Tag: Dispute Resolution

The Public Prosecutors’ Department in Dubai has the power to impose fines with respect to certain criminal misdemeanors and offences[i] without being required to refer the matter to a Court of Law. Such fines are issued under a Penal Order. This power stems from Dubai Law No. 1 of 2017, which authorises the Attorney General of Dubai to prescribe the offences and the corresponding fines which may be the subject of a Penal Order. On 1 October 2019 the Attorney General of Dubai issued Resolution No. 119 of 2019 (the Resolution) amending certain fines that could earlier be imposed under Penal Orders, and adding misdemeanors and offences which may be the subject of a Penal Order.  

 

The following fines are amended:

 

 

Misdemeanor or Offence	Previous Fine	Current Fine
Intentionally disturbing another through means of  telecommunication	AED 5,000	AED 3,000
Publicly attributing to another person an incident susceptible of making the other person subject to punishment or exposing the other person to contempt	AED 2,000	AED 5,000
Publicly disgracing the honour of another person	AED 2,000	AED 3,000
Committing libel or slander over the telephone (which includes text, email, and other electronic messaging)	AED 2,000	AED 3,000

 

 

The following misdemeanors and offences may now be punished under a Penal Order:

 

 

Misdemeanor or Offence	Fine
Burning or causing to be burned any object belonging to a third party	AED 3,000
Consuming food and beverages publicly during fasting hours of Ramadan	AED 2,000
Compelling, inciting or assisting with publicly consuming food and beverages during the daytime of Ramadan	AED 2,000 with closure of shop (where applicable)
Violating an order for closure of shop	AED 3,000
Causing physical injury to another by fault (i.e. not by accident)	AED 1,000
Using a car or a motorcycle without the authorisation or consent of its owner	AED 1,000
Destroying any movable or immovable property belonging to another person	AED 1,000
Wrongfully destroying a tree, crops or any plants belonging to another person	AED 2,000
Harassing or torturing a domestic or tamed animal belonging to another person	AED 1,000
Wrongfully injuring any animal or cattle belonging to another person	AED   500
Staying illegally in the country for up to 90 days	AED 1,000
Not obtaining a residency visa for a child during the legally prescribed time period	AED 1,000
Assisting another to illegally stay in the country	AED 1,000
Driving a vehicle in violation of an order preventing the person from driving	AED 3,000
Driving a vehicle without a valid license	AED 3,000
Removing the number plate of a vehicle without permission to use it on another vehicle	AED 2,000
Failure to stop after causing a vehicle accident	AED 2,000
Refusing to provide name or address to a police officer	AED 1,000

 

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[i] Under the UAE Penal Code, ‘Misdemeanors’ are crimes that are punishable by a fine, diyah and/or a term of imprisonment not exceeding three years. ’Offences’ are crimes that are punishable by a fine or by detention for a period not exceeding ten days.

Several significant changes to the UAE Civil Procedure Law (Federal Law No. 11 of 1992 as amended) came into effect in February this year. An overview of these changes, brought about by Regulations promulgated pursuant to Decree by Law No 10 of 2017 and Cabinet Resolution No. 57 of  2018 (the Regulations) can be found in our inBrief of 12 February 2019.

 

The changes made to Payment Orders under the Regulations have gathered a lot of interest, as it may offer an efficient means of recovering certain debts through the onshore UAE courts. In this inBrief, we take a closer look Payment Orders and the changes made by the Regulations.

 

What are Payment Orders?

 

Payment Orders are a mechanism for immediate ex parte judgment (i.e. without notice to the debtor). It existed under the UAE Civil Procedure Law before the Regulations were issued, but its use was restricted to claims involving financial instruments such as promissory notes and bills of exchange. Pursuant to the provisions   the Civil Procedure Law, Payment Orders may be applied for by a creditor holding a financial instrument and who has a confirmed claim for a fixed amount of money or a movable of a known type and quantity. It is important to note that where multiple claims are being asserted, and not all of them meet the legal requirements for an application for a Payment Order, the ordinary civil procedure for claims should be followed.

 

A key change brought about by the Regulations was to extend Payment Orders to disputes where the creditor’s right is “confirmed” either electronically or in writing, which need not be a financial instrument. What constitutes a “confirmed” debt has not been defined in the Regulations and the ordinary meaning may mean a written admission of debt. Recently, the Dubai Court granted a Payment Order based on a payment certificate certified by the engineer in a construction matter notwithstanding the existence of an arbitration clause in the underlying contract. The court therefore considered the certification of the engineer to be confirmation that the debt is due. This decision was not tested in appeal. Additionally, the Regulations provide that a claim for interest can be made under a Payment Order, whereas previously interest could not form part of such a claim.

