What was the nature of the dispute in Merina v Marwan and what was the total amount at stake?
The dispute centered on a commercial disagreement between Merina, a Dubai-based equipment supplier, and the Defendants, Marwan and Marald, regarding the provision of manlift machines for construction projects. The relationship, which began in November 2019 following the issuance of a Local Purchase Order (LPO), deteriorated by January 2020 when the Defendants fell into arrears.
On 7 February 2021, the Claimant filed a claim in the DIFC Courts’ Small Claims Tribunal (the “SCT”) claiming AED 150,000 for unpaid rental charges in addition to court fees.
The core of the conflict was not merely the debt itself, but the procedural mechanism for recovery. While the Claimant sought to utilize the DIFC Courts to recover the outstanding balance, the Defendants maintained that the contractual framework governing the hire of the equipment mandated an alternative dispute resolution path, specifically arbitration, thereby rendering the SCT an inappropriate forum for the claim.
Which judge presided over the SCT hearing in Merina v Marwan and when was the judgment issued?
The matter was heard before SCT Judge Maha Al Mheiri. The jurisdiction hearing took place on 22 February 2021, where the court evaluated the competing arguments regarding the validity of the DIFC Courts' jurisdiction. The final order, dismissing the claim, was issued by Judge Al Mheiri on 1 March 2021.
What were the specific jurisdictional arguments advanced by the Claimant and the Defendants in Merina v Marwan?
The Defendants argued that the DIFC Courts lacked jurisdiction because neither party was a DIFC entity; rather, the Claimant was a Dubai Free Zone entity and the Defendants were UAE onshore entities. They relied heavily on the LPO, which contained a specific arbitration clause (Clause 17) mandating that disputes be settled by three arbitrators in the country of the project location.
The Defendants argues that the Claimant is a Dubai Free Zone Entity and both the Defendants are UAE onshore entities rather than DIFC entities, and therefore the Defendants contend that the DIFC Courts has no jurisdiction over the Claim.
Conversely, the Claimant argued that the DIFC Courts had jurisdiction based on the terms and conditions printed on their own invoices. The Claimant contended that because the Defendants had signed and stamped these invoices—which included a clause opting into the DIFC Courts' jurisdiction—the parties had effectively consented to the DIFC forum.
Did the Claimant’s act of performing under the LPO without signing it constitute a valid acceptance of the arbitration clause?
The legal question before the court was whether the Claimant, by performing the contract and supplying the manlift machines, had implicitly accepted the terms of the LPO—including its mandatory arbitration clause—despite never having formally signed the document. The court had to determine if the LPO’s "supremacy" clause (Clause 1.2), which stated that the LPO terms override any subsequent conditions imposed by the supplier, effectively nullified the Claimant's invoice-based jurisdictional opt-in.
How did Judge Maha Al Mheiri apply the doctrine of contract formation to the LPO in Merina v Marwan?
Judge Al Mheiri reasoned that the contractual relationship was governed by the LPO issued by the Second Defendant. Even though the Claimant did not sign the LPO, their conduct in fulfilling the order and supplying the equipment served as clear evidence of acceptance of the terms contained within that document.
As such, by the Claimant agreeing to work with the Defendants, the Claimant is accepting the terms and conditions of the LPO sent.
The court further reasoned that the LPO contained an express provision (Clause 1.2) stipulating that its terms would override any subsequent conditions the supplier might attempt to impose. Consequently, the Claimant’s attempt to introduce a DIFC jurisdiction clause via their own invoices was ineffective, as those invoices were subsequent to the LPO and contradicted the established dispute resolution mechanism.
Which specific statutes and rules did the SCT consider when determining the jurisdictional challenge?
The court’s analysis was anchored in the Judicial Authority Law, specifically Article 5(A) of Dubai Law No. 12 of 2004, which governs the jurisdiction of the DIFC Courts. The court assessed whether the parties had validly "opted-in" to the DIFC Courts' jurisdiction. Additionally, the court applied principles of contract formation under the DIFC Contract Law, specifically Articles 14 and 15, to determine whether the Claimant’s performance constituted an acceptance of the LPO’s terms.
How did the court interpret the arbitration clause within the LPO in the context of the DIFC Courts' jurisdiction?
The court examined Clause 17 of the LPO, which mandated that any unresolved dispute be referred to arbitration. The court found that this clause was binding upon the parties.
As such, the Defendants submit that it is clear from the LPO that the law to be applied on the parties is in accordance with the dispute provisions set out above.
By determining that the LPO was the governing contract, the court concluded that the arbitration agreement contained therein took precedence over the Claimant’s unilateral attempt to confer jurisdiction upon the DIFC Courts. The court emphasized that the parties had not satisfied the requirements for a valid opt-in under the Judicial Authority Law, as the LPO’s arbitration clause remained the primary agreement between the parties.
What was the final disposition and the order regarding costs in Merina v Marwan?
The SCT dismissed the claim in its entirety. The court explicitly ruled that the DIFC Courts lacked the requisite jurisdiction to hear and determine the dispute.
In light of the above, I am satisfied that the SCT does not have the jurisdiction to hear this Claim.
Regarding the financial implications of the proceedings, the court ordered that each party bear their own costs, declining to award legal or court fees to either side.
What are the wider implications for suppliers and contractors regarding LPO terms and jurisdiction clauses?
This judgment serves as a warning to suppliers who rely on invoice-based terms and conditions to establish jurisdiction. The court has affirmed that where a primary contract—such as an LPO—exists and contains its own dispute resolution or arbitration clause, that document will generally prevail over subsequent, conflicting terms printed on invoices. Practitioners must advise clients that performance of a contract is sufficient to bind them to the terms of an LPO, even in the absence of a signature. Consequently, parties must ensure that their jurisdictional preferences are negotiated and included in the primary purchase order or master service agreement, rather than assuming that later invoice terms will be enforceable.
Where can I read the full judgment in Merina v (1) Marwan (2) Marald [2021] DIFC SCT 030?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/small-claims-tribunal/merina-v-1-marwan-2-marald-2021-difc-sct-030. The text is also archived at: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/small-claims-tribunal/DIFC_SCT-030-2021_20210301.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | N/A |
Legislation referenced:
- DIFC Contract Law, Articles 14 and 15
- Judicial Authority Law, Dubai Law No. 12 of 2004, Article 5(A)