In Brief:
Legal proceedings can be daunting, not least because the process of suing a defendant in the UAE Courts can often be long, drawn out and costly. In this article, we discuss several fast-track options available to creditors/claimants in the UAE Courts (onshore), DIFC Courts, ADGM Courts and in the Rental Disputes Settlement Centre to put maximum pressure on and obtain a judgment against a debtor in the fastest and most cost efficient way possible.
1. UAE Onshore Courts (i.e. excluding the DIFC and ADGM Courts)
There are several fast-track procedures available in the UAE Courts (onshore) which can potentially be utilised by a creditor/claimant in order to: (i) put maximum pressure on a debtor to pay or settle a debt due and/or (ii) for a creditor to obtain a judgment against a debtor quickly. We summarise some of the most frequently used procedures below.
A. Dishonoured Cheques for insufficient funds are now deemed to be executable instruments
Federal Decree-Law No. 14 of 2020 introduced important amendments to Federal Law No. 18 of 1993 (Concerning the Commercial Transaction Law), regarding dishonoured cheques. For example, a dishonoured cheque for insufficient funds is no longer considered to be a criminal offence under Federal Law No 3 of 1987 (the Penal Code). Pursuant to Article 635 Bis of Federal Decree-Law No. 14 of 2020, cheques which have been dishonoured for insufficient funds are now deemed to be executable instruments and a creditor can therefore file an application directly with the relevant UAE Execution Court to request the court to issue an order to enforce the dishonoured cheque(s) amount.
In our experience, it can approximately take up to one week for a decision to be issued by the Execution Judge from the date an application is filed. Once an execution file is opened in the name of the creditor then enforcement procedures can commence after the creditor has served an execution notice on the debtor (in which the debtor is afforded 15 days from service to settle the debt).
The Dubai Courts will also currently open an execution file on cheques that have been dishonoured for account closure. Some of the other courts in other Emirates (for example, the Ras Al Khaimah Courts) are not willing to do so.
As a further entitlement, a creditor is able to (as part of the execution proceedings) to apply for a travel ban against the signatory of the cheque(s). A travel ban is a prohibitive measure which prevents the signatory from leaving the UAE until certain conditions imposed by the court are fulfilled. For example, a travel ban can remain in place until the underlying debt is repaid to the creditor.
B. Criminal complaints on the basis of bounced cheques
Pursuant to Article 641 Bis 2 and Article 641 Bis 3 of Federal Decree-Law No. 14 of 2020, the following actions, amongst others, are considered to be criminal offences with respect to dishonoured cheques:
- Closing an account or withdrawing available funds before issuing the cheque;
- Issuing a cheque for an account which has been frozen;
- Deliberately writing or signing a cheque in a way which makes it unusable;
- Forgery or counterfeiting a signature or details of a cheque;
- Knowingly using a forged or counterfeit cheque; and
- Knowingly accepting funds paid through a forged or counterfeit cheque.
If any of the above circumstances are applicable, a creditor can file a criminal complaint against the signatory of such cheques with the police in order to put pressure on the signatory to settle the debt due to the creditor. The criminal sanctions for the above-listed offences can include: (i) imprisonment of six months up to two years and/or (ii) a fine of AED 20,000 to AED 100,000 and/or (iii) a travel ban being imposed.
C. Payment Orders
Another fast-track procedure for a creditor to obtain a judgment against a debtor, is for the creditor to file an application for a payment order in the relevant UAE Court. The laws governing payment orders can be found in Article 62 Cabinet Resolution No. 57 of 2018 concerning the Executive Regulations of the Federal Law 11 of 1992 (Civil Procedures Law), as amended.
As a preliminary step, the creditor must first send a notarized legal notice to the debtor demanding payment of the debt within 5 days of receipt of such notice. If the debt claimed in the legal notice is not paid within 5 days of the legal notice being sent, a creditor can file an application for a payment order with the relevant UAE Court. An application for payment order is an ex-parte application filed by a creditor for an immediate judgment on the debt due by a debtor (akin to an application for summary judgment in common law jurisdictions). Generally, this procedure is only suited for straightforward debt claims where the amount due is quantifiable and there is evidence to support that the amount is due and owing to the creditor. Different UAE Courts have different requirements that must be satisfied in order for a payment order to be granted. For example, the Dubai Courts have become stricter with granting payment orders and require evidence of an express written acknowledgment of debt by the debtor.
In our experience, it can take up to one week for the UAE Courts to issue a payment order. The major advantage of obtaining a payment order is that it can be immediately enforced through the Execution Court, if the application was filed on an urgent basis. Otherwise, the standard procedure entails serving the payment order first on the debtor and giving the debtor 15-30 days (depending on the amount of the debt) from the date of notification to object to the order or pay the debt before enforcement proceedings can commence. It is possible for the debtor to appeal a payment order, however, the advantage of this route is that the defendant is automatically on the back foot as there will be a judgment against them. A possible disadvantage of this route, is that the payment order can be rejected on appeal on several grounds (for example, jurisdiction) resulting in wasted costs for the creditor. A creditor will, in such circumstances, still have the option to file a fresh or standard claim in the relevant UAE Court.
