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You are here: BAILII >> Databases >> The Dubai International Financial Centre >> Nelly v Nick LLC [2024] DIFC SCT 053 (19 March 2024) URL: http://www.bailii.org/ae/cases/DIFC/2024/DSCT_053.html Cite as: [2024] DIFC SCT 053, [2024] DIFC SCT 53

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Nelly v Nick LLC [2024] DIFC SCT 053

March 19, 2024 SCT - JUDGMENTS AND ORDERS

Claim No. SCT 053/2024

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

In the name of His Highness Sheikh Mohammed Bin Rashid Al Maktoum,
Ruler of Dubai

IN THE SMALL CLAIMS TRIBUNAL OF DIFC COURTS
BEFORE H.E JUSTICE MAHA AL MHEIRI

BETWEEN

NELLY

Claimant

and

NICK LLC

Defendant

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Hearing :	1 March 2024
Judgment :	19 March 2024

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ORDER WITH REASONS OF H.E JUSTICE MAHA AL MHEIRI

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UPON this Claim being filed on 1 February 2024

AND UPON the Defendant filing an Acknowledgment of Service indicating its intention to contest the jurisdiction of the DIFC Courts dated 7 February 2024

AND UPON a Jurisdiction Hearing having been held before H.E. Justice Maha Al Mheiri on 1 March 2024, with the Claimant and the Defendant’s representative in attendance

AND UPON reading the submissions and evidence filed and recorded on the Court file

IT IS HEREBY ORDERED THAT:

1. This Claim be dismissed due to lack of jurisdiction.

2. Each party shall bear their own costs.

Issued by:
Hayley Norton
SCT Judge
Date of Issue: 19 March 2024
At: 11am

THE REASONS

The Parties

1. The Claimant is Nelly (the “Claimant”), an employee of the Defendant.

2. The Defendant is Nick (the “Defendant”) LLC, a company registered in Dubai, the UAE.

Background and the Preceding History

3. The underlying dispute arises over the employment of the Claimant by the Defendant pursuant to an Employment Contract dated 1 February 2022 (the “Employment Contract”).

4. The Claimant was hired as an ‘Chief Executive Officer’ with a monthly salary of AED 42,000. On 12 January 2024, the Claimant was served with a termination letter with his last working day being 29 February 2024.

5. The Claimant submits that he did not receive his salary for the months of December 2023 and January 2024, and other employment entitlements.

6. On 1 February 2024, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) claiming AED 291,766 with respect to various claims relating to his employment entitlements.

7. On 7 February 2024, the Defendant filed an Acknowledgment of Service indicating its intent to contest the jurisdiction of the DIFC Courts.

8. In line with the rules and procedures of the SCT, this matter was listed before me for a Jurisdiction Hearing held on 1 March 2024 with the Claimant and the Defendant’s representative in attendance (the “Jurisdiction Hearing").

The Jurisdiction Application

9. In its submissions, the Defendant submits that the parties are not a “DIFC Body, DIFC Establishment or Licensed DIFC Establishment”. The Defendant also adds that neither the Defendant nor the Claimant is a DIFC Establishment or Licensed DIFC Establishment. The Claimant’s Employment Contract provides that,

“The place of work is the Company’s office located in Tower, Dubai, United Arab Emirates.”

10. There is no incident or transaction related to the claim that was wholly or partly performed within the DIFC and is related to DIFC activities as the claim is related to an alleged breach of the Employment Contract (payment of salary, payment of validated expenses or respecting employment contracts terms for proper termination) and the scope of the Employment Contract is unrelated to any DIFC activities.

11. The Defendant submits that the DIFC Courts is the incorrect forum for determining the Claim, as the Defendant is an onshore company and as such any claim (such as payment of salary, payment of validated expenses or respecting employment contracts terms for proper termination) related to the Employment Contract shall be heard and determined by the competent authority for resolving disputes concerning employment relationships, namely, the MOHRE.

12. In reply, the Claimant submits that his physical presence during the majority of his employment period was within the DIFC. Although initially stationed at Tower, he was subsequently relocated to the DIFC, where he spent a significant portion of his employment. The Claimant argues that 80% of his time, was spent within the DIFC perimeter, as evidenced by his access card and the performance of his Employment Contract remained predominantly within this jurisdiction of DIFC.

Discussion

13. The jurisdiction of the DIFC Courts is determined by Article 5(A) of the Judicial Authority Law, Dubai Law No. 12 of 2004, as amended, (the “JAL”) which provides a number of limited gateways through which the DIFC Courts have jurisdiction over a claim, namely:

“(a) Civil or commercial claims and actions to which the DIFC or any DIFC Body, DIFC Establishment or Licensed DIFC Establishment is a party;

(b) Civil or commercial claims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalised or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract;

(c) Civil or commercial claims and actions arising out of or relating to any incident or transaction which has been wholly or partly performed within DIFC and is related to DIFC activities;

…

(e) Any claim or action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.

