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Counting the Costs – The Abu Dhabi Government has amended its judicial fees regime

Counting the Costs – The Abu Dhabi Government has amended its judicial fees regime

April, 2014
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The Abu Dhabi Government has amended its judicial fees regime. Mazen Talih, Associate at BSA, Abu Dhabi office looks at what this means to litigators.

What’s happening?

The Abu Dhabi Government has passed a law – Abu Dhabi Law No. 6/2013 – which regulates and determines, among other things, court fees
which must be settled by any litigant wishing to use the local courts, for dispute resolution purposes. It was passed at the end of 2013 and came into effect on 1 January 2014 without any transitional arrangements. Basically, it replaced Abu Dhabi Law No. 16/2008, which previously regulated applicable court fees in the Emirate but only regulates court fees payable before the local courts and not other Federal courts,” Mazen Talih says.

“Court fees are fees which must be settled by any litigant in order to fi le a lawsuit before the competent courts. These include fees payable to the Emirate’s Court of First Instance, Court of Appeal and Court of Cassation as well as court expert fees. However, fees in this sense do not include legal fees, advocacy fees or any other costs, including translation costs or party appointed expert witness costs.”

“Court fees are usually determined on the basis of the monetary value claimed under a certain lawsuit. Although, there are exceptions like claims with undetermined value and personal status claims. The prevailing party in a lawsuit is usually awarded court fees,” Talih explains.

Comparisons with Elsewhere?

“Currently, in Dubai, court fees payable for civil or commercial claims fi led before the Dubai Courts of First Instance, amount to 7.5% of a claim’s value for  those with a determined value, subject to a cap of 30,000 AED.”

“Those payable for filing appeals against judgments issued by the Dubai Courts of First Instance are 1.5% of a claim’s value for those with a determined value, capped at 6,000 AED.”

“Court fees payable for civil or commercial claims filed before the UAE Federal Courts amount to 4% of a claim’s value subject to a cap of 30,000 AED, on the other hand, for claims fi led before the Federal Courts of First Instance and the Federal Courts of Appeal. In the other Emirates, except Abu Dhabi, court fees are also subject to a ceiling,” Talih explains.

“When comparing these fees with arbitration fees payable for the registration of arbitration cases with the Abu Dhabi Commercial Conciliation & Arbitration Centre, a number of factors, come into play, including the disputed amount, the number of arbitrators and the complexity of the case.”

“Any party who wants to register an arbitration case with the Centre, must fi rst pay a one-time non-refundable 1,000 AED fee. They must also settle the appointed arbitration panel’s fee, which is worked out on an ad valorem basis.”

“So, if a claim’s value amounts to 3,000,000 AED, the fee is 109,000 AED or 272,500 AED for a panel of three arbitrators. Where a claim’s value
is 300,000,000 AED, the applicable fee for a sole arbitrator panel amounts to 645,000 AED or 1,317,500 AED for a three arbitrator panel. In comparison, the court fees payable before the Abu Dhabi Courts of First Instance for a claim value of AED 300,000,000 would amount to 9,000,000 AED under the new law.”

“However, a further fee is levied by the Abu Dhabi Commercial Conciliation & Arbitration Centre in return for its services, which amounts to 15% of the arbitration panel’s fees. The Centre’s director may also modify the arbitration panel’s fees in line with the case’s particular circumstances and consider any complexities which may arise during the proceedings.”

What’s driving this?

“These changes are intended to prevent inflated and speculative claims. The hope is because of the higher fees now payable by litigants, people may be encouraged to use alternative dispute resolution and amicable settlements more often.”

“The change is in line with the general direction of the judicial authorities in Abu Dhabi, who seem to want to encourage more alternative dispute resolution,” Talih says.

Most significant changes?

“Under the old law, court fees which applied for filing a lawsuit before the Courts of First Instance amounted to 4% of a claim’s value (if the claim had a determined value), subject to a 20,000 AED ceiling which applied for civil and commercial claims.”

