Claim No. SCT 115/2021
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
|Hearing :||31 May 2021|
|Judgment :||14 June 2021|
JUDGMENT OF H.E. JUSTICE NASSIR AL NASSER
UPONhearing the Claimant’s and the Defendant’s representatives at the hearing
AND UPONreading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The Claimant’s claim shall be dismissed.
2. There shall be no order as to costs.
Ayesha Bin Kalban
SCT Judge and Deputy Registrar
Date of issue: 14 June 2021
1. The Claimant is Lentina (the “Claimant”), a company registered in Dubai.
2. The Defendant is Lint (the “Defendant”), a company registered in and located in Switzerland.
Background and the Preceding History
3. The underlying dispute arises over unpaid invoices allegedly owed by the Defendant to the Claimant pursuant to a Marketing Services Agreement entered into by the parties (the “Agreement”) dated 1 January 2019.
4. On 15 April 2021, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking payment of the alleged unpaid invoices in the sum of USD 65,712.50.
5. On 22 April 2021, the Defendant filed an Acknowledgment of service setting out its intention to defend all of the claim.
6. On 29 April 2021, a consultation was scheduled before SCT Judge Hayley Norton but the parties were unable to reach a settlement.
7. On 6, 23 and 31 May 2021, hearings were listed before me, at which both the Claimant’s and the Defendant’s representatives attended.
8. The Claimant’s case is that it carried out its obligations towards the Defendant in accordance with the Agreement. The Claimant submits that the Defendant failed to make payment towards the services provided to it under the Agreement, and therefore the Claimant proceeded to file a claim at the DIFC Courts Small Claims Tribunal seeking payment in the sum of USD 65,712.50, representing full settlement of outstanding invoices and compensation on delay as well as damage to reputation and interest.
9. In response to the Claim, the Defendant submits that it had terminated the Agreement on 30 March 2020 by way of written notice to the Claimant, providing 6 months’ notice to the Claimant making the end date of the Agreement 30 September 2020.
10. The Defendant submits that the Claimant rejected the termination of the Agreement and continued to invoice the participating hotels in accordance with the mechanism set out in the Agreement.
11. The Defendant also submits that in numerous correspondence between October 2020 and February 2021 sent by the Defendant, the Defendant (i) reaffirmed that termination was validly effected and the Agreement came to an end on 30 September 2020, (ii) requested that the Claimant refrain from issuing invoices to the participating hotels for services which post-dated termination, (iii) agreed that the Claimant was entitled to payment of its charges by participating hotels for services rendered up until 30 September 2020 but rejected any entitlements by the Claimant for payment by participating hotels of invoices for services which post-dated termination, and (iv) to close the matter and facilitate a settlement of payment for amounts due by participating hotels.
12. Therefore, the Defendant submits that the issues between the parties are:
a. Whether the Defendant validly terminated the Agreement;
b. Whether the Defendant is required to pay the amounts due by the participating hotels for the charges; and
c. Whether the Claimant is entitled to payments of invoices in respect of services which post-date termination.
13. The parties are both registered and located outside of the DIFC but have ‘opted-in’ to the DIFC Courts’ jurisdiction in accordance with Dubai Law No. 12 of 2004, as can be seen in Clause 12.10 of the Agreement which reads as follows:
“this Agreement shall be governed and construed in accordance with the Laws of the United Arab Emirates and shall be subject to the exclusive jurisdiction of the Courts of the DIFC UAE.”
The Validity of the Agreement
14. Clause 3.1 of the Agreement reads as follows:
“this Agreement shall commence on the effective date and shall, subject to clause 3.2 and 3.3, remain in force for the initial term. Thereafter this Agreement shall be for 2 years and subject to renegotiation at the end of the initial term with a 6-month Notice period, maybe renewed on such terms and conditions as may be mutually agreed between the parties hereto. The contract will auto renew for a subsequent term on the same conditions if no communication has been received to the otherwise.”
15. Clause 3.4 of the Agreement reads as follows:
“notwithstanding the foregoing each of the parties reserves the right to terminate this Agreement for no cause upon giving six (6) months prior written notice”.
16. The Defendant‘s position is that the Agreement was terminated as of 30 March 2020, with the last day of its effect being 30 September 2020.