…

(2) civil or commercial claims or actions where the parties agree in writing to file such claim or action with [the DIFC Courts] whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.”

14. The Defendant is a company registered and licensed in mainland Dubai (not the DIFC free zone). The Claimant was, at all material times, an employee of the Defendant. Although the Defendant states that he attended meetings and spent a lot of his time in the Defendant’s other company located in DIFC. The Defendant is incorporated in Dubai mainland and the Claimant has been its employee at all times.

15. In relation to employment matters outside of the DIFC free zone, the DIFC Courts cannot hear and determine such disputes. Article 5(A) of the JAL reads that the DIFC Courts shall have jurisdiction over civil claims that arise out of or relate to a contract that was performed or was to be performed within the DIFC. It also states that the DIFC Courts has jurisdiction over claims to which any DIFC body is a party. As the Defendant is a Dubai registered entity, and as the Employment Contract central to the Claim was performed in the Dubai, the DIFC Courts has no connection to the claim at hand nor does it have default jurisdiction over this claim.

16. The Employment Contract states ‘United Arab Emirates employment law and regulations’, as such, I find that the DIFC Courts has no jurisdiction over this dispute due to the location and registration of the Defendant. Article 5(A) of the JAL states that the jurisdiction of the DIFC Courts stems from the Claim at hand. This Claim relates to the Claimant’s Employment Contract and the allegation that Defendant has not paid the alleged dues. Section 1 of the Employment Contract provides for:

“The Employee’s employment is at all times subject to the United Arab Emirates employment law and regulations, including Federal Law No. 8 as 1980 as amended (up until 1 February 2022) and Federal Law No. 33 of 2021 that replaces the former labour and employment law, including the expected executive regulations that will be issued in due course (the “Employment Regulations”) and any subsequent provisions which may from time to time be issued by the United Arab Emirates authorities (the “Authority”).”

17. Section 22.5 of the Employment Contract provides for:

“This Contract shall be governed by and be construed in accordance with the Laws of Dubai and the United Arab Emirates and Dubai Courts shall have the jurisdiction to hear and determine all disputes arising under this Contract, subject to the provisions of the Employment Regulations.”

18. In accordance with the Federal Decree Law No. (20) 2023 regarding the regulation of Employment relationships, Article 54 confirms that the competent authority for resolving disputes concerning employment relationships is the MOHRE.

19. Furthermore, even though the Claimant argues that he spent most of his time attending meetings located in DIFC, he is mainly located mainland. Article 5(A) of the JAL, with emphasis on wording relevant to the finding, states as follows:

“1. The Court of First Instance will have exclusive jurisdiction to hear and determine:

a. Thecivil, commercial and labourclaims and actions to which the DIFC or any DIFC body, DIFC establishment or licensed DIFC establishment is a party.

b. Thecivil, commercial and labourclaims and actions arising out of or relating to a contract or promised contract, whether partly or wholly concluded, finalized or performed within DIFC or will be performed or is supposed to be performed within DIFC pursuant to express or implied terms stipulated in the contract.

c. The Court of First Instance shall have exclusive jurisdiction to hear and determinethe civil, commercial and labourclaims and actions arising out of or relating to any incident or transaction, which has been wholly or partly performed within DIFC and is related to DIFC activities;

d. Appeals against decisions or procedures made by DIFC bodies where DIFC Laws and DIFC Regulations permit such appeals and claim;

e. Action over which the Courts have jurisdiction in accordance with DIFC Laws and DIFC Regulations.

2. The Court of First Instance may hear and determine anycivil or commercialclaims or actions where the parties agree in writing to file such claim or action with it whether before or after the dispute arises, provided that such agreement is made pursuant to specific, clear and express provisions.

3. The Court of First Instance may hear and determine anycivil, commercial and labourclaims or actions falling within its jurisdiction if the parties agree in writing to submit to the jurisdiction of another court over the claim or action but such court dismisses such claim or action for lack of jurisdiction. The Court of First Instance may not hear or determine any civil, commercial and labour claim or action in respect of which a final judgment is rendered by another court.” (emphasis added)

20. The above confirms that civil, commercial, and labour claims which are related to the DIFC fall within the jurisdiction of the DIFC Courts by default. However, Article 5(A)(2) provides that parties may only ‘opt in’ to the jurisdiction of the DIFC Courts for civil and commercial claims. As the term “labour” has not been included in Article 5(A)(2), it can only be concluded that a party cannot opt-in to the DIFC Courts’ jurisdiction for employment or labour claims. The above would not only apply to Court of First Instance claims, but also claims filed within the SCT.

21. Therefore, for the reasons set out above, I hereby order that the DIFC Courts lack jurisdiction to hear and determine this Claim, and thus it must be dismissed henceforth.

22. Each party shall bear their own costs.