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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> Nawaf v (1) Nasib (2) Nazareth [2024] DIFC SCT 202 (28 August 2024) URL: http://www.bailii.org/ae/cases/DIFC/2024/DSCT_202.html Cite as: [2024] DIFC SCT 202

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Nawaf v (1) Nasib (2) Nazareth [2024] DIFC SCT 202

August 28, 2024 SCT - JUDGMENTS AND ORDERS

Claim No. SCT 202/2024

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

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

IN THE SMALL CLAIMS TRIBUNAL OF DIFC COURTS
BEFORE H.E. JUSTICE MAHA AL MHEIRI

BETWEEN

NAWAF

Claimant

and

(1) NASIB
(2) NAZARETH

Defendants

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Hearing :	11 July 2024
Judgment :	28 August 2024

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JUDGMENT OF H.E. JUSTICE MAHA AL MHEIRI

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UPON this Claim being filed on 20 May 2024

AND UPON this Claim having been called on 11 July 2024 for a Jurisdiction Hearing before H.E. Justice Maha Al Mheiri, with the Claimant and Defendants’ representative in attendance

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

IT IS HEREBY ORDERED THAT:

1. The First Defendant’s jurisdictional challenge is denied, the DIFC Courts have jurisdiction to hear and determine this claim.

2. The Claimant’s Claim against the Second Defendant is dismissed

3. Each party shall bear their own costs.

Issued by:
Hayley Norton
SCT Judge and Assistant Registrar
Date of Issue: 28 August 2024
At: 10am

THE REASONS

The Parties

1. The Claimant is Nawaf (the “Claimant”), an individual filing a claim in relation to the renovation of his villa located in Dubai.

2. The Defendant is Nasib (the “First Defendant”), a contractor company located in Dubai, UAE.

3. The Second Defendant is Nazareth (the “Second Defendant”), owner of the First Defendant.

Background and the Preceding History

4. The Claimant and the First Defendant entered into a contract agreement dated 28 July 2023 for the provision of renovating the Claimant’s villa located in Dubai (the “Renovation Agreement”). The parties agreed as per the Renovation Agreement that the works carried out in the Villa will be for AED 1,150,000 including VAT.

5. The parties agreed that the renovation should start on 31 August 2023, and to be completed within 16 weeks from the start date. There was a disagreement and delays to the project, with multiple variations through email of the Renovation Agreement due to delays caused by the First Defendant and other service providers.

6. This Claim relates to the refund of amounts paid to the First Defendant for the works carried out by them in respect of the aforementioned project. The First Defendant has failed to deliver the renovation within the time frame as agreed between the parties.

7. On 20 May 2024, the Claimant filed a Claim in the DIFC Courts seeking refund of the advance paid in the amount of AED 421,995 and damages.

8. On 27 and 29 May 2024, the Defendants filed an Acknowledgment of Service setting out their intention to dispute the jurisdiction of the DIFC Courts. In line with the rules and procedures of the Small Claims Tribunal (the “SCT”), this matter was referred to me for determination, pursuant to a Hearing held on 11 July 2024.

The Jurisdictional Challenge

9. The Defendants contest the jurisdiction of the DIFC Courts on 3 grounds, the first ground concerns the absence of a contract between the parties, while the second ground concerns the governing law and jurisdiction, and the third being the Second Defendant is not contractually responsible for the Renovation Agreement.

First Ground

10. The Defendants argue that the Renovation Agreement submitted by the Claimant does not reflect the final agreement between the parties.

11. The Renovation Agreement submitted is only part of a negotiation process, which the Claimant did not agree upon and continued to challenge the price. On 1 August 2023, the Defendants sent the first draft to the Claimant for signature, which was not signed by the Claimant as he challenged the price.

12. The Claimant’s assertion that the Renovation Agreement was signed on 28 July 2023 is inconsistent with this fact, as the Claimant signed the Renovation Agreement at a later stage.

13. The parties engaged in a sequence of communications between the dates of 1 August 2023 to 24 August 2023 in relation to the final summary and bill of quantity documents to the Claimant, indicating the finalized project cost of AED 1,199,257.50 inclusive of VAT, and requested any further clarifications before proceeding with the advance payment. This communication was well past the purported signing date of 28 July 2023.

14. On 24 August 2023, the Defendants sent the final summary and BOQ documents to the Claimant, indicating the finalized project cost of AED 1,199,257.50 inclusive of VAT. This further casts doubt on the validity of the Claimant's assertion regarding the Renovation Agreement date and jurisdiction.

15. In reply the Claimant submits that the Renovation Agreement, dated 28 July 2023, between the parties was signed by him in his personal capacity and by the Second Defendant and on behalf of the First Defendant. The Renovation Agreement was physically brought by the Second Defendant to the Claimant’s office premises in the DIFC around or during the first week of August 2023.

16. The Defendants have continuously claimed and received money under the Renovation Agreement since inception of the contract, as part and in accordance with contractually agreed terms.

17. Upon reviewing the parties’ submissions, I have reached the conclusion that a valid agreement was presented by the Defendants to the Claimant, and by way of email the parties amended the content by sending the updated terms and conditions. While the amendments were not signed in a formal agreement, it is considered as part of the Renovation Agreement.

18. The Defendants were aware of the terms and accepted the transfer of money to proceed with the renovation as stated in the Hearing. The Court acknowledges that the Claimant performed his obligation as set out in the terms of the Renovation Agreement and the amendments to the Renovation Agreement by transferring money to the First Defendant.

19. It is clear that the intention of the money transfer was to carry out contractual obligations. The Court is of view that the Renovation Agreement is valid and enforceable and all the amendments and negotiations to the agreement’s clauses are amendments to the original Renovation Agreement dated 28 July 2023.