 

This inBrief will consider the position where a Payment Order is sought consequent to a written admission of debt.

 

What constitutes a written admission of debt?

 

While the Civil Procedure Law and the Regulations provide no guidance on this issue, given the consequences of a successful application for a Payment Order (e.g. order issued within three days, a reduced appeal window of 15 days), it is likely that the courts will require a clear and unequivocal admission of debt. Although there is no system of binding precedent in the UAE, guidance may be given by reference to previous judgments:

 

It is established in the judgments of this court that an acknowledgment of a debt is the acknowledgment of a person that he owes a certain right to someone else, with a view to consider that right as being proved, and exempt the creditor from adducing any further evidence. For such an acknowledgment to be valid, it must be certain and assertive. If such an acknowledgment is surrounded by doubt, then it cannot be considered as correct or valid. The value of acknowledgment and significance of the paper issued by the debtor, where he acknowledges a debt and the consequences thereof on termination of limitation are matter of facts at the court discretion, as long as its inference is correct and reasonable. (Petition No. 1/2010(Labor))

 

The Regulations provide that confirmation of the debt, including written admissions of debt, may be established by reference to electronic sources.

 

What is the process?

 

Article 63 of the Regulations requires a creditor wishing to make an application for a Payment Order to first demand payment from the debtor. The creditor is required to grant the debtor at least five days from the date of receiving the demand to make payment. While the Regulations do not specifically address how a demand may be issued, Article 144 of the Civil Procedure Law provides that the demand be issued by registered post with acknowledgment of receipt, or by any other method that is agreed upon by the parties. Such alternative method should necessarily be one which facilitates a record of when the demand was served on the debtor. A prudent option would be to issue the demand through the Notary Public, as this would minimize the room for a debtor to successfully claim that the demand was not served on it.

 

Once five days have lapsed without payment being received from the debtor, an application may be filed before a summary judge. The competent court is identified with reference to the debtor’s domicile. The application must include the details required of an ordinary Statement of Claim/Plaint.  Additionally, the written admission of debt must be produced as evidence with the Statement of Claim/Plaint, together with evidence of the demand for payment being made.

 

An application for a Payment Order attracts the normal court fee (in Dubai, 6% of the claim value subject to a cap of AED 40,020).

 

Article 63 provides that the order be granted (or denied, presumably) within three days of the application being filed. If the application is denied, the judge is required to provide reasons. Prior to the Regulations, there was no requirement for the judge to provide reasons. If the application for a Payment Order is denied, the case will be transferred to be heard under the ordinary procedures. If the Payment Order is granted, the Payment Order is required to be served on the debtor through court within three months, failing which the Payment Order is rendered void.

 

A Payment Order may be appealed within 15 days by the debtor, and the court is required to determine the appeal within a week from the date of registration. Payment Orders qualify for expedited execution, i.e. execution may immediately commence notwithstanding that time for an appeal still exists.  It is also important to note that an application for a Payment Order does not preclude the party from seeking provisional relief under the relevant provisions of the Civil Procedure Code.

 

What next?

 

There are already reports of Payment Orders being applied for and obtained pursuant to written admissions of debt, including reports of a recent case in which a Payment Order for approximately USD 8 million was obtained. While this is promising, not every debt may be suitable for an application for a Payment Order. Payment Orders have been consistently recognised by the UAE courts as being an exceptional remedy, and as being subject to the rules of public order which suggests that the courts will approach applications strictly.

 

A note of caution

 

This development also serves to highlight the fact that the concept of ‘without prejudice’ correspondence is not recognised by the onshore courts. Parties often make written settlement offers in good faith which are subsequently seized upon in onshore court litigation as admissions of indebtedness. With Payment Orders now being extended to written admissions of debt, it is ever more important to be cautious in conducting settlement attempts. ■

The enactment of the UAE’s first standalone arbitration law (Federal Law No. 6 of 2018; the Arbitration Law) introduced some important changes to arbitration in the UAE, such as recognising the enforceability of interim awards and significantly streamlining the enforcement of arbitral awards. However, the requirements for establishing a valid arbitration agreement (i.e. a written agreement entered into by persons with the requisite authority) remained largely unchanged under the new law, which restated the previously existing legislative requirements and codified principles established by the courts, for example recognising arbitration agreements incorporated through reference to standard terms and through electronic correspondence.

