BSA Ahmad Bin Hezeem & Associates

B-2-B Dispute Resolution

B-2-B Dispute Resolution

July, 2016
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For some while, the Dubai Department of Economic Development (DED) has had a Commercial Control and Consumer Protection Department (CCCPD), dealing with consumer disputes. However, it has recently set up a new sub-department, called the Business Protection Department (BPD) which will function as a local commercial dispute-resolution and settlement body.

In the past, there were numerous disputes among businesses and professionals in Dubai but although the CCCPD had means of dealing with consumer disputes it had no way of dealing with business-to-business (B-2-B) ones. As a result, even those disputes which should have been easily resolvable became contentious and adversarial in nature, so a more convenient, affordable and amicable alternative means was needed. This led to the establishment of the BPD in 2015, following internally conducted studies. This Department has already handled hundreds of cases, with a high success rate and its internal working regulations are an extension of the CCCPD operating manual.

The mandate

According to the CCCPD, the BPD is authorised to provide a ‘local commercial dispute settlement service’ in Dubai ‘by intermediation or by other amicable settlement methods’. It bases its activities on informal intermediation, primarily based on standing law, to arrive at (preferably) amicable settlements, between two entities or companies licensed by the DED. It has also been taking on an educational role making sure traders in Dubai understand the laws and procedures required to create a mutual safe trading environment. It runs workshops, conventions, presentations, and distributes literature to all businesses and entities licensed under DED authority, in order to spread awareness, and undertakes ‘economic studies’ on Dubai’s business sector.

Advice is also given to newly DED-licensed businesses and the business sector on unwritten conventions and business habits which are unique to Dubai. Traders are also told about the existence, powers and availability of the BPD as a forum for judiciously settling disputes.

Jurisdiction

The BPD is an ‘informal dispute resolution body’ and its ‘jurisdiction’ is its limited authority to assist in easing backlogs in the Dubai Courts. As a CCCPD sub-department handling B-2-B disputes, it works under the CCCPD authority on a sub-set of consumer-protection disputes.

Its jurisdiction extends to businesses registered with and licensed under the DED under a minimal share capital threshold of 200,000 AED. However, both parties do not need be present in Dubai for the BPD to be asked to conduct a mediation conference.

Even if one party is headquartered outside Dubai, as long as it trades in Dubai, and has a DED license to do so, it can either be summoned as a respondent or complainant.

Foreign traders and consumers

The BPD cannot assume a mediation role for foreign traders or entities which are not licensed by the DED, primarily because they will not have any meaningful power or authority to ‘persuade’ the other party to settle before heading to the courts, or be able to apply sanctions.

Disputes involving individuals or consumers who are not licensed under the DED are also beyond its jurisdiction.

Commercial only

The BPD can also only hold mediation conferences, if the dispute is strictly commercial in nature, and it cannot accept any role in disputes involving insurance, real estate, banking, finance, or labour matters which have a dedicated board or department, and more appropriate statutorily empowered tribunals. It is not a tribunal or a substitute for actual adjudication of disputes in the Courts. It is simply a more convenient, cost-effective alternative way to resolve disputes.

Procedures

Companies or individuals representing companies who wish to consult and engage the BPD’s services register their grievance either via an e-mail to businessprotection@dubaided.gov.ae or by calling +971600545555, or they can file them manually by visiting the Commercial Suits Section in the DED’s main building or one of the CCCPD branch offices which form an integral part of every operable DED Authority branch. They then provide an official letter and documents which evidence the veracity of the claim and a non-refundable fee of 2,020 AED is paid on filing.

Preliminary checks

Before even accepting a file, BPD arbitrators check a number of things including whether the complainant is a representative of the company, if the company is a trading establishment licensed by and registered with the DED and, if the dispute is commercial in nature. They also look at whether the dispute should be looked at by another judicial, legal or administrative authority and in rarer cases, on a prima facie determination of the complaint’s initial validity, decide if the dispute merits further BPD involvement.

If the BPD Board accepts the complainant has satisfied these criteria, they contact the party the complaint has been filed against. The entire setting is amicable, and proceedings are meant to promote an atmosphere of ‘informality’. However, the complaint will have an ‘official’ character. The BPD can settle disputes by phone, or conference calls, if both parties agree.

There is a promise that all cases will be determined expeditiously and flexibly within ‘10 business days’. However, this time limit should not be taken as an official guarantee, as the BPD Board has the discretion to take more time if cases require.

Final decisions

The dispute resolution method itself is more discretionary than binding. The BPD, has limited, very specific competencies, e.g. it has no ‘binding’ authority to enforce any of its rulings. The Board base their determinations on expertise and familiarity with the subject matter of each dispute. A more adhoc case by case approach is used rather than strict procedural guidelines and a formal schedule. They do not necessarily provide exhaustive reasons and legal arguments in their ‘judgments’ in the way a court judge would justify their determinations, although they will do this where possible with reference to explicit legislative or contractual provisions in more clear-cut cases.

They will not necessarily provide internal BPD precedence for their decisions, although they have already settled hundreds of cases. They do not automatically keep comprehensive documentation or maintain records and minutes of all their mediation conferences and meetings.

