A surge in business and trade activity in Dubai has resulted in an increase in the number of legal cases at the courts of the emirate’s financial free zone.
The dirham value of legal claims and counterclaims registered at the DIFC Courts jumped by 81 per cent last year, with the number of cases both large and small filed in the free zone’s courts continuing to rise.
The DIFC Courts registrar Mark Beer said that the sum of claims and counterclaims in cases filed rose to Dh1.76 billion last year, up from Dh971.2 million in 2013.
The total number of claims and counterclaims registered in the free zone’s Court of First Instance rose to 36 during the past year, up from 28 in 2013, with the average amount claimed rising by 25 per cent to Dh42m.
“Business activity has been increasing over the past year or so in both Dubai and the DIFC itself, and this has brought a rise in the number of cases filed in the DIFC Courts,” said Adrian Chadwick, a Dubai-based partner with Hadef & Partners.
Dubai was the fifth-highest performing metropolitan economy in the world last year, according to a survey from the Brookings Institution in January, as an increase in trade and tourism boosted the emirate’s employment and GDP per capita during the period.
The emirate’s economy will grow by 4.5 per cent this year and 4.6 per cent next year, the IMF projects.
The court’s small claims tribunal (SCT), which handles claims of up to Dh100,000 (or Dh500,000 when both parties agree), recorded an even bigger increase in business during the year. The number of cases heard by the SCT rose 70 per cent last year to 126 from 74 in 2013.
Last month the courts announced a consultation on a draft order pertaining to the SCT that would give the tribunal powers to hear disputes of up to Dh500,000, or Dh1m when parties agree.
The order is likely to come into effect before the end of the quarter.
The increase of claims, however, does not correlate to an increase in judgements handed down, with about 92 per cent of the total claims filed ending in settlement and not requiring a trial.
Ninety per cent of claims in the small claims tribunal were settled in fewer than three weeks.
The DIFC Courts jurisdiction was expanded in late 2011, allowing parties from outside the DIFC to use the courts to resolve their disputes.
“We may now be seeing the result of that change, with claims coming through from parties inside as well as outside the DIFC Court’s previous jurisdictional limits,” said Stuart Paterson, a dispute resolution partner at Herbert Smith Freehills.
Mr Beer said that the DIFC Courts were also in discussions with the Shanghai Free Trade Zone’s court over an enforcement arrangement, declining to comment on the time scale of when such an agreement would be finalised.
The court’s chief justice, Michael Hwang, said: “Our ceaseless efforts to ensure the enforceability of DIFC Courts judgements across the globe garnered considerable success and we are steadily building into one of the world’s strongest enforcement regimes.”
The DIFC also signed enforcement agreements with the Federal Court of Australia and High Court of Kenya’s commercial and admiralty division in the past year.
These were followed by similar agreements with the Supreme Court of Singapore and the US Federal District Court for the southern district of New York in January and last month, respectively
“We’re seeing a number of attempts to bring foreign judgments and arbitration awards into the DIFC as a gateway for enforcement onshore in Dubai,” said Mr Chadwick. “If these attempts are successful we could see a further increase in the court’s workload.”
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