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Nuts and Bolts of Decision No. 26 of 2020 Covering Small Claims Tribunals

The judicial system in the United Arab Emirates (“UAE”) is one of the most dynamic systems in the world, in terms of adapting to both social and business needs. Being among the major business hubs and home to multiple small to medium-sized emerging businesses, UAE is constantly required to update its judicial practice to cover the numerous disputes that might arise out of the daily transactions.

As such, UAE regularly improves its legal system to modernize the traditional practice into more cost and time-efficient trials as an alternative to lengthy and costly court proceedings.

In its most recent notable development, on 23 September 2020, the Abu Dhabi Judicial Department took the initiative to launch, by virtue of its Decision No. 26 of 2020 (the “Decision”), the Small Claims Tribunals (the “SCT”) within Abu Dhabi Courts, to rule on disputes relating to small claims.

Notwithstanding the time and cost-effective nature of the SCT, the Decision also safeguards fair trial proceedings by adopting all regulatory principles provided in this respect under UAE laws. Article 8 of the Decision provides that, unless otherwise provided in the Decision, the provisions of the Civil Procedure Code No. 11 of 1992 and its amendments[1] (the “CPC”), in addition to the Federal Law No. 10 of 1992 concerning Evidence in Civil and Commercial Transactions, shall apply. This corroborates that the litigants would still benefit from all due process rights adopted under these laws while exploiting the new additions that the Decision has to offer.

The below covers the developments adopted in the Decision and the key practical directions included therein notably with respect to (1) the competence of the SCT, (2) the initiation of the proceedings, (3) the appointment of experts, (4) the ruling on the dispute, and finally (5) the appeal of the SCT’s judgement.

Competence of the SCT

Article 2 of the Decision provides that the jurisdiction of the SCT includes civil, commercial and employment claims in which the amount of the dispute is quantified, at the maximum of AED 500,000. Furthermore, the SCT has jurisdiction to look into all disputes relating to signature-verification cases regardless of the amount in dispute.

As an exception to the above, per the same Article, even if the claimed amount does not exceed AED 500,000, the SCT has no jurisdiction to rule on the disputes that include the State as a party thereto, summary proceedings and payment orders.

Initiation of the Proceedings

Article 4(2) of the Decision confirms that, unless expressly provided otherwise therein, the same principles and provisions relating to the initiation of proceedings provided for under the CPC shall be applied before the SCT.

However, Article 4(1) of the Decision addresses special provisions for the initiation of proceedings before the SCT, mainly with regards to the preparation phase of the case by the Case Management Office (“CMO”). Whereby this Article directs the CMO to schedule a hearing within 15 days at the latest, from the date on which the Claimant files its claim. However, such a time-limit could be extended for a similar period based on a special decision by the judge.

Furthermore, in the instance of disputes relating to a court-appointed expert (“CAE”), the CMO shall schedule the hearing within 3 days following the submittal of the CAE’s report.

Such an Article portrays the legislator’s intention behind the Decision to expedite the proceedings by restricting the time-limit within which the CMO shall schedule the hearing compared to the same procedural step applicable prior to the issuance of the Decision, where the CMO would have to spend longer time to conduct the same.

Appointment of Experts

Should the Claimant’s reliefs include the appointment of a CAE, Article 3(1) directs the Claimant to advance payment of 3% of the claimed amount, not less than AED 2,000, towards the CAE’s fees upon registration of the case.

Notwithstanding, the direction included in Article 3(1), paragraph (2) of the same Article gives the Tribunal a discretion to decide whether the dispute requires the appointment of a CAE or not, based on the merits of the case.

The provisions of Article 3 of the Decision illustrate to what extent the Decision achieves the prime purpose behind its issuance. This is mainly since, prior to the Decision, such an administrative matter (of settling the CAE’s fees) usually prolongs the proceedings by requiring one or more hearings specifically scheduled for this purpose. However, following Article 3, the remittance of the CAE’s fees at the outset of the proceedings prevents such unnecessary prolongation.

Ruling on the Dispute

As to the SCT’s ruling on the dispute, Article 5(2) of the Decision provides that the SCT shall render its Decision in one hearing only by virtue of a final judgement fully reasoned in this same hearing.

Such a decision, as per paragraph 3 of the same Article, shall include the Claimant’s reliefs, a brief of the opponent’s respective arguments, the basis of the decision, and the determination itself.

Furthermore, paragraph 3 of this Article, in fine, warrants the validity of the SCT’s ruling including the requirements mentioned above and expressly provides that such judgment cannot be subject to annulment based on the lack of reasoning.

Lastly, Article 5 also addresses the event where the SCT appoints a CAE and gives the SCT the right to nominate a CAE to provide his evaluation on the dispute via an oral report during a hearing session. Such an evaluation would then be registered in the hearing’s minutes without the need for an actual written report from his part.

Appeal of the SCT’s Judgement

As to the appeal of the SCT’s judgements, the Decision provides for distinct considerations, notably based on the quantification of the claims.

Article 6 of the Decision provides that, should the value of the dispute be within the limit of the amount provided for under the Cabinet Decision No. 57 of 2018,[2] i.e., less than AED 50,000, the SCT’s Decision shall be final and thus not subject to appeal.

However, should the value of the dispute be more than AED 50,000, the SCT’s Decision could be appealed within 15 days from the ruling's date.

Furthermore, regarding the filing process, paragraph 2 of the same Article directs the appellant to file its appeal via an explanatory memorandum substantiating the grounds for appeal, to the extent that, should the appellant fail to include the reasons for such appeal in its memorandum, the court would thus dismiss the appeal.

Furthermore, the appellant is also required to pay a fixed security deposit amounting to AED 1,000, which will be refunded if the court admits the appeal.

As to the Court of Appeal’s ruling, Article 7(1) indicates that it should be rendered within 5 days at the latest from the appeal registration date and paragraph 3 of this Article states that the decisions rendered by the Court of Appeal are final and not subject to any further challenge.

Finally, the Decision is already enforced, and in a recent judgment issued by the Abu Dhabi courts, an appeal was immediately dismissed in form as the appellant failed to pay the fixed security deposit of AED 1,000.

In conclusion, by assessing the practical impact of the Decision, it is obvious that the provisions included therein squarely fit its purpose and the legislator’s intention to modernize the practice of small claims before domestic courts. This is the more so since, the value of the claims subject to the Decision, i.e., AED 500,000, is not insignificant especially in light of the pre-existent and emerging small to medium businesses in the UAE which would highly benefit from such contemporary evolution in the legal system.

Authored by Haytham Alieh, Partner

[1] Cabinet Decision No. 57 of 2018 on the Regulation of Federal Law No 11/1992 on the Civil Procedure.

[2] Article 23(2) of the Cabinet Decision No. 57 of 2018 on the Regulation of Federal Law No 11/1992 on the Civil Procedure.
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