Alternatively and to avoid the risk mentioned above, a creditor can immediately (pursuant to Article 66 of the abovementioned law), file a standard claim with the relevant UAE Court of First Instance and request that the claim be dealt with as a payment order (if the judge considers that the claimant has met the conditions for such an order). If the judge does not consider the claim to be appropriate for the payment order route, then the claim will proceed on the standard route and may proceed through all three tiers of the court if either party files an appeal to the higher courts. One advantage of this route is that a creditor will not lose the court fees paid should the court find that the claim is not suitable for the payment order route.
D. Amicable Settlements in the UAE Courts
Most UAE Courts offer mediation and settlement procedures to expedite resolving disputes between parties without the parties having to go through court proceedings. For example, in Dubai, the Centre for Amicable Settlements of Disputes (“Centre”) is an independent Centre that operates as part of the Dubai Court.
One of the Centre’s primary functions is to facilitate settlements of disputes between parties. A claim will automatically be referred to the Centre for summary adjudication if the claim is less than AED 200,000. A dispute can also be referred to the Centre for mediation and settlement regardless of the quantum, if both the claimant and defendant agree to this in advance of the case being registered with the Centre.
Typically, the parties will sign a settlement agreement before the Centre and the Centre will then arrange for an Execution Court judge to affix a ‘writ of execution’ on the agreement so that it is deemed an executable judgment of the Dubai Court. The settlement process is generally completed within one to two weeks of the claimant filing a claim with the Centre and sometimes faster.
The advantage of this route is that if the debtor defaults on payment under the settlement agreement, the creditor or claimant can immediately enforce the settlement agreement through the Dubai Execution Court without needing to litigate on the settlement agreement or to file a fresh case.
2. Rental Disputes Settlement Centre
Decree No. 26 of 2013 (Concerning Rent Disputes Settlement Centre in the Emirate of Dubai) established the Rental Disputes Settlement Centre (“RDSC”) as a judicial branch of the Dubai Land Department, to facilitate expedited mechanisms for the resolution of rental disputes between tenants and landlords, over real estate located in Dubai (including its free zones). The RDSC is comprised of five departments: Central Support Department, Conciliation Department, First Instance Department, Appeal Department, and Execution Department.
If a rental dispute falls within the jurisdiction of the RDSC, the parties or their legal representatives must file a claim with the Conciliation Department first. The aim of this department is to amicably resolve disputes between parties within 15 days of the parties’ first attendance before the department, however, the same time period can be extended once. If the parties reach a settlement, a settlement agreement is signed by the parties and the agreement is forthwith treated as a directly executable instrument.
If an amicable settlement cannot be reached by the parties in the Conciliation Department within 15 days (or within the extended time period), it is open to the parties to file proceedings in the RDSC First Instance Department. If the claim amount is more than AED 100,000, the parties can appeal a decision of the RDSC First Instance Department to the Appeal Department within 15 days from the date of the First Instance Department issuing a judgment. A claimant can therefore potentially obtain a final judgment from the RDSC in approximately three to four weeks if the matter is straightforward with no counterclaims, or two to three months if the matter is more complex and an expert is appointed.
3. The Dubai International Financial Centre Court (“DIFC Court”) and the Abu Dhabi Global Market Court (“ADGM Court”)
The DIFC Court is located within the Dubai International Financial Centre which is a Financial Free-Zone in Dubai. The ADGM Court is located within the Abu Dhabi Global Market Financial Free-Zone in Abu Dhabi. Both the DIFC Courts and ADGM Courts are common law courts, which have court rules based on the English Court Civil Procedure Rules and include judges from the UAE and common law jurisdictions (such as England, Hong Kong and Australia) presiding over cases in English.
We discuss some of the fast-track dispute resolution procedures available in the DIFC and ADGM Courts (provided that such courts have jurisdiction to adjudicate a particular dispute):
A. DIFC Court/ADGM Court of First Instance
- Applications for Default Judgment
If a defendant fails to file and serve an acknowledgment of service or has filed and served an acknowledgment of service but has failed to file and serve a defence, the claimant can file an application to request that a default judgment be entered against the defendant pursuant to Part 13 of the DIFC Court Rules or Part 5 Rule 39 of the ADGM Court Rules (as applicable). If the claimant satisfies the requirements under the applicable court rules for obtaining a default judgment, the DIFC/ADGM Courts can issue a default judgment against a defendant on the papers only for any sums claimed by the claimant. A claimant can potentially obtain a default judgment against a defendant within 3 to 6 months from filing the claim by proceeding with this route, provided there are no unforeseen complications (for example, with service of the claim form). - Applications for Immediate/summary Judgment
Pursuant to Part 24 of the DIFC Courts Rules and Part 9 of the ADGM Court Rules, a creditor/claimant can bring an application for immediate judgment (in the DIFC Court) or summary judgment (in the ADGM Court) against a debtor/defendant that files an acknowledgment of service and defends the proceedings against them, if: (i) there is no real prospect that a debtor/defendant will be successful with their defence at a trial and (ii) there is no compelling reason why the case or issue should be disposed of at trial (i.e. there are no material dispute of fact involved which need to be determined at a trial). Therefore these types of applications are best suited for straightforward debt claims or matters which do not involve a material dispute of fact between the parties.
