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United Arab Emirates has made its mark as the go-to jurisdiction
for commercial trade for countries all across the globe. While
there is no doubt that UAE is the preferred destination for setting
up new businesses, opening up branches of foreign offices and high
volume of transactions that take place on a daily basis, this also
means that disputes are common in this jurisdiction.
What are the methods of dispute resolution in commercial
transactions in the UAE?
Broadly, there are two methods of dispute resolution available
for commercial trade in the UAE.
These are: litigation and arbitration.
While dispute resolution through arbitration is picking up pace
and may be preferred in extremely high value disputes having an
international character, predominantly, it is the courts which are
used for solving commercial disputes.
Background on the Judicial System of UAE
The UAE is made up of seven Emirates – Abu Dhabi (Abu
Dhabi city is the federal capital of the UAE), Dubai, Ras Al
Khaimah, Ajman, Sharjah, Fujairah and Umm Al Quwain.
The legal structure of the UAE judiciary is organized into two
systems: the federal judiciary and the local judiciary. Abu Dhabi,
Dubai and Ras Al Khaimah maintain their independent judicial system
at the local/Emirate level for matters that are not assigned to the
federal judiciary in accordance with the Constitution.
Each judicial system has three degrees of courts for litigation.
These are:
-
Court of First Instance -
Court of Appeal -
Federal Supreme Court at the federal level and the Court of
Cassation at the local level.
In accordance with Article 25 of the Civil Procedure Law
(Federal Law No. 11/1992), the Court of First Instance is the
primary court of dispute and is entitled to consider civil,
commercial, administrative, labour and personal status disputes.
Decisions issued by the Court of First Instance can be appealed
before the appellate courts having jurisdiction. Appeals from the
judgments of the appellate courts can be filed with the
cassation/supreme court on specified grounds.
Court Proceedings
In case the dispute is to be resolved through litigation, court
proceedings will have to initiated by the claimant.
The first step in this process involves registering a claim by
filing a statement of claim with the Court of First Instance (case
management office), along with the supporting documents. The claim
should have all the relevant information including the name and
details of the plaintiff, the details of the defendant, the subject
matter and demands, etc.
Once the defendant is notified, the defendant is required to
submit his memorandum of defence along with the supporting
documents.
The court will then hear the matter. It may also appoint an
expert in case the issues involved are technical and require the
opinion of an expert. The expert will hear the parties and prepare
a report, along with its recommendations and the reasons for its
recommendation.
The expert’s report will not be binding on the
court.
Once the pleadings are completed, the court will issue its
judgment which can be appealed. The judgment is required to be
reasoned, and will set the grounds on which the decision has been
made.
An appeal should be filed by the aggrieved party to the
appellate court within a period of 30 days from the date of
judgement, unless the law specifies otherwise.
Conclusion
While commercial disputes are common given the growth of
business in the UAE, it is crucial to hire a local lawyer for
dispute resolution, especially since the court’s language is
Arabic and therefore, a local lawyer who would be able to guide you
on the steps and represent you in court is invaluable.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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