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Haloke v Halil Pjsc [2017] DIFC SCT 049

Haloke v Halil Pjsc [2017] DIFC SCT 049

April 11, 2017

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Claim No: SCT 049/2017

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS 

In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

IN THE SMALL CLAIMS TRIBUNAL

BEFORE SCT JUDGE NASSIR AL NASSER

BETWEEN 

HALOKE 

Claimant 

and

HALIL PJSC 

Defendant

Hearing: 28 March 2017

Judgment: 4 April 2017


ORDER OF SCT JUDGE NASSIR AL NASSER


UPON hearing the Claimant’s representatives and the Defendant’s representative

AND UPON reading the submissions and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

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

2. The DIFC Courts have no jurisdiction to hear and determine this claim and the claim is therefore dismissed.

3. Each party shall bear their own costs.

Issued by:

Nassir Al Nasser

SCT Judge

Date of issue: 11 April 2017

At: 3pm 


THE REASONS

Parties

1.The Claimant is Haloke, an individual living in Dubai (hereafter the “Claimant”).

2. The Defendant is Halil PJSC, a public joint stock real estate development company duly incorporated in the Emirate of Dubai (hereafter the “Defendant”).

Background and the Preceding History

3. The Claimant and Defendant entered into a Sale and Purchase Agreement on 18 March 2008 (hereafter “the Agreement”) regarding the purchase of an off-plan unitlocated in the Business Bay area of Dubai (hereafter the “Property”). The purchase price of the property was AED 1.1 million with the Claimant paying AED 343,950 in instalments pursuant to the Agreement.

4. The Defendant failed to complete the development by the date specified in the Agreement or by the long stop date in the Agreement which resulted in a breach of contract between the parties. The Claimant instructed Hadef & Partners LLC to serve a termination notice on the Defendant, however, the Defendant refused to accept the termination notice.

5. The Defendant then completed the development of the Property outside the dates specified in the Agreement, however the Claimant refused to pay the remainder of the purchase price. Therefore, the Defendant terminated the Agreement for non-payment and requested a further AED 100,000 which the Claimant refused to pay. Subsequently, the Defendant sold the Property to another buyer.

6. On 10 October 2016, the Claimant requested the Defendant to return the instalments paid by the Claimant pursuant to the Agreement. However, the Defendant failed to respond. As such, on 30 October 2016, the Claimant informed the Defendant that if it did not respond, he would have no choice but to commence legal action against the Defendant.

7. On 5 March 2017, the Claimant filed a claim in Dubai International Financial Centre Courts (hereafter “DIFC Courts”) specifically in the Small Claims Tribunal (hereafter “SCT”) for reimbursement of the instalments paid in the amount of AED 343,950.

8. On 9 March 2017, the Defendant filed an Acknowledgement of Service with the SCT indicating its intent to contest the jurisdiction of the DIFC Courts.

Parties’ Submissions

9. The Defendant in its submission contesting the jurisdiction of the DIFC Courts referred to Article 20 of the Agreement which states that:

“this Agreement and the right of the Parties hereunder shall be governed and construed within the prevailing Laws of the United Arab Emirates and the Laws of the Emirate of Dubai and the Parties agree that any legal action or proceeding with respect to this Agreement shall be subject to the non-exclusive jurisdiction of the Courts of Dubai, United Arab Emirates”.

10. The Defendant also referred to Rule 53.2 of the Rules of the DIFC Courts (“RDC”) which states the following:

“the SCT will hear and determine claims within the jurisdiction of the DIFC Courts…”

11. The Defendant argued that the claim does not fall within the jurisdiction of the DIFC Courts, specially that: 1) the parties have not chosen DIFC Courts for dispute resolution nor have they chosen DIFC law as the applicable law in the Agreement; 2) the Property in question is not located in the premises of the DIFC free zone and therefore is not subject to the Laws of the DIFC; 3) the Defendant is a company incorporated and based outside the DIFC; 4) the unit sale transaction had not taken place in the DIFC and has no connection to the DIFC; and 5) the claim relates to a unit forfeiture procedure by the Dubai Land Department and not by the DIFC Registrar of Real Property.