 

Judgments on issues of arbitration ordinarily contain a reference, if not as part of the reasoning of the judgment then at least as a preface to the reasoning, to the nature of arbitration as a form of dispute resolution. In cases decided before the Arbitration Law came into effect, arbitration was characterised as an exceptional form of dispute resolution. The characterisation of arbitration as an exceptional form of dispute resolution goes beyond mere semantics, as it formed the basis for the application of strict standards in determining whether a valid arbitration agreement existed.

 

It was therefore a welcome development that the Dubai Court of Appeal in a judgment issued in January 2019 characterised arbitration not as an exceptional form of dispute resolution, but as an alternative one:

 

As such, arbitration is not an exceptional means of resolving disputes but an alternative means that shall be followed once its conditions are satisfied. Arbitration is a matter of the parties’ intent and giving expression to their intent in a written agreement, whether in the form of a separate agreement or as a clause within a contract. In all cases, the law requires that such agreement be evidenced in writing.¹ 

 

However, in its judgment issued in Cassation Petition No. 1019 of 2018 in March 2019, the Dubai Court of Cassation once again characterises arbitration as an exceptional form of dispute resolution. By way of background, Cassation Petition No. 1019 of 2018 involved a challenge to the jurisdiction of the Dubai Court based on the existence of an arbitration clause. Although several drafts of a contract containing an arbitration clause were exchanged between the parties via email, a physical copy was not signed. It is also important to note that (a) the disagreement between the parties was with respect to the commercial terms, and there was no discussion or disagreement regarding the arbitration clause in the draft agreements, (b) both parties performed certain obligations under the contract, and (c) the plaintiff in fact asked the defendant how many arbitrators should constitute the tribunal, before it instituted proceedings in Court. The Court held as follows:

 

It is also established that arbitration is an express agreement whereby parties agree on referring their disputes to an arbitrator and not to the court. The agreement on arbitration may be an arbitration clause or terms of reference, and this is only valid in writing, whether by signing an instrument between the two parties or the messages, cables or other electronic means exchanged between the parties or through any form of written correspondence. Agreement on arbitration may not be assumed or inferred from general provisions in a document or a quotation as long as the arbitration agreement is not specifically provided for in a way indicating that both parties expressly know about and accept it, because it is an exception from courts’ jurisdiction. (Emphasis added).

 

Following from its characterisation of arbitration as an exceptional form of dispute resolution, the Court of Cassation went on to hold that there is no valid arbitration agreement:

 

However, the emails do not show that the two parties agreed on the terms included in the draft contract and this is further evidenced by the two parties’ failure to sign the contract. The expert’s report, which the court believes to be correct, indicates that the two parties did not sign the contract because they were in disagreement on some of the contractual terms and that the basis of the transactions between them was the quotation. The messages exchanged between the two parties did not refer to any agreement between the parties on referring their dispute through arbitration or to the back-to-back condition, therefore, the two pleadings are baseless both in fact and law, and the court hereby dismisses them.

 

Interestingly, the Court of Cassation made no reference to the provisions of the Arbitration Law or its applicability, even though it was relied on by the parties in their written arguments.

 

There is no system of binding precedent in the UAE and, notwithstanding the judgment discussed above, there is still reason to believe that the Dubai Courts are getting progressively more arbitration-friendly, particularly following the enactment of the Arbitration Law. However, it appears that there still may be some instances where the courts view arbitration as an exceptional form of dispute resolution and consequently apply strict standards to determining whether a valid arbitration agreement exists.  Given the circumstances, the prudent view is that parties should continue to have a signed agreement (as was the practice before the enactment of the Arbitration Law) or, at the very least ensure that there is an unequivocal agreement to arbitrate contained in the electronic correspondence they wish to rely on, which are until there is further clarity on this issue. Parties will also have to ensure that the individuals agreeing to arbitration on behalf of corporate entities must have specific authority to do so, regardless of whether the agreement is reached through a signed agreement or electronic correspondence. ■

Introduction

 

Significant changes to Federal Law No 11 of 1992 (the Civil Procedure Code) will soon be coming into effect. These changes are introduced through regulations (the Regulations) issued under the Civil Procedure Code and will come into effect on 16 February 2019.

 

The Regulations were promulgated pursuant to Decree by Law No 10 of 2017. These Regulations will amend the Civil Procedure Code where applicable.

