The United Arab Emirates is a leading global destination for businesses across sectors and industries, serving as a home for several national and international corporations. Given the volume of the business that is undertaken, with corporations existing within and outside the country, it is not a surprise that commercial litigation is thriving in the country.
Typically, the commercial disputes are resolved through litigation or arbitration. While arbitration is exponentially growing as a method of solving disputes, litigation continues to be the primary medium for dispute resolution in the UAE.
Court System in the UAE
The UAE follows the civil law system and has courts both at the federal level and the local level. The court system consists of the following courts at each level:
- Court of First Instance
- Court of Appeal
- Court of Cassation (called the Supreme Court at the federal level)
The Emirates of Dubai, Abu Dhabi and Ras Al-Khaimah follow the local court system which is independent of the federal judicial system.
Apart from the above, the UAE has also established free zones in various Emirates. The Dubai International Financial Centre follows its own laws, which are based on English or common law. The courts of DIFC enforce these laws with the courts hearing regional and international disputes, based on the consent of the parties.
Steps for initiating commercial claims in the UAE
Registration of Claim:
The first step to a commercial claim is registering the claim by filing a statement of claim with the Court of First Instance (case management office), along with the supporting documents.
The statement of claim should have the following information: name and details of the plaintiff and defendant, court before which the lawsuit is filed, date of filing the statement of claim, subject matter of the lawsuit, demands and grounds for relief, signature of the plaintiff.
The language of the UAE courts is Arabic and therefore, all documents and information have to be submitted with the court in Arabic. In case the document is not in Arabic, the document should be translated and legally certified before it is submitted.
Defendant’s Defense:
The defendant is entitled to receive a copy of the statement of claim and he is required to submit a memorandum of defence to the statement of claim, along with copies of the supporting documents.
Case Value:
The value of the lawsuit will be assessed on the day of its filing, which is based on the plaintiff’s latest claim. The case value will also include all interests, royalties, indemnities, other expenses which value is estimated and due on the date of filing the case. In case the claim relates to the validity, nullification or termination of a contract, the value of the subject matter of the contract will be the case value.
Appearance before the Court
Both plaintiff and defendant or their attorneys should be presented on the date of hearing. Any submission of a new document which could have been submitted previously may result in postponement or adjournment of the hearing. The courts in this case, may impose fines on the person who caused the postponement. That said, the parties can submit a document in order to reply to the other party’s pleas and defense. The case will be heard by the court.
Judgment issued by the Court
The court will issue its judgment after the pleadings are completed. The judgement should mention the name of the court that issued it, type of case, names of the parties, and the judges who heard the case. The judgment should also set out the brief facts of the matters, the relief requested by the plaintiff, the defence, and the grounds for judgment including the enacting terms.
Next Steps
Once a judgment is pronounced, it can be appealed by the aggrieved party to the Court of Appeal within a period of 30 days from the date of judgment. A party may also seek a review of the judgment. For the judgment to be enforceable, it has to be executed by the winning party before an execution judge.
Conclusion
Commercial disputes are a very common occurrence in the litigation sphere in the UAE. That said, it is crucial that expert legal guidance is obtained by the disputing parties when contemplating action for a commercial matter before the courts. This is particularly since the courts operate in Arabic, and cases decided by the courts do not act as precedents but only as guidance. Lawyers who have been practicing in this field for years would have the requisite experience to guide at each step of the claim.
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