Appeals

Parties cannot appeal a BPD Board final decision. The highest authority for determining such cases rests with the BPD Board itself because the entire process is meant to be amicable. However, the BPD cannot bind parties to its final decision or determination and if parties choose not to abide by the decision, they are free to resort to the Dubai Courts. In addition, at any point during an ongoing BPD case, either or both parties can opt to proceed unilaterally to any other appropriate judicial tribunals, and the mediation and the BPD Board’s jurisdiction, instantly ceases. Neither the process nor the decision unilaterally voids parties’ rights from exercising their statutory right to dispute adjudication in the Dubai Courts.

Parties’ provisional or interim adherence to the BPD Board’s authority is not deemed to be a unilateral waiver of that right. However, should a party opt to exit the mediation this may, however remotely, be construed against the party by their opponents in the course of a trial, and in rarer instances, there could be a ‘judicial presumption’ against them for having done so but this would not be guaranteed.

Deterrents and punitive powers

As a sub-department of the DED, the main licensing authority in Dubai for commercial entities which wish to pursue commercial activities in Dubai, the BPD has been known to block or temporarily suspend the license of DED-registered or licensed traders, businesses, or entities. Their penalties include 500 AED fines for not appearing when summoned after having accepted BPD mediation in principle, and for not abiding by Board’s decisions and findings after having accepted, the mediation process in principle.

Exiting the jurisdiction

If either party decides to ‘exit the jurisdiction’ or simply leave the country while the dispute remains unsolved, the BPD reserves the right to apply sanctions including blocking or suspending trade licenses.

This can be done if the absconding party has left without attending to or addressing the dispute or complaint launched against them, or has left midway through the mediation or without or before abiding by the decision after the mediation process had ended and the decision has been issued. However, the statutory basis of the BPD’s deterrent or punitive powers are not clear.

They are meant to be an informal but ‘official’ dispute resolution body tasked with settling disputes amicably rather than contentiously. Punitive sanctions, instruments, tools and measures against non-cooperative or non-compliant parties are judicial powers which no DED department legally enjoys or can conceivably wield, as the DED as a whole is an administrative, not a judicial body. Therefore, the BPD is a dispute resolution and mediatory body, not a statutorily-empowered ‘inferior’ administrative tribunal and compliance with its decisions is not statutorily enshrined in any standing law, statute, regulation, ordinance or legislation. Its authority stems from its amicable nature and its ability to encourage and convince parties, through unanimity, not coercion, to accept its decisions instead of going to court. Its authority also rests on the provision of the ‘option’ for either or both of the parties to accept BPD mediation in the first place, as this mediation is not compulsory or required (although the Courts may remand some claims in the pretrial or preliminary stages to the BPD Mediation Board if they feel the case can be more adequately settled and resolved there).

As a result if a party chooses not to accept BPD mediation, and await formal process service in line with trial hearings at the Courts, can they be conceivably ‘penalized’ for freely choosing not to engage with the BPD just because the other party had done so, as by the BPD’s own admission, the Dubai Courts enjoy final binding authority in any settlement or case resolution once they are engaged in line with correct procedure?

Relationships with Dubai authorities

The Dubai Court may take ‘judicial notice’ of parties’ prior attempts at BPD mediation. The BPD can be asked to provide documents of interest to the Court, or those which are material and pertinent to the successful adjudication of the case, as per the Court’s determination. However, this has not happened often. The BPD maintains contacts with the Dubai Courts, and liaises with them via a specialised judicial-authorities contact. The Courts use BPD expertise or knowledge, especially when the BPD is asked to provide documents for use in a trial, case, action or commercial suit, where the parties have been involved in a BPD mediation. Parties can file for a Court Order or warrant or summons request to secure the BPD’s production of documents. The instances and ‘proof thresholds’ the summoning party must offset are still to be determined by any rigorous case-law, as this method has not been used yet.

Parties can also petition the Court to issue a judicial warrant, or the Courts can summon the BPD or issue orders for the production of evidence on its own accord. In these cases, the BPD Board presumably plays the role of ‘intervenors’, which is vaguely comparable to ‘amicus curae’ or ‘friends of the Court’, as they are invited to file briefs and provide testimony at the Courts, not necessarily at the litigating parties’ behest.

Both these mediums function as channels through which the BPD can effect standing, but there is no information on how and if the BPD can be called upon as intervenors, witnesses, or for motions to produce documents, as it is a relatively new department.

The Courts also have to adequately determine how appropriate any BPD testimony in the form of motions to produce documents is, especially if it can be used in support of one party’s position or claim, or be used as a judicial presumption against the party who lost the BPD mediation.

The BPD also maintains contact with the Dubai Police and can be called on to produce documents to facilitate and assist in police investigations, e.g. where commercial quarrels between businesses involve bounced or dishonoured cheques.

 

Published: July 2016
Practice: Corporate and M&A
Publication: Emirates Law Business & Practice – Dubai Judicial Institute
Authors: Dr. Ahmad Bin Hezeem, Jimmy Haoula and Akram Rashid

 

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