 

The Regulations (in all, 193 articles) address a wide array of litigation procedures, from service of process, to enforcement of foreign judgments and arbitration awards, to execution procedures. Some of the Regulations codify practices already observed by the UAE Courts. In this inBrief, we set out a high-level overview of some of the Regulations which will impact both litigants and practitioners alike.

 

Service of Process

 

Pursuant to Article 3 of the Regulations, a court may permit a party or its attorney to serve process. Pursuant to the Regulations, process may be served between 7 am and 9 pm, unless served electronically, in which case the time limits do not apply. Article 6 of the Regulations provide that process may also be served by voice or video calls, text messages, fax, or any other alternative and technological means as may be determined by the Minister of Justice.  Importantly, Article 5 of the Regulations provides that if the official language of the defendant is not Arabic, the plaintiff is required to provide an official translation of the court notice in English. The cost of translating the notice is recoverable by a successful plaintiff.

 

Article 7 provides that service on parties domiciled abroad may be effected through ‘technological means, or private companies and offices, or as otherwise agreed between the parties, and if service cannot be so effected, process will be served through diplomatic channels.

 

Pursuant to Article 8, service is deemed to be effected on the date of sending the email or text message and on the date on which a voice or video call was made. Only process served by facsimile is deemed to have been served on the date of receipt.

 

Registration of Cases

 

Article 16 of the Regulations requires that a Statement of Claim/Plaint should include the details of the defendant(s) including information regarding the defendant’s identification number, which is applicable with respect to individual defendants. The practice of the Dubai Courts with respect to corporate defendants is to require a copy of the defendant’s trade license at the time of registering the case. It is therefore of practical significance that parties have copies of their counterparties’ ID and/or licensing documents with them, and obtaining such documentation should form part of best practice when entering into transactions.

 

Certain Regulations are evidently intended to speed up litigation procedures. Article 18, for example, provides that the period allowed for the defendant to appear in the Case Management Office or the court following registration of the case is ten days, which may be reduced to three days. Where summary claims are concerned (such as applications for provisional attachment) this period is 24 hours, which may be reduced to one hour on the condition that notice is served on the defendant personally. While Article 18 goes on to carve out an exception for maritime claims, the scope of the exception is currently unclear.

 

Proceedings in the UAE Courts are commenced by filing the plaint and supporting evidence (electronically or in person) with the relevant court. Thereafter, the Case Management Office of the court will fix the court fee payable, and complete the registration of the case upon receiving payment and completing any documentary requirements which may be identified by the Case Management Office. Given that there can be a considerable passage of time between filing the plaint and completing the registration in some instances, this led to uncertainty regarding the date on which action was commenced, which is an important consideration in determining whether time bars and other time related deadlines under law have been complied with. Article 19 of the Regulations clarifies that the date of registration is deemed to be the date on which the case was submitted to the court system, and not the date on which the registration of the case is completed.

 

Assessment of Case Value

 

Assessment of case value is an important practical consideration, as it has a bearing on jurisdiction, appeal thresholds, and of course the court fees payable by a plaintiff. Article 23 of the Regulations provides that minor circuits (as set out in Article 30(1) of the Civil Procedure Code) will have jurisdiction over civil, commercial and labour claims not exceeding AED 1 million in value (the threshold previously being AED 500,000), and counterclaims asserted in such cases irrespective of the value of the counterclaim. Decisions made by the minor circuit court in labour cases valued at no more than AED 20,000 and in all other cases valued at no more than AED 50,000 may not be subject to appeal. The current threshold is AED 20,000 for all types of cases. Article 23 further provides that the threshold (in terms of value) for appealing a judgment of the Court of Appeal to the Court of Cassation is AED 500,000. The current threshold is AED 200,000. Article 25 of the Regulations contains provisions for assessing case values in various types of disputes. For example, an action for the dissolution of a company and appointment of a liquidator is valued based on the company’s capital at the time of filing action.

 

Conduct of Proceedings

 

Certain claims may now be disposed of with only one hearing by a minor circuit court (Article 22). These claims include civil and commercial claims not exceeding AED 100,000 and claims for wages and salaries not exceeding AED 200,000. The Case Management Office is required to fix a case which is to be disposed of under Article 22 for its first hearing within 15 days of the date of registration of the case, and this may be extended only once with an additional 15 days by the judge supervising the matter. Article 22 does not apply to cases in which the State is a party.

