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Claim No. SCT 467/2022

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Ruler of Dubai

IN THE SMALL CLAIMS TRIBUNAL OF DIFC COURTS
BEFORE H.E. JUSTICE NASSIR AL NASSER

BETWEEN

MIUCIT

Claimant

and

MAHAB

Defendant

JUDGMENT OF H.E. JUSTICE NASSIR AL NASSER

UPON this claim being filed on 23 December 2022 and amended on 1 February 2023

AND UPON a Hearing being held before H.E. Justice Nassir Al Nasser on 8 February 2023 with the Claimant’s and the Defendant’s representatives in attendance

AND UPON reading the submissions and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

The Defendant shall refund the Claimant the sum of USD 45,339.

The Defendant shall pay the Claimant the Court fees in the sum of USD 2,266.95.

The Claimant shall return the defective product to the Defendant. Upon receipt, the Defendant shall either fix the defective product or provide the Claimant with a refund.

Issued by:
Delvin Sumo
SCT Judge and Assistant Registrar
Date of issue: 21 February 2023
At: 12.30pm

THE REASONS

The Parties

The Claimant is Miucit (the “Claimant”), a company registered and located in SA.

Background and the Preceding History

The underlying dispute is in regard to the reimbursement of the deposit paid on 23 August 2021 by the Claimant to the Defendant in regards to a purchase order dated 12 August 2021 in the sum of USD 45,339. In addition, the Claimant seeks a refund or replacement of defective products in the sum of USD 9,071.62

On 23 December 2022, the Claimant filed a claim with the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking the total amount of USD 54,410.62.

On 2 January 2023, the Defendant filed its Acknowledgment of Service setting out its intention to defend all of the claim.

In accordance with the Rules of the DIFC Courts, a Consultation was held before SCT Judge Maitha Al Shehhi with both parties’ representatives in attendance. However, the parties failed to reach a settlement.

Thereafter, a hearing was held before me on 8 February 2023, at which the Claimant’s and the Defendant’s representatives were in attendance (the “Hearing”).

The Claim

The Claimant’s case is that, on 12 August 2021, the Claimant submitted a purchase order to the Defendant in the sum of USD 113,347.50. On 16 August 2021, the Defendant confirmed the Claimant’s order and issued a proforma invoice. The Defendant required a deposit in the sum of USD 45,339, which the Claimant paid by way of wire transfer on 23 August 2021.

The Claimant submits that at the time of placing the order, the Defendant advised that the product would be available to pick up within 6 to 8 weeks.

The Claimant submits that, to date, the Defendant has failed to deliver the product as per the purchase order, even though the Claimant has on numerous occasions requested updates on the delivery schedule.

In addition, the Claimant submits that it had requested either a replacement or credit for defective products previously received from the Defendant. The Claimant filed its warranty claim totalling USD 9,071.62.

The Defence

The Defendant submits that it has been transparent with the Claimant by informing the Claimant that there have been delays in terms of production of the goods. By way of an email dated 12 November 2022, the Defendant informed the Claimant that the products would be ready for collection by January 2023.

The Defendant also submits that it tried to resolve the issue amicably by offering the Claimant a refund with a 20% penalty as the Defendant had misinformed the Claimant that the goods were ready on 12 November 2022. Therefore, in line with the terms and conditions of Lortthe penalty is applicable.

Jurisdiction

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:…

The parties are both companies registered outside the jurisdiction of the DIFC, however, by virtue of an agreement signed by the parties and filed with the court on 19 January 2023, I note that the parties have agreed to ‘opt-in’ to the jurisdiction of the DIFC Courts, which reads as follow.

“any dispute, differences, controversy or claim arising out of or in connection with the invoice between Miucit and Mahab dated 12 July 2022 including but not limited to any question regarding the existence, validity, interpretation, performance discharge and applicable remedies of the underlying invoice in dispute, shall be subject to the exclusive jurisdiction of the Courts of the Dubai International Financial Centre (“the DIFC Courts”).”

