Small firms welcome expansion of DIFC Courts jurisdiction

Tribunal finds favour owing to speedy settlement of claims.

Dubai: The DIFC Courts has extended the jurisdiction of its Small Claims Tribunal (SCT) to include entities based outside the free zone.

Since expanding its jurisdiction, the SCT recently heard and resolved its first non-DIFC related case. The case — related to the non-payment of an invoice, involved two Dubai-based small and medium enterprises (SMEs).

The settlement followed mutual selection by both parties of the DIFC Courts' mediation process and the SCT. Both parties accepted the DIFC Courts jurisdiction and subsequently reached a settlement on December 29.

"The process was extremely efficient and transparent and I am currently working through two similar debt repayment cases with the SCT," the claimant, Rajesh, an operations manager with a Dubai-based furniture trading company, said.

The SCT — which caters mostly to SMEs — hears disputes in which the value of the claim does not exceed Dh500,000. Lawyers are not permitted to represent parties before the SCT and the time taken for judgments to be handed down is also significantly reduced. On average, such cases are resolved in less than a month.

Language issue

"One of the great things of the SCT is that everything can be heard in English, which is the international business language; the judges are international and have better experience; and the way arguments are heard from both sides ensures a better outcome for both," Brian Wilkie, founder of Gulf for Good, said.

"I know of a few small companies who have gone out of business because they couldn't get paid by major suppliers."

It was in October that the SCT was formed, initially to cater solely to DIFC-registered companies. "The DIFC jurisdiction area has so many retail sectors from which the courts have seen many employment issues — it will double now with this new jurisdiction," Amnah Sultan Al Owais, deputy registrar of the Courts, said.

Moreover, the filing fees for an SCT claim are lower than at the Court of First Instance. The registrar also has the discretion to waive such fees when the claimant proves they are unable to afford it.

Omar Juma Al Muhairi, an SCT judge at DIFC Courts, recently had a case involving a restaurant and 17 of its employees. Within one hour, the 17 cases were settled.

According to Shamlan Al Sawalehi, another SCT judge, there's been a trend of claimants reducing the claim amounts so it is within the SCT jurisdiction. "They know they won't waste time with litigation and legal representation — it's a good facility for SMEs," Al Sawalehi said.

"It's nice to have it in a confidential environment in a more friendly, unofficial way. SCT is the place where they can settle problems without going into the company-catered environment of litigation as proper contractual disputes would have," he added.

Other options

SMEs who wish to settle their disputes also have the option of going to the mediation centres at the Dubai Chamber of Commerce or register their complaint at the Dubai Courts.

"If you go to the Chamber of Commerce, it will go to settlement, but it is not legally binding — so I am not sure if other parties will carry out their obligations," Al Muhairi said. "If you went to Dubai Courts, it would take some time."

The announcement about the extension of SCT's mandate comes just as the Ministry of Economy is expected to release the much-awaited SME laws, which aim to streamline the process of setting up a small business in the UAE by cutting back on red tape and reducing start-up costs. "We can expect the laws to come out around April to July," Al Muhairi said.