 

Denying documents on the basis that they are copies (based on Article 9(2) of the Federal Law No 10 of 1992) is a position commonly adopted by parties, particularly defendants. Article 20 of the Regulations however provides that denying documents simply on the basis that they are copies will no longer be acceptable, and the party seeking to deny documents will also be required to maintain that such documents are “invalid” or were not in fact authored by the party to whom they are attributed to. A party which has denied documents and the court finds that the party’s denial was without justification may be subject to a fine of between AED 1,000 to AED 10,000. Importantly, Article 20 also provides that the court may inform the authorities regulating the legal profession in the UAE of the fine, and thus impacts the advocates having conduct of litigation. It is to be noted that fines for frivolous denials of documents is not new, however its codification is a welcome development.

 

The efficient conduct of litigation is a recurring theme in the Regulations. The Regulations require parties to plead their cases as completely as possible at the hearing before the Case Management Office (i.e. before the matter is transferred to a court). Article 32 provides that if the plaintiff or the defendant submits a document in a subsequent session which requires the court to adjourn the matter, and the court is of the view that the document could have been submitted at the first hearing, the court may penalise the party submitting the document with a fine between AED 2,000 to AED 5,000. Article 32 clarifies that a party may however produce documents in response to the defences and/or incidental demands of the other party without threat of sanction. Article 35 provides that a court may allow the parties to submit documents, submissions and new evidence, and to amend the relief sought and assert counterclaims that they were unable to submit to the Case Management Office. However, the court at its discretion may deny such submissions if the court is of the view that they could have been made to the Case Management Office.

 

Article 37 provides that a hearing may not be adjourned more than once for the same reason attributable to a party in the absence of a valid excuse. Where such a valid excuse exists, the second adjournment shall not exceed two weeks. Article 48 provides that where the pleadings have been concluded, the court may issue its decision or reserve the matter for judgment in a period not exceeding two weeks. The date reserved for judgment may only be adjourned once, and for a period of no more than two weeks. In other words, judgment must be issued within a month of pleadings being concluded.

 

Article 39 provides that the court is no longer confined to using interpreters appointed or licensed by the Ministry of Justice, and the court may use an interpreter from another source or resort to the use of ‘approved technology’. The Regulations do not provide any guidance as to what constitutes ‘approved technology’, and this may be the subject of further regulations.

 

Costs and Fines for Malicious Prosecution/Defence

 

While the law and the Regulations provide that the court may award costs, in practice the UAE Courts do not award legal costs, except in a token sum. Court fees and expert’s fees are however recoverable by a successful plaintiff. Article 56 of the Regulations provides that even a party that is successful on the merits of the case may be required to bear a portion of the expenses if that party has inter alia caused any ‘futile expenses’ or did not disclose documents which could have disposed of the matter to its opponents. Article 58 of the Regulations provides that a party which submits a malicious motion, plea or defence may be subject to a fine between AED 1,000 and AED 10,000.

 

Payment Orders 

 

Articles 62 through 68 of the Regulations set out provisions with respect to ‘Payment Orders’. Payment Orders are not new and the relevant provisions can be found in Articles 143 to 149 of the Civil Procedure Code. Payment Orders may be applied for by a creditor who has a claim for a fixed amount of money or a movable of a known type and quantity, and where the creditor’s right is confirmed. The Regulations enable the possibility of confirmation by reference to electronic sources, as well as the option of applying for a Payment Order where the subject of the claim is the execution of a commercial contract, or in case the creditor’s entitlement arises out of a commercial instrument. Pursuant to Article 63 of the Regulations, the creditor is required to demand payment from the debtor and grant at least five days to make payment. If payment is not received, a Payment Order may be applied for. The application must include the details required of a Statement of Claim/Plaint (as set out in Article 16 of the Regulations), and have the proof of the debt and evidence of the demand for payment attached thereto. Article 63 provides that the order be granted (or denied, presumably) within three days of the application being filed. If the application is denied, the judge is required to provide reasons. Prior to the Regulations, there was no requirement for the judge to provide reasons. A Payment Order may be appealed within 15 days by the debtor, and the court is required to determine the appeal within a week from the date of registration.

 

An application for a Payment Order does not preclude the party from seeking provisional relief under the relevant provisions of the Civil Procedure Code.

