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.

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