Why did Nisan initiate a claim for AED 120,857.14 against Neysa in the DIFC Small Claims Tribunal?
The dispute arose from a commercial relationship between Nisan, a company registered in Sharjah, and Neysa, a Dubai-based entity operating an online marketplace. Nisan, acting as a third-party seller on the Neysa platform, sought to recover a sum of AED 120,857.14 through the DIFC Courts. The core of the conflict involved the characterization of the contractual relationship between the parties and which set of terms governed their interactions.
On 2 May 2024, the Claimant filed a claim with the DIFC Courts’ Small Claims Tribunal (the “SCT”) seeking payment in the sum of AED 120,857.14.
The Claimant asserted that the DIFC Courts held jurisdiction based on the "Condition of Use & Sale" found on the Neysa website. Conversely, the Defendant argued that this document was intended for retail consumers rather than professional third-party sellers. The resolution of this claim hinged on whether the Business Service Agreement (BSA) signed by the seller superseded the general consumer terms, thereby mandating arbitration rather than litigation in the SCT.
Which judge presided over the jurisdictional challenge in Nisan v Neysa [2024] DIFC SCT 174?
The jurisdictional challenge was heard by H.E. Justice Nassir Al Nasser within the Small Claims Tribunal. The hearing took place on 16 July 2024, with representatives from both Nisan and Neysa in attendance to present their respective arguments regarding the applicability of the DIFC Courts' jurisdiction.
How did the parties argue the applicability of the Business Service Agreement versus the Condition of Use & Sale?
The Defendant, Neysa, argued that the relationship was strictly governed by the Business Service Agreement (BSA), which the Claimant accepted upon registering as a third-party seller. Neysa provided evidence that the onboarding process required explicit agreement to the BSA, which contained a specific arbitration clause. They contended that the Claimant’s reliance on the "Condition of Use & Sale" was misplaced because those terms were designed for retail customers, not marketplace sellers.
In response, the Defendant submits that clause 14 of the Condition of Use & Sale applies to customers shopping via Neysa.com and not third party sellers registered on the market place.
The Claimant, Nisan, maintained that the DIFC Courts possessed jurisdiction, citing clause 14 of the "Condition of Use & Sale." This clause explicitly referenced the DIFC Courts and the Small Claims Tribunal as the exclusive forums for disputes arising from the use of Neysa services. The Claimant’s position was that these terms were binding and provided a clear jurisdictional gateway for the recovery of the claimed amount.
What was the precise jurisdictional question before the SCT regarding the application of Article 5(A) of the Judicial Authority Law?
The Court was tasked with determining whether the DIFC Courts possessed the requisite jurisdiction to hear a claim between two non-DIFC entities when the governing contract mandated arbitration. The central issue was whether the Claimant had successfully established a jurisdictional gateway under Article 5(A) of the Judicial Authority Law (Dubai Law No. 12 of 2004). Specifically, the Court had to decide if the "Condition of Use & Sale" relied upon by the Claimant could override the arbitration agreement contained within the Business Service Agreement (BSA) that governed the parties' professional relationship.
How did Justice Nassir Al Nasser apply the test for jurisdictional competence in the absence of a DIFC nexus?
Justice Al Nasser evaluated the evidence regarding the onboarding process for third-party sellers. The Court found that the Defendant had successfully demonstrated that the BSA was the operative agreement for sellers. By registering as a seller, the Claimant had entered into a binding contract that included an arbitration clause, which the Court noted should now be administered by the Dubai International Arbitration Centre (DIAC) following the abolition of the DIFC-LCIA.
Therefore, I find that the parties are non DIFC registered entities and have not agreed to the jurisdiction of the DIFC Courts, and in accordance with Article 5(A) of JAL, I find that the DIFC Courts have no jurisdiction to hear and determine this claim.
The Court reasoned that because the parties were not DIFC-registered entities and had not otherwise consented to the jurisdiction of the DIFC Courts in their primary commercial agreement, the requirements of Article 5(A) were not satisfied. The Court prioritized the specific arbitration agreement over the general consumer terms, concluding that the SCT lacked the authority to adjudicate the dispute.
Which specific statutes and rules were applied to determine the court's lack of jurisdiction?
The primary authority applied was Article 5(A) of the Judicial Authority Law (Dubai Law No. 12 of 2004), which serves as the foundational jurisdictional gateway for the DIFC Courts. The Court also considered the effect of Decree No. 34 of 2021, which abolished the DIFC-LCIA Arbitration Centre. The Defendant successfully argued that this decree necessitated the transition of arbitration administration to the DIAC. Additionally, the Court reviewed the procedural history under the Rules of the DIFC Courts (RDC), specifically noting the Defendant's timely filing of the Acknowledgment of Service to contest jurisdiction.
How did the court interpret the impact of Decree No. 34 of 2021 on the arbitration clause?
The Court accepted the Defendant’s submission regarding the transition of arbitral administration. The original agreement mandated arbitration under the DIFC-LCIA rules. The Court acknowledged that, following the issuance of Decree No. 34 of 2021, the arbitration clause remained valid and enforceable, but the administrative body had shifted to the DIAC.
The Defendant adds that further to the issuance of Decree No. 34 of 2021 and following the abolition of the DIFC-LCIA Arbitration Centre, this Arbitration should now be administered by the Dubai International Arbitration Centre (“DIAC”) unless both parties agree otherwise.
This interpretation reinforced the Court's conclusion that the parties had a clear, ongoing mechanism for dispute resolution outside of the DIFC Courts, further negating the Claimant's argument that the SCT was the appropriate forum.
What was the final disposition of the claim and the order regarding costs?
The Court granted the Defendant’s Jurisdictional Challenge, ruling that the DIFC Courts lacked the authority to hear the claim. Consequently, the claim was dismissed for lack of jurisdiction. Regarding the costs of the proceedings, the Court ordered that each party bear its own costs, reflecting the nature of the jurisdictional dispute.
What are the practical implications for marketplace sellers and platform operators regarding jurisdictional clauses?
This ruling serves as a reminder that marketplace operators must ensure their onboarding documentation clearly distinguishes between retail consumer terms and professional seller agreements. For practitioners, the case highlights that the DIFC Courts will strictly scrutinize the "governing agreement" in commercial disputes. Litigants cannot rely on general "Conditions of Use" if a more specific Business Service Agreement exists between the parties. Future claimants must ensure that the jurisdictional clause they rely upon is not superseded by a mandatory arbitration provision within a specific service contract.
Where can I read the full judgment in Nisan v Neysa [2024] DIFC SCT 174?
The full judgment is available on the official DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/small-claims-tribunal/nisan-v-neysa-2024-difc-sct-174 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/small-claims-tribunal/DIFC_SCT-174-2024_20240718.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case precedents were cited in the text of this order. |
Legislation referenced:
- Judicial Authority Law, Dubai Law No. 12 of 2004, Article 5(A)
- Decree No. 34 of 2021 (concerning the abolition of the DIFC-LCIA)