Therefore, I am of the view that the DIFC Courts have the jurisdiction to hear and determine this claim in accordance with the above clause and Article 5(A)(2) of the JAL.

Findings

At the hearing, the parties agreed that the Claimant shall return the defective product to the Defendant to be reviewed and, upon receipt, either fix the product under the warranty or provide the Claimant with a refund. Therefore, I shall only determine the Claimant’s remaining claim for AED USD 45,339 below.

The Defendant submits that Lort ought to be added to this claim as they were the reason of the delay. However, I find that there is no contractual relationship between the Claimant and Lort, instead the contractual relationship is only between the Claimant and the Defendant.

Upon reviewing the evidence submitted by the Claimant, it appears that on 12 August 2021, a Purchase order was made to the Defendant. On 16 August 2021, by way of an email, the Defendant issued a proforma invoice and advised the Claimant that the items will be tentatively ready within 6 to 8 weeks from the time the order is booked.

On 23 August 2021, as per the Defendant’s request, , the Claimant made a transfer of 40% of the full amount being the sums of USD 45,339.

On 30 September 2021, the Claimant requested an update as to delivery of the products. On 2 October 2021, the Defendant responded stating as follows:

“the Cells for doing the capacities ordered are expected to be available with us, by the end of this month. Later to their availability, it would take 15 working days to turn around the order.”

By way of an email dated 4 January 2022, the Claimant informed the Defendant as follows (the “4 January 2022 Email”):

“I’m not sure I understand your request. We have an unfilled order dated 16 August 2021. We were repeatedly advised at order placement to expect shipment with 6-8 weeks (models with prismatic cells), it has been 18 weeks and we’re still awaiting notification of order readiness. Infusion is holding USD 45,339.00 as a deposit against this non-filled order (wired on 23 August 2021). Mahab have been beyond patient with infusion’s manufacturing transitions.”

Since the 4 January 2022 Email, the Claimant sought numerous updated from the Defendant as to the delivery. On 2 April 2022, the Claimant sent a formal demand for a refund of the deposit amount by way of an email. On 7 April 2022, the Claimant sent a further follow up.

Thereafter, there were several emails from the Defendant to the Claimant providing them with dates of completion, however, the items were not delivered to the Claimant.

On 10 November 2022, the Claimant sent a formal demand to immediately refund the deposit of USD 45,339.

On 12 November 2022, the Defendant sent the Claimant an email stating that the product would be ready in January 2023.

Upon review of the numerous correspondence between the parties, I find that the Defendant has breached its contractual duty by failing to deliver the product within 6 to 8 weeks and providing different dates of delivery.

Article 77 of the Contract Law DIFC Law No. 6 of 2004 (the “DIFC Contract Law”), provides the following:

“Non- Performance is failure by a party to perform any one or more of its obligations under the contract, including defective performance or late performance”.

Article 86(1) and (2) of the DIFC Contract Law, provides the following:

I find that the Defendant’s failure to perform its obligation amounted to a fundamental non-performance. As the Defendant’s non-performance (i) substantially deprived the Claimant of what it was entitled to expect under the Contract; (ii) strict compliance with the obligations which has not been performed is of essence under the contract; (iii) the Defendant’s non-performance is intentional or reckless, as the Defendant provided the Claimant with many different reasons of the delay without providing any evidence of its delay; and (v) the non-performance gives the aggrieved party reason to believe that it cannot rely on the Defendant’s future performance.

Therefore, the Claimant has the right to terminate the Contract (the purchase order) and be fully refunded without deducting any penalties.

Therefore, I find that the Defendant shall refund the Claimant the sum of USD 45,339.

The Defendant shall pay the Claimant the Court fees in the sum of USD 2,266.95.

The Claimant shall return the defective product to the Defendant. Upon receipt, the Defendant shall either fix the defective product or provide the Claimant with a refund,as agreed at the hearing.