United Arab Emirates: DIFC Small Claims Court: A Practical Alternative For Resolving Employment Cases

Last Updated: 23 October 2017
Article by Rebecca Ford

The DIFC Small Claims Tribunal is becoming a popular alternative due to its speed, privacy and lower costs. This article will examine the reasons the DIFC Small Claims Tribunal is becoming the forum of choice for the resolution of employment disputes, and how to handle a claim raised in the Tribunal.

In recently published figures, the DIFC Small Claims Tribunal (the Tribunal) reported that for the period January – June, the number of cases commenced in the Tribunal rose from 79 in 2016 to 150 in 2017.  It is likely that a large proportion of those cases will relate to employment disputes.

What Type of Employment Disputes can be brought to the Tribunal?

The Tribunal was established in 2007, and aims to give parties in dispute swift and efficient access to justice, often without legal representation at the court hearings.

The Tribunal has jurisdiction to hear and determine claims within the jurisdiction of the DIFC Court where the amount or value of the claim does not exceed AED500,000, or, in the case of employment disputes, where the claim exceeds AED500,000 and all of the parties to the claim have elected in writing for it to be heard by the Tribunal.  Different rules apply to commercial disputes which are not the subject of this article.

Whilst the Tribunal is an "opt in" jurisdiction, allowing parties to commercial disputes arising outside of the DIFC to choose to adopt the DIFC jurisdiction, this remains problematic for employment disputes which arise from the UAE Law No. 8 of 1980, as amended (the Labour Law), which provides that the Labour Court has jurisdiction to hear any claim.

Why is the Tribunal popular for employment disputes?

There are a number of reasons which make the Tribunal attractive to potential parties of a dispute, the four main ones being:

  1. Conciliation Stage:  Unlike the DIFC Court of First Instance, the Tribunal process divides a dispute into two stages, a conciliation process and then a hearing if the conciliation process fails to achieve a settlement.  However, with almost 90% of Tribunal claims being settled within the first four weeks from commencement of the claim, it appears that the conciliation stage is particularly effective.
  2. Speed:  The litigation timetable is very swift.   The Court has made it relatively easy to commence a claim, and once the claim has been served, a defendant has seven days in which to file a defence.  Thereafter, the Tribunal will seek to list a conciliation hearing quite quickly.  Whilst the speed at which the first stage of the Tribunal litigation is processed can cause problems within a company (for example, it may take a few days for the claim to reach the right person within an organisation, and it may take a while to pull together the relevant documents for a defence), nevertheless it does allow the company to get on with running their business once the claim is dealt with.
  3. Privacy:  The DIFC Court of First Instance is a public forum, in which the pleadings are filed online and the hearings are posted on Youtube.  The Tribunal, on the other hand, is a private forum and judgments are anonymised.
  4. Cost:  The Court fees for commencing a claim are lower in the Tribunal than in the Court of First Instance, and with the parties encouraged to attend the hearings and represent themselves, legal fees are limited (or removed).  However, the Tribunal judge retains the discretion to allow parties to be legally represented where appropriate, and in our experience, parties may want to seek legal advice on the merits and presentation of their claim or defence prior to the conciliation hearing.  In addition, following a final hearing of the claim (where it cannot be settled), the Tribunal does not generally award costs against the losing party, unless, for example, one party has behaved unreasonably.

Complex disputes may be reallocated to the Court of First Instance and in some cases, parties to a potential dispute which exceeds AED500,000 may wish to decline the Tribunal's jurisdiction.

What can I expect of the Tribunal Process?

Briefly, the Tribunal Process is as follows:

  1. Commencement of a claim in the Tribunal is by way of Form 53/01, which is available online or from the DIFC Court Registry. The Claimant should set out the basis for the claim, and provide a summary of the remedy the Claimant is seeking and the reasons why the claimant is entitled to that remedy.  The Claimant should also attach supporting documents – for example, the employment contract.
  2. The Claim will usually be served on the Defendant by the Tribunal.
  3. The Defendant has seven days in which to file and serve a response, either admitting the claim, making an application disputing jurisdiction, or filing a defence.  The defence should contain any parts of the claim which are admitted, as well as setting out the parts which are denied and the reasons why.   The defence should also include any documents on which the Defendant intends to rely.
  4. The Tribunal will then list a conciliation hearing.  This is intended to be an informal hearing, in which the parties explore settlement with the help of the court.  Where settlement is reached, the Tribunal will issue a consent order in which the terms of settlement are issued.
  5. If the claim cannot be settled (the conciliation process may also include a second consultation hearing) the Tribunal judge will instruct the parties on the next steps for a final hearing of the claim.  Directions are likely to include any witness evidence to be submitted, the way in which the witness evidence will be examined, and any documents to be served.
  6. A final hearing of the claim will then take place, before a different Tribunal judge.

Conclusion

Whilst the speed of the process, the lack of transparency (given the private nature of the hearings), and the flexible approach to directions for a final hearing can cause concerns to parties contemplating Tribunal litigation, nevertheless there are many good reasons why parties may choose to bring a claim before the Tribunal rather than the DIFC Court of First Instance.  Ultimately, each forum exists to service different types of cases at an appropriate level (which reflects the differences in speed and cost) and ensures that parties to a dispute enjoy access to justice.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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