Resolving an International Commercial Supply Dispute: A Strategic Cross-Border Victory

Background

Our client, a foreign importer of automotive parts represented by Awatif Mohammed Shoqi Advocates and Legal Consultancy, made a deal with an exporter in the UAE to supply goods. Our client made advance payments, and the other party was then required to send goods and issue commercial invoices in return. There were a lot of transactions over the course of about two years, which suggested that there was an established and ongoing trading relationship. The parties did not sign a formal written agreement to govern their business.

The Dispute

Our client noticed a big difference between the total amount of money sent to the other party and the value of the goods they actually got. Even though they made several advance payments, a large part of the goods that were supposed to be delivered were never delivered. Our client approached the UAE courts to recover the outstanding balance as well as damages for lost profits and other business losses that occurred because the funds were held up for so long, and the supply chain was disrupted. The other party claimed that full delivery had been made.

Court of First Instance

Because there was no formal contract and the financial trail was so complicated, the Court of First Instance set up a specialized expert committee.

The expert committee conducted a thorough review spanning the entire duration of the commercial relationship and confirmed that a substantial outstanding balance remained owed to our client.

The Court of First Instance agreed with everything the committee said, ruled in favor of the confirmed outstanding balance, and awarded damages according to the UAE Civil Transactions Law, which says that a party who acts wrongfully must pay for actual losses and lost profits that naturally result from that behavior. The court also asked the other party to pay the court costs, fees, and legal fees.

Court of Appeal

The other party appealed against the expert committee’s methods and results and asked for a new committee to be set up. After a thorough review, the Court of Appeal upheld the original decision in full and ordered the other party to pay for the appeal, including legal fees and the loss of the security deposit.

Conclusion

This matter illustrates several important principles that arise in international commercial disputes before the UAE courts.

The absence of a formal written contract does not prevent a party from pursuing a successful commercial claim. UAE courts are well-equipped to reconstruct the financial and transactional history of a relationship through the appointment of expert committees, drawing on payment records, commercial invoices, and shipping documentation.