Claim
A commercial action was filed by a local company ("the
Claimant") against the First and Second Defendants, being the
Ports, Customs & Free Zone Corporation and the Dubai Customs
Office (together, "the Defendants"). The First Defendant
was represented by the Attorney General ("AG") of the
Government of Dubai. The Claimant sought the following from the
Court:
- The cancellation of a decision issued jointly by the Defendants pursuant to which the Claimant was fined AED 1,908,888 ("the fine");
- An order that the Defendants pay to the Claimant the value of certain goods, which goods had perished in the port after their seizure. The Claimant submitted that the value of the goods equated to AED 954,444.
Facts of the Case
The Claimant asserted that it had exported a container of
cigarettes and adhesive transparent tape from the Free Zone in
Jebel Ali to Port Said – Egypt. However, the container
carrying the Claimant's goods was mistakenly unloaded in Jeddah
Port in the Kingdom of Saudi Arabia. The Claimant requested the
shipping company to ship/transfer the container to the intended
port of arrival, being Port Said in Egypt; however the shipping
company refused this request and advised that it had taken the
steps to ship the vessel carrying the goods to JAFZA. The Claimant
submitted that upon receiving this information, they requested the
shipping company to off-load the container from the vessel, and
place it on another vessel due to travel to Port Said. However the
shipping company off-loaded the goods in JAFZA. The Claimant
subsequently learned that the container carrying its goods had been
seized by Customs Officers at JAFZA on the basis that the Claimant
was purportedly intending to smuggle the products into the Dubai
market, and that it would be subject to a monetary fine in addition
to the confiscation and destruction of the products.
The net result of the Claimant's submissions was that as it had
not made the mistake of delivering and offloading the goods in the
wrong Port, it should not have been levied with a monetary fine,
nor should its goods have been confiscated. The Claimant further
argued it had no intention to smuggle the products into the Dubai
market.
Court of First Instance
The Court of First Instance ruled in favor of the Claimant. The
fine imposed on the Claimant was cancelled and the Defendants were
ordered to pay the full amount of the compensation requested by the
Claimant.
The Defendants subsequently appealed to the Court of Appeal on the
ground that the Claimant's Court of First Instance action was
time barred in accordance with Article 124 of the Dubai Customs
Law.
Court of Appeal
The Court of Appeal reversed the decision of the Court of First
Instance and refused the action for being time barred. The Claimant
then appealed to the Court of Cassation.
Court of Cassation
The Court of Cassation reversed the lower's court decision and
referred the case again to the Court of Appeal. The Court of
Cassation held that the lower Court had erred in multiple
circumstances.
Firstly, the Court of Cassation held that the lower Court had
mistakenly applied the Dubai Customs Law to the case despite this
law being inapplicable. The Court of Cassation further held that
the decision to confiscate the goods and impose a monetary fine was
issued in compliance with Articles 143 (7) and 145 (1) of Law No.
85 of 2007, being the GCC Unified Customs Law. Further on, the
Court of Cassation also held that the lower Court had therefore
erred when accepting the time bar defence arising from Article 124
of the Dubai Customs Law.
The Court of Cassation referred the matter back to the Court of
Appeal with the following mandate:
- To ascertain whether the Claimant's Court of First Instance action had been filed within the period prescribed in the GCC Unified Customs Law; and
- To ascertain whether the Claimant was entitled to receive any compensation under the provisions of this law.
Court of Appeal
The Court of Appeal again reversed the appealed judgment and
dismissed the Claimant's case. The Claimant again appealed to
the Court of Cassation.
Court of Cassation
With respect to the form of appeal.
The Court of Cassation accepted the appeal.
Interestingly and as a side note, in its response to the
Claimant's appeal, the First Defendant had argued that that the
AG no longer had the power to represent it, as the requisite
competence for legal representation had been transferred to the
Dubai Legal Affairs Department by virtue of Law 32 of 2008.
However, the Court of Cassation held that respondents to an appeal
must be sued in the capacity in which they are originally named in
the initial stage before the Court of First Instance. The Court
held also that where a respondent enjoys a legal personality which
is independent from its legal representative, and, where a
respondent is the subject of the litigation, any change in the
capacity of its representative at a later stage will not affect its
representation before the higher court.
As to the substance of the appeal, the Claimant argued that the
Court of Appeal had erred in its decision to reverse the lower
Court's decision. The main ground of the Claimant's appeal
was that the provisions of Articles 142, 143 (7 & 8) and 145 of
the GCC Unified Customs Law related to the smuggling of the
products, and that those Articles should only be applied if it
could be established that the Claimant had the intention to smuggle
the products into the Dubai market. The Claimant submitted that
this could not be the case because it was clear and obvious that
the seized products were initially transported from JAFZA equipped
with the sole purpose of export to Egypt. The Claimant argued that
therefore payment of Customs tariffs' was not applicable.
The Court of Cassation rejected the Claimant's argument. The
Court held that articles 142, 143 (7) of the GCC Unified Customs
Law defined smuggling as the act of bringing or the act of
attempting to bring goods into or out of the United Arab Emirates
in contravention of the applicable laws and without payment of the
customs tariffs.
Further, the Court of Cassation held that smuggling could be
established when the goods in question were hidden and not easily
located. The Court found that this is what the Claimant had
done.
Accordingly, the Court of Cassation decided that the Claimant's
conduct constituted smuggling for the purposes of the GCC Unified
Customs Law. The fine imposed by the Defendants was upheld.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.