17. The Claimant submits that the Defendant has attempted to rely on one line in the Agreement without considering the remainder of the text in the context of the Agreement. The Claimant adds that the use of the term “Notwithstanding” in contracts does not differ from its plain and ordinary English meaning.
18. The Claimant submits that followed by the foregoing, so without disregard of the above, then a client of the Claimant may terminate an agreement as long as the remaining points of the agreement entered into between the Claimant and said client have been fulfilled which in this case is the minimum term. In addition, the Claimant submits that 6 months’ notice provided to the Claimant by the Defendant does not exempt the Defendant from carrying out its obligations under the Agreement for a minimum term of 2 years.
19. I am of the view that the initial term as defined in the Agreement is two years commencing from the effective date. However, as per Clause 3.4 of the Agreement each of the parties has reserved the right to terminate this Agreement for no cause upon giving 6 months’ notice to the other side.
20. In review of the Agreement and the evidence provided, I find that the Defendant has carried out its obligations towards the Claimant and has terminated the Agreement with the Claimant in accordance with clause 3.4 of the Agreement.
21. Therefore, having found that the Defendant has exercised its rights under Clause 3.4 of the Agreement and lawfully terminated the Agreement by provided a notice period as required by the Agreement, I am of the view that the terms of the Agreement are only binding upon the parties until 30 September 2020.
Whether the Claimant is entitled to payments of invoices in respect of services which post-date termination
22. As the Agreement between the parties commenced on 1 January 2019 and has been terminated on 30 March 2020 with a 6 months’ notice for which the last day was determined to be 30 September 2020, I find that the Claimant is not entitled to invoices in respect of services provided post the termination date of 30 September 2020.
23. Therefore, the Claimant provided an amended calculation as per its submissions and claimed the sum of USD 32,768.75 which are invoices dating until 30 September 2020.
Whether the Defendant is required to pay the amounts due by the participating hotels for the charges
24. The parties to the Agreement are the Claimant and the Defendant. However, Clause 2.1 of the Agreement reads as follows:
“From the first day of the initial term until expiry of the initial term and all subsequent term(s), or other termination of this Agreement (whichever is earlier), in consideration for the payment of the charges by the Client to LENTINA and subject to the terms and conditions hereof, LENTINA shall provide to the Client the services set out hereunder in respect of the Group of Hotels, in such manners as is deemed appropriate by LENTINA sole opinion..”
25. The terms “Participating Hotels” or “Client” are defined in the Agreement to mean any Lint branded hotel that agrees to participate in the Agreement by signing the enrolment form provided in the Schedule 4 of the Agreement.
26. Clause 4.4 of the Agreement reads as follows:
“invoices rendered by LENTINA to the Client shall be paid by the Client in full without discount, deduction, set-off or counterclaim of any kind within thirty (30) days of the date of invoice”.
27. The Defendant‘s position is that the payment of those outstanding invoices is not owed by the Defendant as it is not a participating hotel of a client under the Agreement.
28. The Defendant also adds that the Defendant and the participating hotels are separate and distinct legal entities which are defined separately in the Agreement.
29. Clause 1 of Schedule 4 of the Agreement provides that:
“by executing this proxy, the Hotel agrees:
(a) That it is a party to, and a participating hotel within the meaning of the Agreement;
(b) To be bound by and abide by the terms and conditions of the Agreement; and
(c) To be fully responsible for its own fees including any outstanding or delayed payments as stated in the Agreement.”
30. The Claimant filed a claim against the Defendant for services rendered to participating hotels/clients and not the Defendant. The Agreement provides that each participating hotel or client is responsible for its own fees.
31. Therefore, I find that the Defendant is not liable for payment owed to services rendered to participating hotels/ clients, seeing as each such entity would be responsible for its own fees by enrolling.
32. The Claimant also claimed compensation for delays, damages to reputation and interest at the discretion of the court. However, the Claimant has failed to provide evidence of delays and damages to reputation and interest.
33. Therefore, I dismiss the Claimant’s claims accordingly.
34. In light of the aforementioned, I dismiss the Claimant’s claims as I have found that the Defendant is not liable to pay fees on behalf of participating hotels.
35. I also find that the validity of the Agreement is from 1 January 2019 to 30 September 2020.
36. I also dismiss the Claimant’s claim for compensation for lack of evidence.
37. There shall be no order as to costs.