12. In response to the Defendant’s submissions, the Claimant argued that although the Defendant relied on Article 20 of the Agreement as stated in paragraph 9 above, the Defendant does not specifically state that Article 20 itself precludes the DIFC Courts from having jurisdiction in respect of the dispute. The Claimant in his argument referred to the case Taaleem PJSC v (1) National Bonds Corporation PJSC and (2) Deyaar Development PJSC [2010] DIFC CFI 014, which establishes that the DIFC Courts fall within the meaning of the “Courts of Dubai”. The Claimant also added that the same approach was adopted and applied in Investment Group Private Limited v Standard Chartered Bank [2015] DIFC CA 004, where the court found that the ordinary meaning of the phrase “Dubai Courts” must include all the courts and judicial committees formed within the territory of Dubai and established by the law within the Emirate of Dubai, regardless of whether these courts exercise separate jurisdictions.

13. Furthermore, the Claimant responded to the Defendant’s submission regarding Rule 53.2 of the RDC and argued that the value of the claim in this claim is USD 91,720.00 which falls within the Small Claims Tribunal threshold pursuant to RDC 53.2(1): “where the amount of the claim or the value of the subject matter of the claim does not exceed AED 500,000.”

14. The Claimant rejected the arguments made by the Defendant in paragraph 11 above and argued that they are not factors which can preclude the DIFC Courts from having jurisdiction in respect of this claim. In addition, he argued that the Taaleem PJSC judgment discusses the source and scope of the jurisdiction of the DIFC Courts. In response, the Defendant argued that the Taaleem PJSC case deals with the acquisition of a property located within the premises of DIFC, rather than properly located outside of the DIFC.

15. The Claimant submits that its claim does fall within the jurisdiction of the DIFC Courts on the basis that it is a dispute under Article 5(A)(1)(a) of Dubai Law No. 12 of 2004, as amended (hereafter the “Judicial Authority Law” and Article 19(1)(a) and (b) of DIFC Law No. 10 of 2004, as amended (hereafter the “DIFC Court Law”) in that the dispute involves a DIFC Establishment or a Centre Establishment. In addition, the claim would also fall under paragraph 3.1 of the Protocol of Jurisdiction between the Dubai Courts and DIFC Courts dated 7 December 2009 (the Laws and the Protocol relied on by the Claimant will be discussed in detail below). The Claimant points out that DIFC Establishments and Centre Establishments are defined terms in the Judicial Authority Law and DIFC Law. Article 2 of the Judicial Authority Law states that a DIFC Establishment defined as:

“Any entity or enterprise established, licenced, registered or authorised to carry on business or conduct any activity within the DIFC pursuant to DIFC Laws, including Licensed DIFC Establishments”.

16. The Claimant argues that that the Defendant advertises on its website for Hamid Park Residence, a property located in the DIFC. He also added that Hamid Park Residence is a project developed by Harry Development LLC which is a joint venture between Dubai Properties Group and the Defendant. Therefore, the continuing interest of the Defendant in Central Park is significant enough to consider that the Defendant has activities in the DIFC. However, the Defendant responded that Harry Development LLC is an independent company even though the Defendant owns share in the company. The Defendant also added that an advertisement to sell a property on a public website is not adequate to establish jurisdiction for a specific court, and the fact that the Defendant may offer to sell properties in various free zones and foreign countries, does not per se make the Defendant a company incorporated or licensed in these jurisdictions.

17. Finally, the Defendant requested that the DIFC Courts award it legal costs in the event that the Claimant’s claim is dismissed.

Finding

18. Having considered the written submissions and the arguments put forward at the Hearing, I find that this dispute does not fall within the jurisdiction of the DIFC Courts and the Small Claims Tribunal and therefore the Claimant’s claim must be dismissed for want of jurisdiction.

19. Rule 53.2 of the Rules of the DIFC Courts (“RDC”) requires that the SCT hear only cases that fall “within the jurisdiction of the DIFC Courts.”

20. The jurisdiction of the DIFC Courts is determined by Article 5(A) of the Judicial Authority Law which provides a number of limited gateways through which the DIFC Courts have jurisdiction over a claim, which are, as relevant:

“(a) Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;

(b) Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;

(c) Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities; …

(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations…

(2) … civil or commercial claims or actions where the parties agree in writing to file such claim or action with [the DIFC Courts] whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.”

