Dubai Court Orders Company to Pay Dh2.15 Million in Chemical Supply Row

The Commercial Court in Dubai has ordered a company to pay $588,000 (Dh2.15 million) to a chemical supplier, along with 5 per cent annual interest from October 2023 until full settlement, in addition to court fees, expenses and legal costs.

The ruling came after the court found that the supplier had fulfilled its contractual obligations by shipping and delivering the agreed chemical materials, but had not received the full payment.

The dispute dates back to a lawsuit filed by the supplier against two companies, seeking the recovery of outstanding dues amounting to $588,000. The amount represented the balance payable for chemical supplies shipped to an Arab country under purchase orders worth a total of $925,920.

Court records showed that one of the companies had issued a written guarantee before the commercial relationship began, acknowledging responsibility for the obligations of the other company and undertaking to settle any unpaid invoices if it failed to do so.

The supplier maintained that it had delivered the agreed materials and issued all related invoices in line with the contract.

During the proceedings, the representative of one of the companies challenged the Dubai court’s international jurisdiction and argued that the supplied goods were defective and had later been destroyed.

To examine the claims, the court appointed an expert, whose report confirmed that the supplier had fully performed its obligations. The report found that the chemical materials were shipped, delivered and received without any objection at the time of delivery.

It also established that there had been correspondence between the parties, including explicit acknowledgements of the debt and partial payments. According to the report, the total value of supplies stood at $925,920, of which $337,858 had been paid, leaving an outstanding balance of $588,062.

The court rejected the jurisdictional challenge, holding that part of the contract had been executed in Dubai since the goods were shipped from the emirate to a destination outside the UAE, giving the UAE courts authority to hear the matter.

It also dismissed the claim that the goods did not meet specifications, noting that the shipments had been accepted without objection in 2023, while the destruction reports submitted as evidence were prepared nearly two years later, undermining the allegation of defects at the time of delivery.

At the same time, the court ruled that there was no legal standing against the first company after it was established that it had been struck off and its commercial registration had been cancelled before the lawsuit was filed, meaning it no longer had legal existence at the time of the proceedings.

 

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