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Bao v Banu [2011] DIFC SCT 004

Bao v Banu [2011] DIFC SCT 004

October 1, 2011

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THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE SMALL CLAIMS TRIBUNAL OF DIFC COURTS

Between

BAO

Claimant

and

BANU

Defendant


JUDGMENT


Parties

1. The Claimant is Bao, residing in Dubai United Arab Emirates.
2. The Defendant is Banu, a Free Zone company in Dubai, United Arab Emirates.

Background

3. On September 2011 the Claimant brought this claim before the Small Claims Tribunal (SCT) stating that the Defendant and xxxx on October 2006 have entered into a Sale and Purchase Agreement (SPA) for the purchase of a Villa (the property) located in a Project- in Dubai on the Account of the Claimant. When the Claimant paid the full amount for the villa in 2011, the Defendant required from him a cheque in the sum of AED 25,436 for utilities fee in order to give the possession of the villa and he did so. The Claimant argues that he was entitled to possession with utilities once the Defendant received the agreed moneys due under Villa. The Claimant required the Defendant to return a cheque in the sum of 25,436 AED but the Defendant refuesd.
4. On October 2011, the Defendant submitted an application to dispute the jurisdiction of the DIFC Courts.
5. As per the Defendant, the claim is related to a villa located and therefore the Villa project is outside the jurisdiction of the DIFC Courts.
6. The Defendant stated that it is not a DIFC registered company, according to its commercial license; the Defendant has been incorporated in the Free Zone which is outside of the DIFC (The commercial License has been submitted)
7. Also, the Defendant insisted that the Claimant and the Defendant have agreed and signed to make the Dubai Law the governing Law of their agreement and to refer to Courts of Dubai as the Courts with the exclusive jurisdiction to hear any legal action related to the contract as per clause 16 of the Sale and Purchase Agreement.
” This agreement and the right of parties hereunder shall be governed by the Laws of the United Arab Emirates and the Laws of Dubai and the parties agree that any legal action or proceeding with respect to this agreement shall be subject to the exclusive jurisdiction of the Courts of Dubai, U.A.E.”

 

The Hearing

8. The Claiment attanded in person while the Defendant was represented.
9. Moreover, the Claimant requested to dismiss the Defendant’s Application to contest the jurisdiction of the DIFC for reason that the Defendant was carrying on business there, a breach of SPA was related to the jurisdiction of the DIFC Courts, and in the context of the SPA “the laws of Dubai” meant the laws of DIFC. The Claimant mention that he has equitable rights and remedies that can be enforced against Defendant under the SPA.
10. The Defendant denied and argues that the company incorporated in a free zone, which is outside of DIFC jurisdiction. In addition, the Claimant and the Defendant never agreed to refer their disputes to the DIFC Courts and there is no provision in the DIFC laws or Dubai laws require the same. Also, the Claimant has no capacity to lodge such claim since he is a tenant as per Dubai Land Department. Furthermore, the Claimant did not sign with Defendant any contract with regards to the Property.
11. The Claimant had requested the Court to strike out the application submitted by Defendant for the reason it was breach of SPA within the jurisdiction of the DIFC Courts. In order for DIFC Courts to have jurisdiction under article 5(1) of Dubai Law that provide:

“(1) Without prejudice to paragraph 2 of this article, the court of first instance shall have exclusive jurisdiction over:

a) Civil and commercial cases and disputes involving the Centre or any of the Centre’s Bodies or any of the Centre’s Establishment;
b) Civil or commercial cases and disputes arising from or related to a contract that has been executed or a transaction that has been concluded, in whole or in part, in the centre or an incident that has occurred in the Centre;
(2) Parties may agree to the submit to the jurisdiction of any other court in respect of the matters listed under paragraphs (a),(b) and (d) of this article.”
12. In fact that, the Claimant have shown the Court that it has jurisdiction over Defendant as Centre Establishment. However, if the Defendant deny the jurisdiction of the DIFC at the time where the SPA was signed, it would not be considered as a recognised company; this means that the Defendant is in breach of article 115(1) of the DIFC Companies Law 2006. The Claimant also provided that the Defendant gave its address as, the Gate Building, DIFC, for the reason of SPA, which was to be performed, even in part, in the centre. Thus, the Claimant can make payment either to the Defendant address or to its bank account as per clause 4.2 of the SPA. Accordingly, under article 5(1) (b) of Dubai Law no. 12, the DIFC had jurisdiction over dispute arising from the SPA, unless article 5(2) applied.

The Jurisdiction

13.  the relevant provisions of DIFC Law identifying the scope of the Court’s jurisdiction are set out in Article 5(A) of the Judicial Authority Law (No. 12 of 2004) which provides as follows:

(1) Without prejudice to paragraph 2 of this Article, the Court of First Instances shall have the exclusive jurisdiction over:

(a) Civil or commercial cases and disputes involving the Centre or any of the Centre’s Bodies or any of the Centre’s Establishments.
(b) civil or commercial cases and disputes arising from or related to a contract that has been executed or a transaction that has been concluded, in whole or in part, in the Centre or an incident that has occurred in the Centre.
(c) Objections filed against decisions made by the Centre’s Bodies, which are subject to objection in accordance with the Centre’s Laws and Regulations.
(d) any application over which the Courts have jurisdiction in accordance with the Centre’s Laws and Regulations;”
(e) any application over which the Courts have jurisdiction in accordance with the Centre’s Laws and Regulations;”

And Article 19(1) of DIFC Law No 10 of 2004 which provides as follows:

“The DIFC Court of First Instance has original jurisdiction pursuant to Article 5(A) of the Judicial Authority Law to hear any of the following:

(a) civil or commercial cases and disputes involving the Centre or any of the Centre’s Bodies or any of the Centre’s Establishments;
(b) civil or commercial cases and disputes arising from or related to a contract concluded or a transaction concluded by any of the Centre’s Establishments or the Centre’s Bodies;
(c) civil or commercial cases and disputes arising from or related to a contract that has been executed or a transaction that has been concluded, in whole or in part, in the Centre or an incident that has occurred in the Centre; and
(d) Any application over which the DIFC Court has jurisdiction in accordance with DIFC Laws and Regulations.”
14. In the present case as stated in the Defendant’s License which is issued by the Dubai Healthcare City – free zone since March 2004 under registration number under the name of Banu, which is the same name in the SPA. Furthermore this company is physically located outside of DIFC jurisdiction.
15. The Claimant is arguing that the xxxx Holding Company which is a DIFC recognised company has conducted some of Banu businesses and activities on behalf Banu. I am not satisfied with this argument because no evidence was provided that the Al XXXX Holding Company has conducted some activities on behalf Banu, as well as the SPA was singed at the Banu located in the Dubai Healthcare City as both parties confirmed that. Moreover the Property is located at the Project within Dubai Land area.
16. So, the parties in this case not to any such contract or transaction or the cause of action arose from or related to a contract that had been wholly or partly executed or preformed in the Centre or arose from or related to a transaction that had been concluded in the Centre or from an incident that had occurred in the Centre and;
17. In my judgment there is no doubt that this Court has no jurisdiction under Article 5A (b) as discussed above.

FOR THE ABOVE MENTIONED REASONS IT IS ORDERED THAT:

1. The Defendant’s application to contest jurisdiction is accepted.

2. The Court has no jurisdiction to hear and determine this claim.

3. Both parties to pay their own costs.

 

H.E. Justice Omar Almuhairi
SCT Judge
Date of Issue: October 2011
At: 11am

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