21. Neither party is, or was, a DIFC registered and licensed entity, contrary to the Claimant’s arguments. Advertisements made by the Defendant in relation to a property in the DIFC, unrelated to the underlying claim, are not sufficient to subject the Defendant to the jurisdiction of the DIFC Courts as relates to all of its business activities. Furthermore, in the circumstances relevant to this case, association with a related entity that is a DIFC registered and licensed entity does not shift this status to the Defendant. Therefore, the Defendant cannot be interpreted to be a DIFC registered or licensed entity.

22. There is no evidence that the relevant Agreement was “partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC.” There is also no evidence that this case relates to “actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities.”

23. The parties have made no reference to a DIFC Law or Regulation granting jurisdiction over this dispute, nor do I consider any relevant to this dispute.

24. Finally, there is no indication that the parties have opted-in to the jurisdiction of the DIFC Courts pursuant to Article 5(A)(2) of the Judicial Authority Law. Although the Claimant argues that Article 20 of the Agreement is sufficient to opt-in to the jurisdiction of the DIFC Courts, this is not the case. Any agreement to opt-in must be “specific, clear and express” and I find that Article 20 does not fall within this standard. The Claimant’s reference to previous case law is misguided as both the Taleem PJSC case and the Investment Group Private Limited case involve facts significantly different from this case and did not relate to property located outside of the DIFC.

25. Paragraphs 3 and 4 of the Protocol of Jurisdiction between the Dubai Courts and DIFC Courts dated 7 December 2009, as referred to by the Claimant, clarify the jurisdiction of the DIFC Courts and the Dubai Courts. However, these provisions largely reiterate the same jurisdictional rules provided by the Judicial Authority Law and do not merit additional discussion as relates to this claim.

26. The above discussion shows that this claim does not fall within any of the relevant gateways of the Judicial Authority Law and thus, the DIFC Courts do not have jurisdiction over the claim. Furthermore, there is the added issue that the relevant Property underlying the claim is located outside of the DIFC free zone.

27. Generally, the parties to a dispute may agree on the jurisdiction of a specific court pursuant to Article 31(5) of Federal Law No.11 of 1992 Concerning Civil Procedures (the “CPC”), which states:

“Save in the cases provided for in article 32 and articles 34-39 it shall be permissible to agree on the jurisdiction of a specified court to determine a dispute and in the event jurisdiction shall be vested in such court or in the court in whose area the defendant has his domicile or place of residence or place of business.”

28. Article 32 of the same law provides for the following exception to the above:

“(1) In actions in rem in respect of real property and actions for possession jurisdiction shall be vested in the court whose area the real property, or a part thereof if it located in the areas or more than one court is located.

(2) In actions in personam in respect of real property, jurisdiction shall be vested in the court whose area the real property is located or the defendant has his domicile.”

29. This claim is in relation to a property located outside the DIFC but in Dubai and pursuant to the above provisions, real property jurisdiction shall be vested in the court in whose area the real property is located or where the defendant has his domicile. Part 5 of DIFC Law No. 10 of 2005 reiterates this requirement by providing that the DIFC Courts will apply the law of the jurisdiction within which the properly is located. The Defendant company is not incorporated or registered in the DIFC and therefore cannot be interpreted to be domiciled in the DIFC. The advertising and sale activities of the Defendant’s joint venture subsidiary described by the Claimant are not sufficient to create a domicile within the DIFC. Therefore, under an independent review of the laws of Dubai and the UAE, the DIFC Courts cannot be found to have jurisdiction over this claim.

30. As to the Defendant’s request to be awarded legal costs, RDC 53.70 states as follows:

“The SCT may not order a party to a small claim to pay a sum to another party in respect of that other party’s costs, fees, and expenses, including those relating to appeal, except:

(1) such part of any Court or Tribunal fees paid by that other party as the SCT may consider appropriate;

(2) such further costs as the SCT may assess by the summary procedure and order to be paid by a party who has behaved unreasonably”.

31. Although I have dismissed the Claimant’s claim, I shall not order the Claimant to pay the Defendant’s legal costs, pursuant to Rule 53.70, as there is no indication that the Claimant has “behaved unreasonably.”

32. For the above cited reasons, I find that the Claimant’s claim should be dismissed for lack of DIFC Courts’ jurisdiction and therefore grant the Defendant’s application to contest jurisdiction.

33. Each party shall bear their own costs.

Issued by:

Nassir Al Nasser

SCT Judge

Date of issue: 11 April 2017

At: 3pm