“The maximum amount of court fees payable for filing a lawsuit before the Courts of First Instance, was capped at 20,000 AED, irrespective of a claim’s value. The previous ceiling at which fees were capped for civil and commercial claims has been abolished.”

“Article 28 of the new law stipulates any party wishing to fi le a civil or commercial claim before the Courts of First Instance, must settle court fees
amounting to 3% of a claim’s value, without any applicable ceiling and they are no longer subject to any cap.”

“For example, for those with a claim value of 1 million AED in a civil or commercial case, court fees will amount to 30,000 or 300,000 AED for cases with a claim value of 10 million AED.”

“In addition, court fees payable for fi ling appeals against judgments issued by the Courts of First Instance are 3% of the claim value for claims with a determined value, whether the appeal is fi led by the plaintiffs or defendants. Although, in this case the fees have remained capped at 10,000 AED, in line with the previous law’s provisions,” Talih explains.

Other approaches

“Public entities are exempted from the settlement of court fees as are employees filing labour cases against employers, whether before the Abu Dhabi Courts of First Instance, Courts of Appeal or Courts of Cassation,” Talih explains.

“Court fees payable before the Abu Dhabi Courts of Appeal for appeals filed after the 1 January 2014 will be computed in line with the new law’s provisions. Nevertheless, appeal fees under the new law remained capped at 10,000 AED.”

“Any party who wants to fi le an appeal before the Abu Dhabi Courts of Appeal will be bound to settle 3% of the claim’s value, subject to a ceiling of 10,000 AED.”

Comparing other types of case

“Under the new law, court fees applicable for registration before the Abu Dhabi Courts of First Instance of any claims other than commercial or civil claims are subject to a cap of 30,000 AED. Cases can be separated into commercial, civil, labour, personal status and criminal categories. However the court fees payable for the registration of personal status, criminal and or labour cases filed by employees are subject to a ceiling lower than AED 30,000,” Talih explains.

“So labour cases filed by employees against employers before the Abu Dhabi Courts, are exempted from Court fees, whether they are heard before the Abu Dhabi Courts of First Instance, Courts of Appeal or Courts of Cassation.”

“However, labour cases fi led by employers against employees before the Abu Dhabi Courts of First Instance, will be subject to court fees amounting to 3% of the claim value, subject to a cap of 30,000 AED.”

“Court fees applicable to personal status claims fi led before the Abu Dhabi Courts of First Instance and Courts of Appeal, will not exceed 600 AED in each of these stages.”

What’s the impact?

“These changes could discourage litigants who are prone to high value speculative litigation and inflated monetary claims. For example, it could impact those with claims involving general damages, loss of opportunity or damage to or loss of reputation.”

“There could also be a positive impact on defendants who could be prone to procrastination, tempted to delay the resolution of indefensible
disputes or who fail to pay what may be a straightforward debt.”

“However, the new law could also adversely affect individuals and small businesses who want to make justifiable claims before the Abu Dhabi courts, as they may lack the necessary fi nancial resources to pursue major claims in what could now become a costly litigation process.”

“Going forward litigants, whether plaintiffs or defendants in Abu Dhabi will need to first seriously analyse their claim’s chances of success, counterclaim or defense, as tends to happen in other jurisdictions where the winning party’s legal costs are payable by the losing party, which can discourage exploratory types of litigation.”

“Legal practitioners will also now have to advise their clients very carefully on the chances of success, as opposed to simply undertaking any new instructions regardless of the potential outcome as they may have done when fees were likely to be minimal.”

“This law is a welcome step which may improve the legitimacy and reasonableness of lawsuits and encourage alternative dispute resolution initiatives,” Talih concludes.

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Published: April 2014
Publication: Lexis Nexis Middle East
Title: Counting the Costs – The Abu Dhabi Government has amended its judicial fees regime.
Practice: Litigation
Contact: Fadi Hassoun

 

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