Claim No. SCT 396/2023
THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS
IN THE SMALL CLAIMS TRIBUNAL
BETWEEN
MOOSUB
Claimant
and
MIOR
Defendant
ORDER WITH REASONS OF SCT JUDGE AND REGISTRAR AYESHA BIN KALBAN
UPON reviewing the Claim Form dated 9 October 2023 (the “Claim”)
AND UPON a Jurisdiction Hearing having been held before SCT Judge and Registrar Ayesha Bin Kalban on 21 November 2023 with the Claimant and the Defendant in attendance
AND UPON reading the submissions and evidence filed and recorded on the Court file
IT IS HEREBY ORDERED THAT:
1. The DIFC Courts have jurisdiction to hear and determine this claim.
2. Each party shall bear their own costs.
Issued by:
Hayley Norton
SCT Judge and Assistant Registrar
Date of Issue: 27 November 2023
At: 12pm
SCHEDULE OF REASONS
The Parties
1. The Claimant is Moosub (the “Claimant”), an individual residing in the United States of America.
2. The Defendant is Mior (the “Defendant”), an individual residing in Dubai, the United Arab Emirates.
Background
3. This dispute arises out of a loan agreement entered into between the parties on 1 August 2012 (the “Loan Agreement”), whereby the Claimant extended to the Defendant a loan amount of AED 654,000 (the “Loan Amount”).
4. The Claimant filed his claim with the DIFC Courts Small Claims Tribunal (the “SCT”) on 9 October 2023 seeking repayment of the Loan Amount by the Defendant, in accordance with the terms of the Loan Agreement.
The Jurisdiction Challenge
5. The Defendant’s Acknowledgement of Service dated 13 October 2023 set out his intention to contest the DIFC Courts’ jurisdiction. This was supported by a jurisdiction challenge that was duly responded to by the Claimant on 24 October 2023.
6. The crux of the Defendant’s jurisdictional challenge lies within Clause 3.2.1 of the Loan Agreement which reads as follows:
“If any dispute or claim arises between the Parties out of, regarding or in connection with this Agreement (including any question regarding the existence, scope, validity or termination of this Agreement or this arbitration provision), the application of this Agreement, any right or obligation arising under this Agreement or the Loan, the dispute or claim shall be finally resolved either (i) through the procedures of the Small Claims Tribunal of the Courts of the Dubai International Financial Centre, or, if such procedures are not sufficient for resolution of any dispute or claim, (ii) by arbitration under the Rules of the DIFC-LCIA in force at the date of the request for arbitration, which Rules are deemed to be incorporated by reference into this Section 3.2…”
7. The Defendant takes the view that Clause 3.2.1 does not meet the requirements set out by Article 5(A) of the Judicial Authority Law, Dubai Law No. 12 of 2004, as amended, (the “JAL”) to capture the parties’ intention to resolve disputes in the DIFC Courts by way of a clear and express provision. The Defendant relies on the Court of Appeal’s (the “CA”) decision in the matterLara Basem Musa Khoury v Mashreq Bank PSC [2022] DIFC CA 2007, which dismisses an appeal against a decision of the Court of First Instance whereby the Judge dismissed the CFI claim on the basis that the DIFC Courts lacked jurisdiction to hear and determine the claim. The Defendant states that an ‘opt-in’ clause, being a clause that sets out the parties’ intention to bring disputes arising between them to the DIFC Courts for adjudication must be exclusive, and not provide the possibility for an interpretation that the parties would be allowed more than one forum to resolve any disputes, as is the case within Clause 3.2.1, where the parties can either seek to bring their claim to the SCT, or to the DIFC-LCIA1for adjudication by way of arbitration.
8. Additionally, and what appears to be in the alternative, the Defendant submits that the SCT is not equipped to deal with this specific claim, and submits that this Claim should be resolved by way of arbitration, being the second forum referred to in Clause 3.2.1, that the parties may engage in the event that the SCT procedures are found insufficient. In the Hearing, I asked the Defendant to elaborate further on this submission, namely to point out the procedures that he deems to be lacking in sufficiency. The Defendant responded by stating his views that this Claim is more complex than what it appears to be at the outset, and that it may concern matters surrounding laws of the United States of America, tax evasion and complicated family disputes.
9. The Claimant refutes all submissions put forward by the Defendant and submits that the Loan Agreement is binding between the parties, including the dispute resolution mechanism set out within Clause 3.2.1.
Discussion
10. Article 5(A) of the JAL sets out the DIFC Courts’ jurisdiction over:
“(a) Civil, commercial and labour claims to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;
(b) Civil, commercial and labour 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, commercial and labour 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.”
11. The JAL sets out that civil and commercial claims with no connection to the DIFC can be heard by the DIFC Courts where parties agree in writing to refer matters to the DIFC Courts. There is no requirement set out in the JAL that exclusivity of forum be a prerequisite. Furthermore, the Defendant has not provided any convincing arguments demonstrating that the SCT would not be an appropriate forum to hear this Claim. I also find that the CA’s findings inLara Basem Musa Khoury v Mashreq Bank PSCrelate to an entirely different set of circumstances that are not applicable to the matter at hand, and that appeal related to an asymmetric jurisdiction clause that allowed a claim to be brought to the DIFC Courts only if brought by the defendant bank in that case. This is clearly not an authority that can be relied upon in this Claim.
12. I am satisfied that the Claimant exercised his right under the Loan Agreement to bring this claim before the SCT, and that despite the Loan Amount being in excess of the general financial threshold of the SCT, the parties’ agreement in Clause 3.2.1 is clear in displaying the parties’ intention of ‘opting-in’. As explained to the Defendant in the course of the Hearing, the SCT offers an informal approach to dispute resolution, and I am of the view that the parties would benefit from the court-mandated mediation session imposed by the SCT in the course of proceedings brought before it. His claims regarding the complexity have not been substantiated and therefore I am not convinced that this Claim relates to more than a loan agreement.
13. For the above cited reasons, I find that the DIFC Courts has jurisdiction over this Claim.