 

Enforcement of Foreign Judgments and Awards

 

Article 85 of the Regulations provides that an application to enforce a judgment or order of a foreign court shall be made to an execution judge, and that the judge is required to make his decision within three days. The execution judge is required to verify the following before issuing the decision:

 

• that the UAE Courts do not have exclusive jurisdiction over the matter;

 

• that the judgment or order has been issued by an authorised court under the law of the relevant foreign jurisdiction;

 

• that the parties to the foreign proceedings have been summoned and represented;

 

• that the foreign judgment/order sought to be enforced is res judicata under the laws of the relevant foreign jurisdiction; and

 

• that the foreign judgment/order sought to be enforced is not contrary to judgment or order of a UAE court, and is not contrary to the morals and public order of the UAE.

 

Article 86 provides that the provisions of Article 85 (set out above) are also applicable to arbitral awards issued in a foreign jurisdiction. Article 86 adds that the subject matter of the foreign arbitral award must be arbitrable according to the laws of the UAE, and the award must be enforceable in the jurisdiction in which it was issued, in order to seek enforcement in the UAE. The provisions of Articles 85 and 86 are without prejudice to the provisions of any treaties entered into by the UAE with respect to the enforcement of foreign judgments, orders or awards. The New York Convention is an example of such a treaty.

 

Conclusion

 

Overall, the Regulations are directed towards quick and efficient litigation, and will be welcomed by parties and practitioners. However, they put considerable time pressure on litigants, particularly on defendants, to ensure that their respective cases are pleaded fully within relatively short time periods.

 

The Regulations contain many provisions which warrant a detailed look, for example with respect to provisional orders and execution proceedings, which will be discussed in a series of inBriefs to follow. ■

In an order dated 31 October 2018, the DIFC Court accepted that a party seeking an anti-suit injunction against proceedings in a foreign court must show that proceeding before the foreign court is or would be “vexatious or oppressive” to that party. The DIFC Court further held that where the applicant has the option of obtaining a stay of proceedings in the foreign court itself, the DIFC Court would have no “compelling reason” to grant an anti-suit injunction; to do so would not be in line with the overriding objectives of the Court.

 

Case Background

 

Afridi & Angell continue to represent the Claimants in an ongoing employment dispute (case number CFI 015-2018) in the Dubai International Finance Centre’s Court of First Instance (the DIFC Court).

 

The First and Second Claimant are group companies which conduct business in international commodities and financial services. With operations in financial centres around the world, they are registered in the DIFC and the United Kingdom, respectively (together, the Claimants).

 

The First Defendant is a former employee of the First Claimant and a current employee of the Second Defendant, a company licensed in the DIFC with a similar business to that of the Claimants. The Third Defendant is the company secretary and office operations manager of the Second Defendant. The First, Second and Third Defendants are referred to collectively as the Three Defendants.

 

In March 2018, the Claimants issued proceedings in the DIFC Court seeking immediate relief against the conduct of the Three Defendants (the DIFC Proceedings). The basis of the DIFC Proceedings is related to the resignation of the First Defendant from the Claimants and the actions of the First Defendant in the lead up to, and after, his resignation. The Claimants allege that the First Defendant, who at the time was an employee of the First Claimant, conspired with and assisted the Second and Third Defendants (his new employer and its company secretary, respectively) to facilitate the taking of the Claimants’ clients and employees to the business of the Second Defendant. The Claimants sought the assistance of the DIFC Court and issued proceedings to enforce the restrictive covenants contained in the First Defendant’s contract of employment, and to prevent the First Defendant from using confidential information of the Claimants for the benefit of the Second Defendant in the first “springboard injunction” proceedings before the DIFC Court.

 

The Claimants also initiated proceedings before the United States District Court for the Northern District of Illinois (the US Proceedings) against: (i) the Third Defendant; (ii) the parent company of the Second Defendant (the Parent Company); and (iii) the Chief Operating Officer of the Parent Company. The US Proceedings were instituted to prevent the Parent Company from an international attempt to poach the Claimants’ employees.

 

The Second and Third Defendants (the Defendants) consequently submitted an application to the DIFC Courts in the form of an anti-suit injunction requesting an Order for the Claimants to stay the US Proceedings.

 

Anti-suit Injunctions in the DIFC Courts

 

An anti-suit injunction is a form of relief sought against a party to prevent them from either instituting a legal action or continuing with proceedings that have already been commenced.

 

The power of the DIFC Court to grant anti-suit injunctions was confirmed in Brookfield Multiplex v DIFCI LLC [2016] DIFC CFI 020 in which the DIFC Court held that it has the power to grant anti-suit injunctions pursuant to Article 32 of DIFC Law 10 of 2004.

