In an action initially filed before Abu Dhabi Court, the Court of Cassation held that unless proven otherwise:
- Electronic Emails should be afforded due evidential weight; and
- Electronic Emails shall be treated as an original copy once the transmission of the email from the sender to the recipient is proven.
The Abu Dhabi Court held further that the doctrine of
"Exceptional Circumstances," which gives the judge the
right to intervene and to reduce a broker's commission does not
apply if the commission is fixed.
A commercial action was filed by a brokerage company ("the Claimant") against a local contracting company ("the Defendant"). The Claimant sought the following from the Court:
- Confirmation of an attachment order issued from the summary judge;
- An order that the Defendant pay brokerage commission amounting to AED 29,812,646; and
- The Defendant filed a counterclaim against the Claimant in which the Defendant requested, amongst other things, that the actual commission due to the Claimant be reduced from 2% to 0.5 %.
Facts of the case
The Claimant asserted that it had managed to source one purchaser to buy five towers ("the Towers") in the Al Reem Island development in Abu Dhabi, and that on 22nd Jan 2008 a sale agreement for the concerned towers was concluded between the Defendant and the purchaser for the sum of AED 1,490,632,260 (approximately AED 1.5 billion). The Claimant further averred, however, that the execution of the sale agreement was followed by the execution of an agreement between the Defendant and the Claimant, wherein the Defendant committed itself to pay the Claimant 2% of the purchase price of the Towers as commission. The total commission was stated by the Claimant as AED 29,812,646. The Claimant argued that it had been agreed between the both parties that:
- 1% of the commission was to be paid to the Claimant by the Defendant upon receipt of the first installment from the purchaser (being 5% of the total purchase price); and
- The remaining 1% of the commission was to be paid to the Claimant by the Defendant upon the receipt of the second installment that amounts to 5% of the total purchase price within seven days of receiving the notice of payment.
The Claimant asserted that the Defendant had received both the
first and second installments from the purchaser but had refused
and/or failed to pay the due commission to the Claimant. The
Claimant further particularised that the Defendant had acknowledged
that it was obliged to pay the commission, and that the Defendant
had undertook, by way of an electronic email sent on 1st May 2008,
to pay the commission in nine installments (i.e. AED 3,312,516.13
on a monthly basis), with such installment payments to commence
from 23 May 2008.
On 23rd May 2009 an attachment order was issued over the Defendant's premises, bank accounts and vehicles. As stated above, the Defendant filed a Counterclaim against the Claimant. In addition to requesting that the Court reduce the commission due to the Claimant from 2% of the purchase price of the Towers to 0.5% of the purchase price, the Defendant also sought an order that the Claimant pay AED 350,000,000 to the Defendant by way of material and moral damages. In this regard, the Defendant asserted that it had suffered a loss of reputation due to the spread of rumors regarding the suspension and cancellation of work in the Towers project, which rumors the Defendant claimed began to be circulated in the market after the Claimant filed its case in Court. The Defendant also requested that the Court appoint an expert to assess the damages in this regard.
Court of First Instance
The Court of First Instance ruled in favor of the Claimant and ordered the Defendant to pay commission amounting to AED 29,812,646. The Defendant appealed the decision.
Court of Appeal
The Court of Appeal reversed the decision of the Court of First Instance. The Court of Appeal reduced the amount of commission due to the Claimant by the Defendant to AED 14,905,322.60. Both the Claimant and the Defendant appealed to the Court of Cassation.
Court of Cassation
Arguments Presented by the Claimant
The Claimant argued that the Court of Appeal had erred in its
decision to amend the amount of the commission to 1% of the total
purchase price because the Defendant received 10% of the total
purchase price. The Claimant further argued that the parties had
previously agreed to reduce the commission from 4% to 2%, and that
the Defendant had committed itself in the email dated 1st May 2008
to pay commission amounting to AED 29,812,646 by nine monthly
installments, commencing on 23rd May 2008.
Court's Decision - Claimant's Appeal
The Court of Cassation interpreted Articles 4 and 11 of the Electronic Transaction and E-Commerce Law (Law No.1 of 2006) to mean that, unless proven otherwise, electronic emails should enjoy due evidential weight, shall be considered as an original copy and shall be admissible as full evidence once the transmission of the email from the sender to the recipient is proven. The Court of Cassation held further that the content of electronic emails cannot be disputed unless the concerned party denies its issuance or signature, or if it is proven that what is produced does not match the original.
The Court held also that acceptance and offers may be expressed by electronic emails. The Court clarified this to mean that it is permissible for offers and acceptances to be contained within separate emails. With specific reference to the facts of the case, the Court determined that it was clear that the Defendant had confirmed in its email to the Claimant dated 1st May 2008 that it would pay 2% as a commission. The Court of Cassation agreed that the Court of Appeal had erred in its decision to amend the commission due to the Claimant.
Arguments presented by the Defendant
The Defendant argued that the Court of Appeal erred in its decision that the commission should not be less than 2% as per the customary norms in the UAE. The Defendant further argued that the commission due to the Claimant ought to be adjusted in light of the global financial crisis, because it had become burdensome for the Defendant to pay the previously agreed commission due to the worldwide credit crunch.
The main grounds of the Defendant's appeal can be summarised as follows:
- The credit crunch constitutes an exceptional circumstance that could not have been foreseen by the Defendant and which rendered the Defendant's obligations onerous but not impossible;
- That accordingly, the commission should be reduced from 2% to 0.5%;
- That the court should have appointed an expert to assess the damages suffered by the Defendant as a result of the rumors that had circulated throughout market after the Claimant filed the case.
Court's Decision – Defendant's
The Court of Cassation interpreted Articles 2 and 255 of the UAE Commercial Transaction Law (Federal law No 18 of 1993) to mean that whenever parties fixed the amount of commission in a sale agreement, the commission should be due for payment to the broker once the transaction has successfully been completed between the parties. The result of this finding was that the doctrine of "Exceptional Circumstances," which gives the judge the right to intervene, and, for example, to reduce the amount of commission due, does not apply in this case. According to the Court of Cassation the doctrine of Exceptional Circumstances should be applied only to continuous contracts where the performance extends over a period of time. The result of this finding was that if a debtor was lax in the performance of a continuous contract and an exceptional circumstance occurred during such performance and rendered his obligation onerous, the debtor should not benefit from his negligence and should not be able to claim the benefit of the doctrine of Exceptional Circumstances.
The Court of Cassation also determined that the gross exploitation cited in the Defendant's argument did not apply in this case as it did not meet the conditions stipulated by Articles 187, 188 and 189 of the Civil Transaction Law (Federal Law No. 5 of 1985 as amended by Federal Law No. 1 of 1987).
Finally, the Court of Cassation held that the documents provided by the defendant were not sufficient to prove the allegation that it had suffered moral damages and a loss of reputation as a result of the rumors that had circulated in the market. With respect to the Defendant's argument that an expert should have been appointed to determine the damage caused to the Defendant's reputation, the Court held that if it is capable of assessing the facts of a case, the appointment of an expert is not compulsory.
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