Claim No. SCT 129/2016
THE DUBAI INTERNATIONAL FINANCIAL CENTRE
In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum,
IN THE SMALL CLAIMS
(1) MR HARVEY
(2) MRS HALEN
Hearing: 23 October 2017
Judgment: 30 October 2017
JUDGMENT OF SCT JUDGE MARIAM DEEN
UPONthe Claim Form being filed on 15 August 2016;
AND UPONthe Claimant
AND UPONthe Defendant failing to attend the Consultation scheduled on 16 March 2017 and default judgment being entered in favour of the Claimant by Order of SCT Officer Ayesha Bin Kalban on the same date (“Default Order”);
AND UPONthe Defendant’s application on 28 September 2017 to set aside
AND UPONthe Defendant indicating its intention to contest jurisdiction and defend all of the Claim on 12 October 2017;
AND UPONa Jurisdiction
ANDUPONreviewing the documents and evidence submitted in the Court
IT IS HEREBY ORDERED THAT:
- The Defendants’ application to contest jurisdiction is denied.
- Each party shall bear their own costs.
Date of issue: 30 October 2017
- The Claimants’ case is that they entered into a sale and purchase agreement (“SPA”) with the Defendant and Mrs Habib on 19 September 2014, by the terms of which they agreed to sell the entire share capital of their company “Hayleigh Limited” in exchange for a total purchase price of AED 2,404,503. The parties subsequently amended the SPA on 23 November 2013, removing Mrs Habib as a party to it and extending the deadline date (“First Addendum”). There was a further amendment to the SPA on 22 September 2014 whereby the payment terms were changed (“Second Addendum”).
- It is alleged that AED 400,000 of the purchase price remains outstanding and became due and payable to the Claimants on 15 March 2015. In addition, the Claimants are seeking interest and to recover the Court fee and costs from the Defendant.
- Clause 17 of the SPA states:
“Governing law and jurisdiction”
17.1 This Agreement shall be governed by and construed in accordance with the laws of the Emirate of Dubai and the laws of the UAE
17.2 In the event of a dispute arising between the Parties in connection with this Agreement:
(a) where the dispute relates to a claim for a sum within the limits specified by the DIFC
(b) for all other disputes, the dispute shall be referred to, finally settled by, arbitration in accordance with the Rules of the Dubai International Arbitration Centre (DIAC). The language to be used in the mediation and in the arbitration centre shall be English. In any arbitration commenced pursuant to this clause the number of arbitrators shall be one and the arbitration shall be conducted in Dubai.”
- The Claimant seeks to rely on Clause 17.2(a) of the SPA as demonstrating that the parties intended to ‘opt-in’ to the jurisdiction of the DIFC Courts’ SCT in the event that a dispute arose within the limits of the SCT.
- However, the Defendant relies on Clause 17.1 of the SPA in arguing that it is the
- Rule 53.2 of the Rules of the DIFC Courts (“RDC”) requires that the Small Claims Tribunal (“SCT”) hears 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
Judicial Authority Law
“(1)(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.”
- Neither party is, or was, a DIFC registered or licensed entity and there is no evidence to suggest that the SPA transactions were partly or wholly performed within the DIFC or related to DIFC activities. In the absence of 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 Judicial Authority Law.
- For cases to be heard in the SCT they must firstly fall within the DIFC Courts’ jurisdiction, as addressed above, and secondly, the case must also be appropriate for the SCT.
- I am of the view that the DIFC Courts do have jurisdiction to hear and determine this Claim, as Clause 17.2(a) of the SPA states that “where the dispute relates to a claim for a sum within the limits specified by the DIFC Small Claims Tribunal from time to time, then the dispute shall be referred by either Party to the said Tribunal”. I find that the parties have used ‘specific, clear and express provisions’, as required by Article 5(A)(2) of the Judicial Authority Law in order to ‘opt-in’ to the Jurisdiction of the DIFC Courts and even more specifically, the SCT.
- I have not been persuaded by the Defendant’s argument that the 2007 Property Purchase Agreement has any impact on the current dispute regarding jurisdiction, as Clause14.2 of the SPA clearly states that:
“The Parties and the Company agree that the Property Purchase Agreement shall be terminated with effect from the Effective Date…”
- At the Hearing, the Claimant submitted that the SPA and Addendum superseded the original Property Purchase Agreement. It was also argued that neither Addendum affected Clause 17 of the SPA regarding the governing law and jurisdiction, which remained intact and binding upon the parties. In the absence of evidence to the contrary, I am inclined to accept the Claimant’s arguments.
- Clause 17.1 of the SPA specifies that it is to be governed by and construed in accordance with the laws of Dubai and the laws of the UAE as applicable thereto. However, Clause 17.2 addresses the dispute resolution options and clearly states that in the event of a dispute arising, the dispute shall be referred to the SCT if it is ‘within the limits’ specified by the SCT. The same clause provides for the dispute to be referred to arbitration if it falls outside of the limits of the SCT. I do not feel there is any ambiguity in the SPA’s provisions regarding dispute resolution procedures and am of the view that the parties clearly intended to opt into the SCT if possible, and proceed to arbitration if not.
- The Claim Form states that the total value of the claim is USD 123,729.95 (AED 454,460.11) which is within the AED 500,000 limit of the SCT. Accordingly, there is jurisdiction for the SCT to hear the dispute.
- I also find that the laws of the DIFC ought to apply in determining the dispute within the SCT. Clause 17.1 of the SPA required for it to be governed by and construed in accordance with the laws of the Emirate of Dubai and the laws of the UAEas applicablethereto; the DIFC is located within Dubai and the UAE, therefore its laws are included within the definition of the ‘laws of the Emirate of Dubai and the laws of the UAE’. Furthermore, as the SCT has been opted into for the purposes of dispute resolution, it follows that the laws of the DIFC would be theapplicablelaws in the circumstances, pursuant to Clause 17.1 of the SPA.
- Therefore, the Defendants’ application to contest jurisdiction is denied and the merits of the case shall be considered.
- The parties shall bear their own costs.
Date of issue: 30 October 2017