An application for immediate/summary judgment can be determined by the DIFC Court or ADGM Court on the papers only or at a hearing. A claimant can potentially obtain an immediate/summary judgment from the DIFC/ADGM Court against a debtor/defendant within 6 to 8 months from the claim being filed, provided there are no unforeseen complications (for example, with service of the claim form).
B. The DIFC Small Claims Tribunal and the ADGM Small Claims Division
The DIFC Small Claims Tribunal (“SCT”) (established in 2007) and the ADGM Small Claims Division (“SCD”) (established pursuant to Decision No. 20 of 2020), were established to resolve disputes between parties in an expedited manner.
- The DIFC Court Small Claims Tribunal
The SCT has jurisdiction to deal with civil and commercial disputes. The rules applicable to the SCT are found in Part 53 of the DIFC Court Rules. The SCT has jurisdiction over: (i) claims which do not exceed AED 500,000 and (ii) where the claim relates to the employment or former employment of a party and all parties elect in writing that it be heard by the SCT. There is no value limit for the SCT’s elective jurisdiction in the context of employment claims. Any claims exceeding AED 500,000 must be filed in the DIFC Court of First Instance, unless the parties have jointly elected in their commercial contract (if any) or subsequent to execution of the contract, to increase the value of any claim to be adjudicated by the SCT up to AED 1 million (the maximum monetary jurisdiction of the SCT).
Legal representation is not permitted in the SCT, except with the permission of the court. Legal representatives can however provide their clients with guidance on the procedure in the SCT. If a company is a party to proceedings in the SCT, any of its full-time officers or employees may represent the company at a consultation.
The time periods for serving and/or responding to pleadings in the SCT are shorter than in the Court of First Instance. After the pleadings stage has closed, the SCT usually fixes a consultation to be held before a SCT judge within 2 weeks of the claim being filed. The primary purpose of the consultation is to give the parties an opportunity to resolve the dispute amicably and most cases are settled during the consultation. If a defendant fails to attend the consultation, the SCT Judge can issue a final judgment against the defendant in their absence or adjourn the consultation. If the defendant attends the consultation and the dispute cannot be settled amicably between the parties, the SCT judge can either decide the matter on the papers only (if requested by the parties) or schedule a further consultation or schedule a hearing to resolve the claim.
The proceedings in the SCT are generally concluded within one to two months from the claim form being filed, unless there are complications (for example, with serving the claim form), then the proceedings may take longer. If a party wishes to appeal the decision, it must first seek permission to appeal from the DIFC Court of First Instance. Costs are generally not recoverable in the SCT. - The ADGM Court Small Claims Division
The SCD also has jurisdiction to deal with civil and commercial disputes in an expedited manner. The rules pertaining to the SCD can be found at Part 37 of the ADGM Court Rules and in the ADGM Courts Practice Direction 3. The procedure in the SCD is similar to the SCT, however, there are several differences which we discuss below:- The SCD has jurisdiction over claims which do not exceed USD 100,000 and it does not have jurisdiction over employment claims, such as the SCT. Employment claims must be filed in the Employment Division of the ADGM Court, unless both parties agree in writing that it is to be dealt with as a small claim;
- Parties in the SCD may be legally represented without permission from the SCD (unlike in the SCT), or they can choose to represent themselves. The SCD may give permission to a party who is not a natural person to be represented by an employee or director who is not a lawyer, on being satisfied that the person is likely to be able to present the party’s case efficiently and to assist the Court in reaching a just result in accordance with the overriding objective. In the SCT no such permission is required for the consultation;
- The Court may, of its own initiative or upon the request of any party, make an order referring the dispute or any part of the dispute to court-annexed mediation, where in the opinion of the Court such order appears appropriate;
- A hearing is generally scheduled by the SCD to determine the matter as soon as reasonably possible (there is no specified time set like in the SCT). The SCT diverges much more from the DIFC Courts’ standard timetable than the SCD does from the ADGM Courts’ Court of First Instance. The parties can however agree (or the SCD can of its own motion if it considers appropriate) decide the claim on the papers only;
- In contrast to the SCT, a claimant can file an application for default judgment against a defendant that: (a) at the date on which judgment is entered has not filed a defence and the relevant time for doing so has expired; or (b) has filed a counterclaim and at the date on which judgment is entered a defence has not been filed and the relevant time for doing so has expired; and
- In the SCD, the costs of lawyers are capped according to a sliding scale dependent on the value of the claim.
As with the SCT, the aim of the SCD is to resolve disputes within a few months of the claim being commenced.
4. Conclusion/Recommendation:
Hadef & Partners LLC always aims to advise our clients on the most appropriate dispute resolution processes available to pursue their claim(s), or defend their position, in the fastest, most efficient and least costly way possible. Please contact us should you require any dispute resolution advice.