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Farouk v Farrin Advocates & Legal Consultants [2015] DIFC SCT 009

Farouk v Farrin Advocates & Legal Consultants [2015] DIFC SCT 009

December 17, 2015

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Claim No: SCT XXXX

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE SMALL CLAIMS TRIBUNAL

BETWEEN

Farouk

Claimant

and

Farrin Advocates & Legal Consultants 

Defendant

 

Hearing: 7 December 2015

Judgment: 17 December 2015


JUDGMENT OF JUDICIAL OFFICER NASSIR AL NASSER


Background

1. The Claimant is Farouk (“the Claimant”), an employee of the Defendant.

2. The Defendant is Farrin Advocates and Legal Consultants (“the Defendant”), a Law Firm registered in Dubai, UAE.

3. On 28 February 2011, the Claimant and the Defendant entered into a partnership agreement. On 31 October 2011, the parties amended the partnership agreement dated 28 February 2011. Furthermore, on 12 January 2014, the Defendant sent a notice to the Claimant with its intention to terminate the partnership agreement effective on 15 May 2014. Which the Claimant acknowledged and accepted. Therefore, on 18 February 2014, the parties signed an exit agreement establishing all terms and conditions for the end of partnership between the parties.

4. On 11 April 2011, the Defendant hired the Claimant as an employee by means of an employment contract numbered AIA3095KDK01E registered in the Ministry of Labour for an unlimited period. Subsequently, on 1 June 2014, the parties signed a different employment agreement (“the Agreement”) which was not notarised in the Ministry of Labour. However, the Agreement provided that the governing law would be the DIFC Employment Law and that the terms of the Agreement superseded any previous colloquy, agreement, and employment contract held or signed between the parties.

5. The Agreement also provided that the Claimant would be employed as Executive Director at the Defendant’s offices in Dubai and that the main locations in which to perform the activities would be the firm’s Dubai and Sharjah offices. Furthermore, the agreement provided that the employment would be limited to three years. In addition, that an ad hoc labour contract would be stipulated between the two parties and would be filed and registered by the Defendant in the relevant UAE offices immediately after signature of the agreement in question.

6. The Claimant and the Defendant were in dispute over the employment entitlements, which led the Claimant to file a case in the DIFC Courts. Although the governing law in the agreement is the DIFC Employment Law, the Agreement does not refer to which jurisdiction or platform should resolve any dispute between the parties. As such, the Defendant upon acknowledging service of the Claim form decided to contest the jurisdiction of the DIFC Courts.

7. The Defendant in his submissions contested the jurisdiction of the DIFC Courts on the basis that pursuant to Article 4 of the DIFC Employment Law, the Defendant is neither an establishment having a place of business in the DIFC nor an entity that is created by Law No. 9 of 2004. In addition, that the statement of claim filed by the Claimant does not contend otherwise nor does the Claimant contend that he is ordinarily based within or works within or from the DIFC.

8. Furthermore, the Defendant added that since Article 4 clearly eliminates the application of the DIFC Employment Law in the present dispute, the relevant law governing the relationship between the parties will be the UAE Federal Law no. 8 of 1980 (as amended).

9. On the other hand, the Claimant alleges that he filed the Small Claim in the DIFC based on Dubai Law No. 12 of 2004 as amended by Law No. 16 of 2011, namely, Article 5A(2) which provides that “the Court of First Instance may hear and determine any civil and commercial claims or actions where the parties agree in writing to file such claim or action with it before or after the dispute arises, provided that such an agreement is made pursuant to specific, clear and express provisions”. The Claimant also alleges that Article 5A(2) effectively amends the jurisdictional limitation in the DIFC Judicial Authority Law, allowing wider categories of parties to appeal to the DIFC Courts, even when there is no established connection to the DIFC, as long as the parties have clearly and explicitly agreed to “Opt in” their civil and commercial dispute to the DIFC Courts Jurisdiction.

10. Furthermore, the Claimant alleges that the Agreement between the parties dated 1 June 2014; specifically clause 11 explicitly states that “as to the interpretation of the Agreement, as well as its validity, construction and performance, the laws of the DIFC will govern”.

The Hearing

11. On 7 December 2015 a hearing was conducted before me, the Claimant and the Defendant’s representative attended the hearing.

Finding

12. These proceedings are based on Dubai Law Law No. 16 of 2011, amending Law No. 12 of 2004 as alleged by the Claimant. The Claimant relies on Article 5(2) of Law No. 16 of 2011, amending Law No. 12 of 2004 which provides as follows:

“The Court of First Instance may hear and determine any civil or commercial claims or actions where the parties agree in writing to file such claim or action with it whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.”

13. However, the Defendant argued that Article 5A(2) of Law No. 16 of 2011, is clear and that there is no clear explicit special provision in the Agreement referring the dispute to the DIFC Courts for resolution as required under the Law.

14. Therefore, I am of the view that it is clear that the parties did not explicitly agree in writing pursuant to specific, clear and express provisions in the Agreement that any disputes arising out of the Agreement would be submitted to the DIFC Courts and therefore it does not satisfy Article 5A(2) of Law No. 16 of 2011. However, the parties agreed on the governing law when choosing the DIFC Employment Law which can be applied in other courts or platforms of dispute resolution.

15. In addition, Article 4 of the DIFC Employment Law provides that:

“Application of the Law

(1) The Law applies to an employee of:

(a) An establishment having place of business within the DIFC; or

(b) An entity that is created by Law No. 9 of 2004, and the employee is based within, or ordinarily works within or from, the DIFC.

…”

16. However, the Defendant is not an establishment having place of business in the DIFC or an entity created by Law No. 9 of 2004 and the employee is not based within, or ordinarily works within or from, the DIFC. As such, it is clear from the agreement that the Claimant will be responsible for the business development of the Dubai Office and the Sharjah Office. Therefore, I am satisfied that pursuant to Article 4 of the DIFC Employment Law the law only applies to establishments having a place of business within in the DIFC.

17. There is a difference between the governing law and jurisdiction. The parties in the agreement agreed on the governing law which is the DIFC Employment Law, but failed to agree on the jurisdiction of the agreement or the court or platform that will resolve a dispute between the parties.

Conclusion

18. In conclusion, although the governing law in the Agreement signed by both parties is the DIFC Employment Law, the parties in the Agreement failed to specifically, clearly and expressly agree that the DIFC Courts have jurisdiction to hear and determine the case.

FOR THE ABOVE CITED REASONS IT IS ORDERED THAT:

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

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

3. Each party shall bear their own costs.

 

Issued by:

Nassir Al Nasser

Judicial Officer

Date of Issue: 17 December 2015

At: 4pm

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