January 16, 2024 SCT - JUDGMENTS AND ORDERS
Claim No. SCT 461/2023
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE SMALL CLAIMS TRIBUNAL
BETWEEN
(1) NICO
(2) NOLAN
Claimants
and
NASH
Defendant
ORDER WITH REASONS OF SCT JUDGE DELVIN SUMO
UPON this Claim having been called for a Consultation before SCT Judge Delvin Sumo on 8 January 2024 with the Claimants and the Defendant’s representative in attendance (the “Consultation”)
AND UPON reviewing the case file and submissions contained therein
AND UPON the Defendant’s email correspondence to the SCT Registry dated 9 January 2024
AND PURSUANT TO the Rule 4.12 of the Rules of the DIFC Courts (“RDC”)
IT IS HEREBY ORDERED THAT :
1. This Claim be dismissed due to lack of jurisdiction.
2. Each party shall bear their own costs.
Issued by:
Delvin Sumo
SCT Judge and Assistant Registrar
Date of Issue: 16 January 2024
At: 3pm
SCHEDULE OF REASONS
The Parties
1. The Claimants are Nico, two individuals based in Abu Dhabi, UAE (the “Claimants”).
2. The Defendant is Nilan, a company located in Dubai, the UAE (the “Defendant”).
Background
3. On 3 August 2023, the Claimants filed a claim with the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking payment of sums allegedly owed by the Defendant to the Claimant in the amount of USD 12,000 (the “Claim”) pursuant to an agreement entered into between the parties dated 26 May 2022 (the “Agreement”).
4. On 21 November 2023, the Defendant filed a Defence without Counterclaim.
5. On 8 January 2024, a consultation was listed before me at which the Claimants and the Defendant’s representative attended (the “Consultation”).
Can the DIFC Courts hear and determine this Claim?
6. Rule 53.2 of the Rules of the DIFC Courts (“RDC”) requires that the SCT hear only cases that fall “within the jurisdiction of the DIFC Courts”. The jurisdiction of the DIFC Courts is determined by Article 5(A) of the Judicial Authority Law, Dubai Law No. 12 of 2004, as amended (the “JAL”), which provides a number of limited gateways through which the DIFC Courts have jurisdiction over a claim, which are, as relevant:
“(a) Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;
(b) Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;
(c) Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities; …
(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations…
(2) …civil or commercial claims or actions where the parties agree in writing to file such claim or action with [the DIFC Courts] whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.”
7. For cases to be heard in the SCT, they must first fall within the DIFC Courts’ jurisdiction by engaging any of the jurisdictional gateways set out in the abovementioned Article.
8. Upon review of the case file and submissions contained therein, I find there is no evidence to suggest that the transaction was partly or wholly performed within the DIFC nor was it related to DIFC activities. In the absence of a sufficient nexus between the Claim and the DIFC, the DIFC Courts may still have jurisdiction over the Claim if it can be shown that the parties sought to ‘opt in’ to the jurisdiction of the DIFC Courts, pursuant to Article 5(A)(2) of the JAL.
9. Upon reviewing the Agreement, it appears that the Agreement does not contain an express clause by virtue of which the DIFC Courts would be able to exercise jurisdiction over the Claim in accordance with Article 5(A)(2) of the JAL. Instead, it appears that the Agreement contains a clause which sets out the parties’ intention to refer any disputes relating to the Agreement to the Dubai Courts. The relevant wording of Clause 10 under Section 5 of the Agreement is set out below:
“10. Governing law and jurisdiction clause. In the event of any dispute, this agreement will be governed by the laws of the United Arab Emirates and the Dubai Courts will have exclusive jurisdiction.”
10. At the Consultation, I explained to the parties the Court’s position with regards to jurisdiction in light of the abovementioned Clause. The Claimants agreed and confirmed that they wish for this Claim to be heard and determined by the DIFC Courts. The Defendant requested for time to reflect on this point, and I directed that they confirm by no later than Tuesday, 9 January 2024 whether they wish to opt into the DIFC Courts’ jurisdiction.
11. On 9 January 2024, the Defendant emailed the SCT Registry with the following:
“We thank you for your guidance and consultation, but we have decided to proceed with Dubai Court for further proceedings.”
12. The Claimants made further submissions by way of email correspondence to the SCT Registry dated 12 and 15 January 2024, stating the below:
“According to the guidance at 53.16, ‘A jurisdictional challenge must be filed at the same time of filing the Acknowledgement of service and must set out the grounds on which the party makes the challenge.’ Importantly, the Defendant did not raise the jurisdictional point at this stage, and we assumed this would not be an issue at the Consultation.
I have carefully reviewed the SCT rules that you shared, specifically Part 12, Disputing the Court’s Jurisdiction. Rule 12.5 states that if the defendant files an acknowledgment of service and does not make an application disputing the Court’s jurisdiction within the period specified in Rule 12.4(1), he is to be treated as having accepted that the Court has jurisdiction to try the claim.”
13. Firstly, I note that pursuant to RDC 53.7, Part 12 of the RDC does not apply to the SCT. Furthermore, the Court may make an order of its own initiative in accordance with RDC 4.12, which reads as follows:
“The Court may make an order of its own initiative, without hearing the parties or giving them an opportunity to make representations.”
14. Considering the above, I am of the view that the DIFC Courts cannot exercise its jurisdiction over this Claim. The DIFC Courts do not have default jurisdiction over this claim as the parties are both based outside of the DIFC and the other gateways of the JAL do not apply.
15. Therefore, I dismiss the Claimants’ Claim for USD 12,000 on the grounds that the DIFC Courts do not have jurisdiction to hear and determine this Claim.
Conclusion
16. Accordingly, for the reasons I have set out above, I find that the DIFC Courts do not have jurisdiction to hear and determine this Claim.
17. Each party shall bear their own costs.