Second Ground

20. The second ground was that the Renovation Agreement stipulates that the method and forum of dispute resolution is DFSA Courts, as shown below:

“Article 10 GOVERNING LAW AND DISPUTE RESOLUTION

10.1 Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, shall be settled amicably. If the dispute cannot be settled within 90 (ninety) days after one party notified the other party, the dispute shall be referred to and finally resolved by the DFSA courts.”

21. The Defendants argue that Clause 10 of the Renovation Agreement refers to the method and forum of the dispute, being the DFSA Courts. The Renovation Agreement explicitly outlines the governing law and jurisdiction for any disputes arising from the contract is the "DFSA Courts" rather than the DIFC Courts.

22. The Defendants maintain their position that they have not elected to opt-in to the jurisdiction of the DIFC Courts with respect to the Claim by contesting the jurisdiction of the DIFC Courts. Article 7 concerning the choice of governing law and jurisdictions of the Contract Law, DIFC Law No. 6 of 2004, states:

"The Law relating to Application of DIFC Laws makes provision with respect to the choice by parties of governing law and jurisdictions in a contract."

23. The Defendant argues that the parties did not choose DIFC laws and jurisdiction, the Renovation Agreement explicitly mentions "DFSA Courts" which indicates a clear and deliberate choice by both parties to exclude DIFC jurisdiction.

24. In reply, the Claimant argues that the right forum to hear the dispute is the DIFC Courts. The Claimant started negotiations in December 2022 with the Second Defendant, who is the Managing Director and shareholder of the First Defendant. On 17 January 2023, the first draft of the Renovation Agreement was shared by the Second Defendant. The draft Renovation Agreement mentioned the “court of first instance in Dubai” as the appropriate jurisdiction for dispute resolution.

25. On 21 January 2023, the Claimant responded via WhatsApp message with his comments on the Renovation Agreement, this included “DFSA Courts” as the appropriate jurisdiction for dispute resolution in addition to other suggestions.

26. On 23 January 2023, the Second Defendant responded via email, the email clearly stated that the Second Defendant accepts the DFSA jurisdiction for dispute resolution and attached the revised Renovation Agreement.

27. The Renovation Agreement was concluded much later in the year due to delays in obtaining approvals by the First Defendant from the competent authorities. However, the earlier drafts formed the basis of the Renovation Agreement, hence the jurisdiction in the agreement as stated in clause 10.1 signed by both parties shows the clear intention of the parties that any disputes arising from or relating to the terms of the contract will be referred to the courts in the DIFC for resolution and settlement. In essence, both parties intended for clause 10.1 of the contract to state the DIFC Courts instead of DFSA for the resolution of any disputes between the parties.

28. In accordance with DIFC Law No. 10 of 2004, as a Tribunal of the DIFC Courts the SCT only has the power to hear and determine claims within the jurisdiction of the DIFC Courts. The Law No. 12 of 2004 in respect of The Judicial Authority at the Dubai International Financial Centre (as amended) (the “JAL”), lays out the various jurisdictional routes, as set out below:

“(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;

(d) Appeals against decisions or procedures made by the DIFC Bodies where DIFC Laws and DIFC Regulations permit such appeals;

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

29. In review of Clause 10 of the Renovation Agreement, I note that the Claimant had the intention of using the DIFC Courts in case of dispute at all times. The Court is of view that the subjective intention of one of the parties is not relevant at common law, it is the mutual intention of both parties to be derived objectively from the words they have used, viewed in their context for it to be relevant and understood.

30. In further review of the Renovation Agreement, the Court will give meaning to the words the parties have used, and the cogent argument behind it. When the Renovation Agreement was negotiated before the signing of the Renovation Agreement Dubai Courts was put in the agreement in case of dispute, which the Claimant then wanted to amend to DFSA. The term ‘DFSA’ leads the Court to conclude that they intended to use DIFC Courts. The Court concludes that there is a cogent argument that in Clause 10 of the Renovation Agreement the word DFSA should be read as DIFC, because otherwise the provision is meaningless.

31. Pursuant to the JAL, the DIFC Courts can exercise its jurisdiction over a matter that is unrelated to the DIFC, should the parties have agreed in writing that any dispute arising between them would be referred to the DIFC Courts for adjudication. Such a provision would allow the parties to ‘opt-in’ to the DIFC Courts’ jurisdiction, provided that it clearly demonstrated the parties’ intention to do so.

32. Pursuant to Article 15 of DIFC Contract Law, a valid offer to contract is defined as follows:

“A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the intention of the offeror to be bound in case of any acceptance”

33. Therefore, I determine that there is a valid agreement between the parties, and therefore a valid dispute to be brought within the chosen jurisdiction, being the DIFC Courts.

34. Accordingly, the Defendants’ jurisdictional challenge is denied and the DIFC Courts have jurisdiction to hear this matter.

Third Ground

35. The third ground is that the Claimant filed a case against the Second Defendant without legal standing. The Renovation Agreement submitted by the Claimant includes only the name of the First Defendant and omits the name of the Second Defendant. Therefore, the Claimant filed the case against the Second Defendant without legal capacity as he is not a party to the Renovation Agreement submitted by the Claimant.

36. Therefore, the DIFC Court lacks jurisdiction over the Second Defendant since he is not included in the Renovation Agreement, and not a party to the Claim.

37. The Court agrees with the Second Defendant this Claim relates to Renovation Agreement signed between the Claimant and the First Defendant, in review of the Claim Form and the documents filed in support of it, it appears that the Claimant, upon the filing the Claim Form named the Second Defendant as part of the Claim for being owner of the First Defendant and partner.

38. Accordingly, the Court shall dismiss this Claim against the Second Defendant and amend the Claim form accordingly.

39. Each party shall bear their own costs as to the jurisdictional challenge.