 

Justice Sir Jeremy Cooke summarised the principles applicable to the grant of an anti-suit injunction by the DIFC Court in the following terms:

 

“It is self-evident that this Court should not interfere with the decisions of other courts of competent jurisdiction…and should not impugn the contents of their judgments. It is only where there is an absence of jurisdiction or where proceedings are vexatious and oppressive that a court is ordinarily prepared to grant an anti-suit injunction.” (emphasis added)

 

The position of the Defendants in CFI 015-2018 

 

The Defendants application requesting an Order for the Claimants to stay the US Proceedings was based on the premise that the DIFC Court has the power to grant relief where the continuation of the foreign claim would be vexatious and oppressive. It was recognised that there was a heavy burden of proof on the Defendants, but it was argued that the applicable threshold had been discharged.

 

The Defendants made the following submissions in support of their assertion that the continuation of the US Proceedings would be vexatious and oppressive:

 

(1) The similar nature of the DIFC and US Proceedings creates a risk of conflicting decisions regarding the same facts as well as extensive and duplicative costs;

 

(2) One of the three defendants in the US Proceedings is resident in the UAE; another defendant in the US Proceedings is a non-trading company; and the relief of worldwide injunction the Claimant seeks in the US Proceedings is fanciful;

 

(3) The events at the heart of the Claimants claim all had a connection with the DIFC and there is no evidence of any link with the USA;

 

(4) The US Proceedings were brought in order to disrupt the Defendants preparation for trial of the DIFC Proceedings and as a means to harass the Defendants; and

 

(5) The relief sought would not interfere with US sovereignty.

 

The position of the Claimants in CFI 015-2018

 

The Claimants agreed that for an anti-suit injunction to be granted it must be shown that the pursuit of the foreign proceedings would be vexatious or oppressive on the injunction applicant (the Defendants). It was further iterated that the high burden of proof is at all times on the applicant and not the respondent to the application (the Claimants).

 

For the Defendants application to succeed, the Defendants must show that:

 

(1) The DIFC is the natural forum for the US Proceedings; and

 

(2) The US Proceedings are either vexatious or oppressive.

 

The Claimants invited the Courts to dismiss the Defendants’ application for an anti-suit injunction on the following grounds:

 

(1) The DIFC is not the natural forum for the US Proceedings on the grounds that:

 

a. the US Proceedings involve different parties each of whom have accepted service of the US Proceedings;

 

b. the US Proceedings involve a different, and notably broader, factual scope;

 

c. the causes of action in the US Proceedings are either broader or different (as applicable), with some being based on both federal and Illinois state legislation;

 

d. the relief sought in the US Proceedings is different. It would be unjust to deprive the Claimants of the additional relief available, and the additional defendants upon whom any judgment can be enforced, in the foreign proceedings; and

 

e. there is a fundamental nexus between the US Proceedings and the United States, namely that the key actions with which the US Proceedings are concerned occurred in Chicago.

 

(2) The US Proceedings are not vexatious or oppressive. As explained by Mr Justice Cooke in Kyrgyz Mobil Tel. Ltd v Fellowes International Holdings Ltd [2005] EWHC 1314 (Comm), the question that must be asked is “whether or not there was a reason justifying the foreign proceedings”. For all the reasons above, this was clearly the case. Furthermore, with particular regard to the additional relief that the Claimants are entitled to seek in the US Proceedings, the Claimants again cited Mr Justice Cooke who explained that “for that reason alone it cannot be said that there was any vexation or oppression.”

 

(3) Notwithstanding the above, whether to grant an anti-suit injunction remains a matter for the Court’s discretion and it was the Claimants position that it would be inappropriate to exercise that discretion. In support of this view, the Claimants averred that:

 

a. the Defendants evidenced an intention to issue an application for a stay of the US Proceedings and as such, and having regard to the basic principles of comity, it is right that the DIFC Court does not interfere but rather allows the US Court to decide whether to entertain the application; and

 

b. the DIFC Proceedings would likely be concluded long before a final judgment is issued in the US Proceedings meaning there is no realistic prospect of conflicting judgments. As such, the injunctive relief sought would be futile.

 

The Order of the DIFC Court in CFI 015-2018

 

His Excellency Justice Omar Al Muhairi stated that he “found the Defendants submissions to be weak” and that there was “no compelling reason” for the Court to order the Claimants to stay the US Proceedings. Accordingly, the Defendants application for an anti-suit injunction was dismissed.

