Dubai court orders two companies to pay Dh57.38m in cargo clearance dispute

Dubai Commercial Court has ordered two companies to jointly pay up to Dh57.38 million to a shipping and customs clearance firm in a commercial dispute over unpaid international cargo clearance services, while rejecting additional claims for legal and supplementary interest.

According to case details, the claimant — a company specialising in shipping and cargo clearance services — filed a lawsuit before the Dubai Commercial Court seeking to compel two companies to jointly pay Dh89.5 million, representing the principal debt along with legal and supplementary interest.

The dispute arose from commercial dealings between the parties related to international cargo clearance services carried out in Dubai and Ajman.

The claimant told the court that it had fully carried out its contractual obligations and issued several invoices in 2022 for clearance and transportation services provided. However, the defendants allegedly failed to settle the outstanding dues despite repeated promises to make payment.

The company also stated that the parties later signed an irrevocable acknowledgment of debt and undertaking in February 2023, in which the defendants acknowledged owing $15.57 million. Under the agreement, the amount was to be repaid within a deadline set for February 2025.

Court records show that the defendants failed to repay the amount after the deadline had passed, despite nearly 11 months having elapsed. This prompted the claimant to file a lawsuit seeking recovery of the outstanding sum along with the interest it claimed had accrued.

During the proceedings, the court ordered the appointment of a three-member accounting expert committee to examine the financial relationship between the parties and reconcile the accounts. However, the claimant failed to deposit the Dh240,000 expert fee required to proceed with the appointment, despite being granted time by the court.

As a result, the court ruled that the claimant had forfeited its right to rely on the preliminary decision appointing the expert committee, in accordance with the UAE Evidence Law.

In its judgment, the court stated that the acknowledgment of debt document signed by both parties constitutes a valid private document and serves as binding evidence against the signatories unless proven otherwise. The court also noted that the defendants did not present any defence or evidence showing they had settled the debt, despite being legally notified of the case.

The court therefore ordered the two companies to jointly pay $15.57 million, or its equivalent in UAE dirhams, provided the total does not exceed Dh57.38 million, in favour of the claimant company.

However, the court rejected the claimant’s request to impose additional legal interest at a rate of 2 per cent per month as well as supplementary interest. It explained that part of these claims constituted compound interest, which is prohibited under the UAE Commercial Transactions Law, as the law does not allow interest to be calculated on accumulated interest.

The court also noted that the 0.5 per cent monthly interest stipulated in the acknowledgment of debt had already been included within the principal amount agreed between the parties. In addition, the claimant did not submit the original invoices relating to the commercial transactions to substantiate the claim in detail.

Based on these findings, the court ordered the defendants to pay the principal debt not exceeding Dh57.38 million, rejected the claims for additional interest, and directed them to bear the appropriate share of court fees and expenses, along with Dh1,000 in legal costs.