UAE / International Litigation
Hugo LodgeSenior Counsel,Dispute Resolution
Crypto enthusiasts believe that the digital economy will usher in the next stage of our civilization. Doubters point to the collapse of value in crypto currencies, exchanges such as FTX and so-called stable coins. Wherever the truth lies between these two viewpoints, blockchain technology is here to stay. It will change the way we live and do business.
On 14 December 2021, the DIFC Courts announced the launch of a ‘Specialised Court for the Digital Economy’ aimed at simplifying complex civil and commercial disputes related to blockchain and the emerging technologies. English silk Michael Black KC has been appointed to be the Judge-in-Charge of the Digital Economy Court ("DEC"), as well as sitting as a DIFC Court of Appeal Judge.
DEC deals with national and international disputes related to current and emerging technologies. It will cover a wide variety of fields including e-commerce, big data, blockchain technologies including Fintech, artificial intelligence, cloud services, unmanned aerial vehicles, 3D printing technologies, and robotics.
New provisions define the types of claims that are suitable for determination in the Digital Economy Court. There may be some overlap between claims that could be brought in the DEC and claims that could be brought in other divisions, such as the Technology and Construction Division. Ultimately, it will be a matter for the court to decide to which division a claim is most suited. DEC has set out its stall as having a wide remit.
DEC ushers in a new era unconstrained by traditional civil procedure rules, pointing to a more realistic adaptation of service, case management and use of assessors / experts.
According to official DIFC sources, ‘As a modern, forward-thinking court, these new provisions make express that the DEC will as far as possible conduct proceedings using appropriate technology with a view to reducing the environmental impact of court proceedings. This will include conducting hearings remotely wherever possible and using digital, rather than paper bundles. Parties are under a duty to assist the court in achieving this objective.’
The new DEC regime employs the use of ‘smart forms’. Unlike traditional court forms, users will provide information through a ‘dynamic, artificial intelligence driven platform that will procure information from court users and then generate a digital document in a format useful to the court.’
In a new move, parties will be expected to supply at the first opportunity nominated email addresses. Documents must be served on a party’s nominated email address. Social media such as direct messaging may also be used to effect service, but the line will be drawn at non-permanent media such as TikTok and disappearing WhatsApps. This ensures that email communication between parties and the use of digital rather than paper documents is the default mode for conducting litigation in the nifty DEC.
A new rule makes plain that the presumption in the DEC is that hearings will be conducted remotely with the digital presentation of material. These forms of working became prevalent during the pandemic but will now become a permanent feature of DEC’s landscape.
DEC has nimble powers to grant interim and final remedies, including the power to authorise judicial officers and others to effect digital transactions where a party refuses to do so and the means of effecting the digital transaction is within the Court’s control, or the control of someone over whom it has jurisdiction. This ensures that modern means of enforcement over digital assets will be available to the DEC. This power can be used at any time in the proceedings.
The DEC encourages the use of assessors where there are technical issues, as an alternative to the costly and cumbersome use of party appointed experts. New rules permit each party to nominate an assessor who will sit with and advise the court on technical matters at hearings.
The aim is to reassure businesses that the blockchain and NFT landscape is designed to ensure trust and safety for all participants, leaving no room for bad actors.
However smooth or rough a sea the digital economy presents, the new DEC is well placed to navigate these exciting challenges.
Collectors of NFT have been particularly keen on the new DEC fast track aimed at providing consumer protection at pace.
This is a new procedure specifically designed for the swift and efficient resolution of low value high volume digital economy claims. It is suitable for claims of AED500,000 or less, although parties can consent to larger claims being dealt with under this procedure. Claims are dealt with in private and any judgments that are published will be anonymised.
Most of the traditional Rules of the DIFC Courts are disapplied, in favour of the procedure contained in the new DEC rules. Claimant and defendant serve successive statements of case to which are attached the critical evidence and legal argument on which a party relies. If a party has a jurisdictional objection, that is also made in these documents.
Once those statements of case are served, the DEC in fast-track cases will generally determine the claim and any counterclaim (including any jurisdictional objections) without a hearing. The aim will be for the court to determine the claim within three months of service of the claim form. If a short hearing is required, it will take place informally and in whatever manner the DEC considers in suitable for the efficient determination of the claim. All this has a refreshing feel.
There are less formal service provisions. A document is served provided it is delivered by a means that is reasonably likely to bring it to the attention of the other party, keep an eye on your direct messages. The fast-track DEC retains the power to transfer proceedings out to the main DEC track if the issues raised are not suitable for the expedited claims procedure. It looks well suited to deal with most consumer complaints.
The fast digital economy claims procedure is a ‘no adverse legal cost regime’. The successful party is entitled to reimbursement of court fees from the unsuccessful party. But the unsuccessful party will not have to pay the legal fees of the successful party. This is similar to the small claims track in England and Wales, with a Dubai Bling six figure threshold as to what amounts to a ‘small’ claim.
Globally, with the rapid growth of digital transformation, trade and services inevitably integrate digital technology in their business models and offerings.
The streamlined approach of the new DEC is a welcome development and will further enhance Dubai’s standing as a leader in the digital economy space. It dovetails neatly with the Dubai government’s enthusiasm for the metaverse, and expanding innovation hubs in the DIFC.
Official DIFC sources state, ‘Now, more than ever an innovative judicial system is key to promoting growth as well as providing security, reliability, and protection for companies and businesses. The new Court is a pivotal step in achieving the UAE’s vision and strategy for the next 50 years. The DEC has been established to attract new and emerging disputes to the DIFC and to help to position the DIFC Courts as the foremost modern commercial Court in the region and one of the most modern and forward-thinking courts in the world.’
For further information,please contact Hugo Lodge.
Published in January 2023