 

In summary, Justice Al Muhairi “agree[d] with the Claimants submissions” and found that:

 

(1) the US Proceedings were different both in respect of the parties involved and the relief sought;

 

(2) he accepted the principle set out in Deutsche Bank AG v Highland Crusader Offshore Partners [2010] 1 WLR 1023 that the party seeking an anti-suit injunction must show that the proceeding before the foreign court is or would be vexatious or oppressive; the Claimants claim in the US Proceedings would be neither “vexatious nor oppressive”;

 

(3) “no apparent injustice” would be suffered by the Defendants should the DIFC Court refuse to order the Claimant to stay the US Proceedings as the Defendants to the US Proceedings “are perfectly capable of making a stay application in the USA proceedings themselves”; and

 

(4) making an order for an anti-suit injunction in such circumstances would “put the parties on unequal footing” which would “not be in line with the overriding objectives of th[e] Court”.

 

Following on from the establishment of the DIFC’s power to grant anti-suit injunctions, this landmark case re-iterates the applicable threshold that must be satisfied for an anti-suit injunction to be granted in the DIFC Court.  The case helpfully highlights the high burden of proof on the applicant, whilst also providing examples of relevant considerations taken by the DIFC Court, namely comity, access to justice, and the overriding objectives of the Court, when considering such applications. ■

On 18 October 2018, the Dubai Court and the Ministry of Human Resources & Emiratisation (MOHRE) launched a “remote litigation service” for labour disputes under AED 20,000 in value.

 

Under this initiative, the requirement of personally attending hearings for labour disputes under AED 20,000 is dispensed with, and parties and their representatives are permitted to ‘attend’ the hearing before the judge electronically. The cases will be heard by a single judge, who is required to render judgment within 24 hours. This initiative has been introduced in order to dispose of low value labour cases in Dubai quickly and efficiently.

 

Labour complaints can be filed physically, electronically, or by calling the MOHRE hotline (80060). Once the case is registered, the parties to the case (i.e. the employer and the employee) are required to attend in person before a Tawafuq Centre to attempt settlement of the dispute. If the dispute is not resolved, and the value of the dispute is under AED 20,000, it will be referred to the labour court to be considered under the remote litigation service. The parties will be provided with an electronic link which will enable them to upload written submissions and evidence, and attend a hearing remotely if required. The service will also allow the parties to access the judgment electronically.

 

The service is not yet operational, and is expected to start functioning in November 2018. ■

On 19 September 2018, H.H. Sheikh Mohammed Bin Rashid Al Maktoum, the Ruler of Dubai, issued Decree No. 28 of 2018 concerning the Acceptance of the Civil Petitions before Dubai Courts (the Decree). The Decree was issued by His Highness to address the procedures in filing appeals to the Court of Cassation. The Court of Cassation is the highest court in Dubai.

 

Article No. 173 of Federal Law No. 11 of 1992 (as amended) (the Civil Procedures Law) provides that appeals to the Court of Cassation must be filed within 60 days of the judgment of the Court of Appeal. A matter is appealable to the Court of Cassation on questions of law, and provided that the value of the dispute exceeds AED 200,000 (Article 176).

 

Prior to the Decree, appellants were required to make payment of the Court of Cassation fee of approximately AED 6,000 and file a detailed petition of appeal before the expiry of the 60 day deadline. Over the past few years, several appeals were rejected by the Dubai Court of Cassation because the payment of the Cassation Court fee was delayed beyond the 60 day deadline, even though the petition of appeal itself was filed in time.

 

The Decree seeks to address this issue by clarifying that the Cassation Court fee may be paid within three working days of the Case Management Office requiring the petitioner to pay the fee, irrespective of the 60 day limit to file the appeal. The Head of the Dubai Court is given discretion to amend this time frame. Going forward, parties wishing to appeal to the Court of Cassation are still required to file the appeal petition within the 60 day deadline, but only need to make arrangements to ensure that payment is made as soon as the Case Management Office requires it.

 

The Decree further provides that a party which had its petition dismissed for reasons of delay in payment of the Cassation Court fee after 3 May 2015 may apply to the Court of Cassation for reconsideration of the dismissed petition. Such applications must be made within 30 days of the Decree coming into effect. This option is not available where the Cassation petition itself was delayed for more than 60 days (i.e. as opposed to the payment of the fee).

 

The Decree will come into force upon being published in the Gazette, which is yet to occur. Dubai is not part of the Federal Court structure, and the Decree is applicable only with respect to proceedings before the Dubai Court of Cassation. ■