In a recent and notable judgment, the Abu Dhabi Court of Cassation examined issues related to procedural compliance in the issuance and notification of performance orders. The case, heard by a panel of esteemed judges, focused on the validity of notification procedures and the enforcement of a performance order issued by a lower court. This analysis sheds light on critical procedural nuances in UAE civil litigation, especially under the Federal Civil Procedures Law, and explores the Court of Cassation’s approach to determining the procedural correctness of notifications.
Case Background
The case involved a significant financial dispute between two corporate entities, with the plaintiff company seeking an order requiring the defendant company to pay approximately AED 8.3 million, along with an additional AED 500,000 in damages. The basis of the claim was a series of purchase orders that the plaintiff alleged remained unpaid by the defendant, resulting in losses. Despite an order for payment issued by the lower court, the defendant challenged the procedural validity of the notification process.
Legal Issues and Arguments
The defendant’s primary contention revolved around the alleged procedural flaws in how the notification for payment was served. The defendant argued that the notification was improperly served through “posting,” meaning it was affixed to the door of the defendant’s last known office. The defendant asserted that this method of service was inadequate and violated procedural requirements under UAE law, particularly since modern communication methods such as phone calls, emails, and digital notifications were not utilized.
Additionally, the defendant contended that the notification was sent to an outdated office address, despite the defendant having moved to a new location and updated its trade license accordingly. This oversight, they argued, hindered their opportunity to respond, resulting in a substantial procedural defect in the performance order process.
Procedural Standards in Notification: A Review
UAE civil procedures, particularly under Article 7 of Cabinet Resolution No. 75 of 2021 (amending Cabinet Resolution No. 57 of 2018), offer specific guidelines for notifying private legal entities. These guidelines stipulate that notifications can be served through various means, including phone calls, emails, and other digital methods, to ensure timely receipt. Article 63 also establishes that a creditor must notify the debtor at least five days before seeking a performance order, ensuring that all possible methods are exhausted before opting for “posting” as a last resort.
The court’s analysis underscored that while notification by posting is permissible when a company has no office or refuses service, this method should only be used after other methods have been attempted. Furthermore, the defendant highlighted a delay in notification of the performance order, exceeding the legally permissible three-month period, arguing that such delay should render the order void.
The Court’s Decision
The Abu Dhabi Court of Cassation upheld the defendant’s arguments, citing a breach of notification procedures. The court noted that under Article 65 of Cabinet Resolution No. 33 of 2020 (amending Cabinet Resolution No. 57 of 2018), a performance order must be served to the debtor within three months of issuance. Failure to meet this timeframe results in the order being “deemed as non-existent.” In this case, the performance order notification was delayed beyond the prescribed three-month period, compelling the court to invalidate the order.
The court ruled that the original judgment was procedurally flawed and reversed it, thereby releasing the defendant from the financial obligation imposed by the performance order. Additionally, the court imposed legal costs on the plaintiff for both the lower court and appellate levels, reinforcing the importance of strict adherence to notification standards in civil proceedings.
Legal Implications
This ruling emphasizes the UAE courts’ commitment to upholding procedural integrity, especially concerning notification requirements. Compliance with these standards is critical, as improper service can nullify otherwise valid claims. The court’s decision reaffirms that notification by posting should remain a last-resort measure, used only when other methods of contact are exhausted.
Furthermore, the ruling serves as a reminder to creditors to exercise due diligence in locating the correct address for service and to ensure that they utilize all prescribed communication methods. In a rapidly digitizing legal landscape, reliance solely on physical posting, without attempting modern notification means, is no longer acceptable.
Conclusion
The Abu Dhabi Court of Cassation’s judgment underscores the critical role that procedural accuracy plays in civil litigation within the UAE. The court’s stringent adherence to notification standards reflects a broader commitment to ensuring fair and transparent legal processes, giving all parties a fair opportunity to respond. This case serves as an essential reference for legal practitioners, highlighting the importance of utilizing comprehensive notification methods and adhering to statutory timelines in performance order cases.
In the UAE’s evolving legal landscape, this decision reiterates the necessity for meticulous procedural compliance and will likely influence future civil and commercial litigation practices across the country.
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