Awatif Mohammad Shoqi Advocates & Legal Consultancy | View firm profile
Commercial disputes in the UAE are resolved either through litigation or arbitration. While arbitration is fast growing as an effective alternative dispute resolution mechanism, litigation before the courts remains the primary channel of dispute resolution in the UAE.
Court System in the UAE
The UAE follows a civil law system. The UAE has also established several free zones – the most popular being Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM). That said, criminal laws of the UAE and the concerned Emirates continue to be applicable to the free zones.
DIFC and ADGM have their own legal framework, which is based on English or common law. Both free zones have specialized commercial courts, which enforce this law, which hear commercial disputes on and pass judgements based on common law principles. The court proceedings are conducted in English.
In contrast, court proceedings in onshore UAE are conducted in Arabic. All documents have to be submitted in Arabic and if the documents are not in Arabic, these must be translated and legalized in accordance with the regulations.
The juridical system in the UAE is at two levels – federal level and local level. At the local or Emirate level, there is the court of first instance, then the court of appeal and finally the court of cassation. At the federal level, court of first instance is followed by the court of appeal which is followed by the Federal Supreme Court.
Many Emirates in the UAE follow their own local judicial system, including Dubai, Abu Dhabi and Ras Al-Khaimah, whereas Emirates of Sharjah, Ajman, Fujairah and Umm Al Quwain follow the federal judicial system.
Limitation Period for Commercial Disputes
In simple terms, limitation period is the period of time during which a lawsuit can be filed before the relevant courts. If the claim is not brought within the specified time, the party may lose its right to pursue the claim.
In accordance with Federal Law No 5 of 1985 (Civil Code), generally, a claim should be brought within 15 years, post which it becomes time barred, unless otherwise specified by a statute. That said, many statutes provide for a shorter period of time for bringing a claim depending on the nature of the claim.
Commercial Litigation in the UAE – Steps
Federal Law No 11 of 1992 (Civil Procedures Law) governs the procedure for hearing commercial disputes in the courts, including appeals and execution of judgements. Typically, the steps followed for a commercial civil dispute is as follows.
1. Filing a Case
Proceedings have to be initiated by the plaintiff before the court of first instance, which has jurisdiction to hear the matter, by submitting a statement of claim. The claim should contain all the details relevant to the case, including the names of the parties, subject matter of the lawsuit, demands and grounds for the claims and the court before which the lawsuit is filed. On filing of the statement of claim, the defendant is notified of the claim. The defendant is required to submit the memorandum of defense.
2. Hearing of the Case
The pleadings are generally held in public, with the plaintiff having the right to put his case first along with the evidence. The defendant would then present its defense and submit relevant evidence.
3. Expert Report
The court is entitled to assign one or more experts for their expert opinion in civil and commercial disputes as provided under the evidence law of UAE, Federal Law No 10 of 1992. The experts are generally those registered in the schedule of experts in the Ministry of Justice. The experts are required to comply with the procedure as mentioned in the Evidence Law.
The expert will call for the appearance of the parties to the litigation, prepare an initial report of his work, share it with the parties for their comments and responses, and submit the final report to the
court. The report will set out the result of the expert’s work, their opinion and reasons for the opinion. The expert’s opinion is not binding on the court and if the court issues a judgment which is not in line with the expert’s opinion, the reasons for deviating from the expert’s opinion would need to be stated in the judgement.
4. Judgment
Once the pleadings are completed, the court will adjudicate the case by pronouncing judgment. The judgment would include the name of the court of issuance of judgement, date and venue, type of case, and the names of the judges, amongst other things. The judgment will set out the grounds on which the decision is based.
5. Enforcement
Once the judgment has been received, the relevant party will file an application for the execution of the judgement. The court may, as part of execution proceedings, attach or seize the movables, debts of the debtor, stocks, bonds, shares, real estate and impose bankruptcy proceedings. An arrest warrant may also be issued against the debtor. The court can also issue a travel ban against the debtor.
6. Appeal
Generally, judgments can be appealed. However, if a person has accepted the sentence or judgment implicitly or expressly, such matters cannot be appealed.
The judgment of the first instance courts can be appealed before the court of appeal.
Appeals from the court of appeal may be submitted before the cassations appeal based on specific grounds, for instance, if the appealed judgment was based on breach of law, or mistake in application or interpretation, or if there’s nullity in the judgment or in the procedure which has affected the judgment.
Judgments from court of first instance can be appealed within a period of 30 days from the date of issuance of the judgment, unless a statue stipulates otherwise. The time limit to appeal to cassation is 60 days.