides ensures a better outcome for both," Brian Wilkie, founder of Gulf for Good, said.
"I know of a few small companies who have gone out of business because they couldn't get paid by major suppliers."
It was in October that the SCT was formed, initially to cater solely to DIFC-registered companies. "The DIFC jurisdiction area has so many retail sectors from which the courts have seen many employment issues — it will double now with this new jurisdiction," Amnah Sultan Al Owais, deputy registrar of the Courts, said.
Moreover, the filing fees for an SCT claim are lower than at the Court of First Instance. The registrar also has the discretion to waive such fees when the claimant proves they are unable to afford it.
Omar Juma Al Muhairi, an SCT judge at DIFC Courts, recently had a case involving a restaurant and 17 of its employees. Within one hour, the 17 cases were settled.
According to Shamlan Al Sawalehi, another SCT judge, there's been a trend of claimants reducing the claim amounts so it is within the SCT jurisdiction. "They know they won't waste time with litigation and legal representation — it's a good facility for SMEs," Al Sawalehi said.
"It's nice to have it in a confidential environment in a more friendly, unofficial way. SCT is the place where they can settle problems without going into the company-catered environment of litigation as proper contractual disputes would have," he added.
SMEs who wish to settle their disputes also have the option of going to the mediation centres at the Dubai Chamber of Commerce or register their complaint at the Dubai Courts.
"If you go to the Chamber of Commerce, it will go to settlement, but it is not legally binding — so I am not sure if other parties will carry out their obligations," Al Muhairi said. "If you went to Dubai Courts, it would take some time."
The announcement about the extension of SCT's mandate comes just as the Ministry of Economy is expected to release the much-awaited SME laws, which aim to streamline the process of setting up a small business in the UAE by cutting back on red tape and reducing start-up costs. "We can expect the laws to come out around April to July," Al Muhairi said.
How to file a claim
- Your claim, or the value of the subject-matter of the claim, has to be up to the value of Dh500,000, with the dispute arising out of (i) a contract for the sale of goods, (ii) a contract for the provision of services; or (iii) a contract of employment.
- Before registering, both parties have to agree in writing that they want to use the Small Claims Tribunal (SCT).
- A claim form must be submitted to the SCT Registrar, which can be obtained from the DIFC Courts' Registry or at www.difccourts.ae. On the form, you need to provide a summary of the remedy you are seeking and the reasons for claiming that you are entitled to it. You must include on the claim form a statement of the monetary value of the small claim.
- The SCT registrar will fix a time for the parties to attend before an SCT judge for consultation. The primary purpose of the consultation will be to allow the parties to attempt to resolve their dispute. This will take place within seven days of filing the complaint. Around 95 per cent of cases are resolved during the consultation stage itself.
- If the claim is not settled at the consultation stage, the SCT judge will give directions for the preparation of a trial. Where appropriate, the judge may order that the claim be transferred to the Court of First Instance.