DIFC offers a fast, convenient and cost-efficient justice system, especially for SMEs
As I entered the DIFC Courts to meet with Mr Nassir Al Nasser, Small Claims Tribunal Judge and Registrar, I was struck by how un-intimidating the entire set-up is designed to be. All-glass doors gave me peek inside the Courts, welcoming me; and as I walked through, there were no security checks. SCT hearing rooms too were nothing different from meeting rooms in an office.
I kindly asked a lady at the reception where I could see Mr Al Nasser, she knew who I was and ushered me into a meeting room. As he entered, we settled in to have a conversation, which was nothing short of insightful. His demeanour added a level of calm to the meeting and I couldn’t help but ponder upon how this would put even the nervous ones in the room, at ease.
The Small Claims Tribunal (SCT),which is a forum of dispute resolution under the DIFC Courts, as Nassir explained, works in English language and in accordance with the common law, as opposed to the civil law procedure used by the local onshore Courts across the UAE. The jurisdiction of DIFC Courts was also opened up beyond the DIFC to the entire country, as well as the world in 2011 by H.H. Sheikh Mohammed bin Rashid Al Maktoum.
As an independent English language common law court, the DIFC Courts complement the UAE’s Arabic-language civil law system. The only operating tribunal of its kind in the region, the Small Claims Tribunal (SCT) was set up at the DIFC Courts in 2007 to allow access to justice in a swift and efficient manner and without the need for lawyers. It also reduces the incidence of lengthy and costly (for the parties and the State) protracted legal battles. It was based on the model of a similar tribunal in Singapore.
“Basically, it is an opt-in clause to be added to the contract, either before forming a contract, or before the contractual relationship between two companies, or even after the dispute, they can agree in writing to come to the DIFC Courts.”Nassir Al Nasser, SCT Judge and Registrar at DIFC Courts
There are quite a few advantages of the SCT to small and medium-sized businesses, including start-ups. The SCT can hear claims for all types of civil and commercial claims, where the amount of value of the claim does not exceed AED 500,000 (approx. USD 136,000). Parties can increase the claim value up to AED 1 million if agreed to in writing.
The nature of the SCT evolved to cater to the needs of amicable dispute resolution, allowing parties to represent themselves when conducting initial consultation meetings with judges who are also certified mediators and, if settlement does not occur at that stage, then parties can continue the proceedings via informal private hearings with a different judge.
Any and all companies, even those not working or registered in the DIFC can come to DIFC courts to settle matters. It’s simply a matter of adding the clause in the written contracts.
The SCT process does not allow for lawyers to be present, which can help businesses save on costs.
All paperwork and proceedings are done in English, and papers do not need to be translated to Arabic for hearings.
Fees of the process are also very reasonable, set at 2-5 percent of the claim value. Nassir clarifies, “for employment matters, it's 2% of the amount claimed with a minimum of $100. For other types of claims, it's 5% of the amount of claim with a minimum of $100. So basically, the maximum is 5%, because the [claim value] threshold is AED 500,000. So, 5% would be AED 25,000,” which would be the cap.
Moreover, the SCT is “a fast resolution process” that “takes four to six weeks for the case to be resolved from the dates of successful service,” which is the point at which the other party has been successfully notified of the claim in writing.
Cases are conducted in private. The proceedings are completely confidential, unlike the larger Court of First Instance (CFI) proceedings, which are public.
Most of all, the new “Smart SCT” initiative has removed the need for people to be physically present in the Court, or even the country, for mediation/hearing. Parties “can attend by teleconference or video call” from anywhere across the world.
The entire SCT process, from the very beginning, is digital. Claims are filed through the e-Registry on the website, all the evidence and paperwork is scanned on to the platform, and now people can attend the proceedings digitally as well. The SCT has become a completely paperless entity, in line with Dubai’s Paperless Strategy.
From simple online filing of a claim, to easy scheduling of consultations and hearings, all the way to drafting the order or judgment, the entire process is highly accessible to the less technology-literate individuals. It is streamlined and convenient to use from home or mobile devices, and does not interfere with, or compromise, any court procedural requirements.
In addition, the DIFC Courts Registry provides assistance to the parties by offering multiple guidance notes on how to prepare claims, logical arguments, and organise evidence. For the majority of cases, this has worked flawlessly, with parties expressing a clear preference for representing themselves as opposed to paying for legal services
The number of claims filed and resolved via the SCT has also been increasing year-on-year, showcasing the effectiveness and transparency in its processes.
For ten years, the DIFC Courts has been running a programme to help people get free legal advice. Every Wednesday morning from 8:30 am to 12:30 pm, under an organised Pro Bono Programme, registered lawyers from the DIFC come to the Courts and offer free legal advice to people on a walk-in first-come-first-served basis.
As Nassir and I talk about the recent increase in start-ups and small businesses across the country, and how many entrepreneurs do not come from a legal background, and are often first-time entrepreneurs, Nassir highlights the importance of strong contracts and seeking legal advice from lawyers. People and businesses of all sizes must “focus on the contract.”
Within the contracts, Nassir says, “one of the important areas is the governing law and the jurisdiction. And before choosing the jurisdiction, [people] have to know the procedures of the chosen jurisdiction and whether their judgments will be enforced. What is also more important than a judgment is the enforceability of that judgment, as a judgment that is not enforceable is just a document with no effect.”
“When entering commercial contracts, businesses in the Gulf region seek to minimise risk and protect their position in case of disputes. SMEs in the UAE make business and personal decisions based not only on the commercial environment, but also on the associated level of legal protection. SME owners typically have very limited time and resources to dedicate to long-term issues. With a limited understanding of the legal context of owning and operating businesses, they tend to rely on systems they can easily understand, such as an amicable dispute resolution.”
SMEs, start-ups, entrepreneurs, as well as those working for them, must not be afraid of the law, which is there to protect and help them. The DIFC Courts and Small Claims Tribunal is pioneering in the adoption of technology to improve and simplify the processes for easy and fast resolutions. Moreover, legal fees for contracts, consultation and such must be looked at as an investment that will safeguard and protect businesses as they grow.
As I was leaving the DIFC Courts, I was offered a tour of the space. With a peek inside the main DIFC courtroom, whereby all proceedings are publicly available on YouTube, and mediation rooms fitted with technology that enable proceedings to take place via video and teleconference. As I stepped out, I looked back through the glass panels with a refreshed perspective of the potential SCT holds for businesses and the value they can provide to people around the world.