A New Abu Dhabi Law updating local court fees regulation carries significant implications for future litigation in Abu Dhabi.
On 26 July 2017, the Emirate of Abu Dhabi issued Law No. 13 of 2017. The law, which came into force on 26 August 2017, regulates the fees payable before the local courts and replaces Abu Dhabi Law No. 6 of 2013.
This law governs the Judicial Fees payable in the emirate (“AD Fees Law”) and has the potential to transform the United Arab Emirates’ dispute resolution landscape. In particular, it carries major implications for litigation in the UAE.
Significant Changes To Local Court Fees
Law No. 13 of 2017 effectively repeal Law No. 6 of 2013 governing the Judicial Fees in the Emirate of Abu Dhabi and the Abu Dhabi Judicial Decision No. 2 of 2012 abolished the previous fee cap applicable to First Instance claims.
The new Law reinstates the cap on fees payable for Court of First Instance (civil and commercial) claims, which under the Previous Law was 3 percent of the value of the claim with no cap. The new fees regime comes into effect after a review of the Previous Law, which had been in force for almost four years.
The article will look into the implications for dispute resolution and assess whether the new law will create a more productive use of the court’s resources as well as positively influencing of litigation strategy in the UAE, and in particular, funding of the court fees incurred by litigants. Legal practitioners and litigants are expected to largely welcome the legislative reform of court fees together with the reintroduction of a cap on local court fees.
The New Abu Dhabi Fee Structure
The law establishes a cap on fees payable before the civil courts of First Instance. Previously, the fee had been AED 3 percent of the value of the claim with no effective maximum cap. Through this new law, the court fees are now 5 percent with a maximum cap of AED 40,000.00 (forty thousand dirhams).
While the cap has increased from the previous pre-2012 cap of AED 20,000 (Twenty thousand dirhams), the Law generally provides more competitive fees than those payable under the Previous Law No. 6 of 2013.
Under previous legislation, court fees were calculated based on the amount of the claim. Under Abu Dhabi’s new court fee legislation, a specific amount of AED 5,000.00 (five thousand dirham) has been set. The new law also exempts public entities, maids and servants, and employees filing claims against their employers from paying court fees for all stages of litigation.
Criminal Case Fees
Article 50 of Law No. 13 of 2017 removed some of the fees for a number of requests regarding criminal issues, such as bail and obtaining the defendant’s criminal records. Also, Article 48 of the Law indicates that the Law shall be applied to court fees on five different criminal cases and applications.
Abu Dhabi Fees Law Strategic Intent
The strategic intent of the new Abu Dhabi local court fees law is to enhance competition, ease the cost burden on litigants of filing cases and minimize the amount of malicious litigation.
One common observation made on the previous local court fees regulation was the deterrent effect on small business claims especially if a defendant was unable to pay or absconded from Abu Dhabi and the UAE.
The high cost of taking a case to court has acted as a disincentive for businesses to instigate legal action against potential defendants for financial fraud, default of payment for financial issues and frivolous cases.
Many legal commentators identified the commercial issues presented by the previous court fees law and advocated a change to the legislation to remove the distorting effects of the previous Abu Dhabi local court fees structure, however unintended they may have been. For their part, legislators recognized the need for reform.
The previous local court fees regulation tended to make litigators cautious in their approach to filing claims, with many opting to submit unsubstantiated financial claims, especially for construction-related claims, where the amounts in dispute such as variation orders and delayed payment claims are often unclear pending quantification.
In these circumstances, litigators tended to file for the appointment of an expert to ascertain an accurate claim amount the claimant may be entitled. While this process does not delay the fees, the claimant will have the right to amend his/her claims or to stop proceedings.
Many clients faced with lodging significant claim amounts were reluctant to pay the substantial court fees upfront. However, clients with small claims tended to be more conservative. Ultimately, if the court fees were not paid, either the court dismissed the claim or the court allowed payment of the fees to be deferred to a later stage.
Moving forward under the new law, all litigators will have a full and direct access to court for filing their claims in a direct way given the new court fees are fairer and more affordable for plaintiffs.
Other Notable Changes
Amongst other notable changes introduced by Law No. 13 of 2017 are the fees payable for the ratification or nullification of awards granted under arbitration and the enforcement of overseas court judgments.
Under the Previous Law, the fee was 3 percent of the value of the award or the overseas court judgment. The fees are now fixed at AED 5,000 for an arbitral award and in accordance with Article 56 of the schedule of Article 60 of the Law, AED 1,000 for enforcing a foreign judgement. These amendments have effectively clarified the long-standing ambiguity that surrounded the fees applicable for these two categories of cases.
Under the Previous Law, there were two categories of fees:
- The first, set fees at AED 1,000 for both awards granted under arbitration and the enforcement of overseas court judgments if the claim was for an un-quantified amount.
- The second set fees at 3 percent of the claimed amount with no cap if the amount was quantified.
Many commentators welcomed the abolition of this arbitrary distinction between quantified and un-quantified claims as a sensible commercial move given the majority of awards and foreign judgments are for quantified sums. Additionally, collecting fees ordinarily applicable to substantive claims effectively acts as a disincentive in the commercial sector for judgment creditors, who have already been forced to spend large sums bringing the original proceedings.
Several new categories and fees have also been introduced under the Fee Schedule included in Article 60 of the Law No. 13 of 2017. However, the fees detailed under Article 60 are nominal.
The new law represents progress in the fee regime applicable in the Emirate of Abu Dhabi. It was prompted by criticisms made against the Previous Law to the effect that court fees acted as an impediment to access to justice. According to a recent survey by the World Bank, court fees and the cost of filing a claim are among the criteria for measuring the efficiency of a judicial system. It’s anticipated that the Law will contribute to the Emirate’s reputation for providing an efficient and inexpensive forum for resolving disputes.
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