Costly Court Procedures in UAE: A 96,000 Dirham Case

The Price of Procedural Compliance in UAE Courts: Company Pays Over 96,000 Dirhams

The UAE's legal system is built on clearly defined rules, especially concerning labor disputes. The following case highlights how failing to pay a seemingly small, 500 dirham procedural fee can lead to severe consequences amounting to tens of thousands of dirhams. The case unfolded in Abu Dhabi and provides important lessons for every company executive and employee—particularly those who may not pay enough attention to procedural requirements during legal proceedings.

The Beginning: A Claim Against a Former Employer

The issue commenced when an employee filed a labor lawsuit against his former employer. According to the employee, he had worked under a fixed-term contract with the company since May 21, 2021, earning a base salary of 10,000 dirhams, which amounted to 20,000 dirhams with benefits. The employee demanded the following amounts:

Unpaid wages: 54,000 dirhams for the period between December 1, 2024, and February 21, 2025.

Compensation for untaken leave: 19,000 dirhams for accrued leave over two years.

Severance pay: 26,250 dirhams due to termination.

The employee resigned on January 21, 2025, citing unpaid wages, and claimed he served his notice period correctly until February 21, 2025.

First Ruling: In Favor of the Employee

On April 17, 2025, the Abu Dhabi Labor Court partially ruled in favor of the employee, ordering the company to pay 96,333 dirhams. The employee personally appeared at the hearing, although the employer had no representative present.

The Company's Appeal: Late and with Procedural Errors

The employer subsequently filed an appeal against the verdict, claiming the initial summons was sent to an incorrect phone number, preventing their attendance at the proceedings. They also contended that the relationship between the parties was not employer-employee but an investment/management agreement with a salary of 4,000 dirhams plus 50% of profits.

Their defense also asserted that the employee allegedly falsified contract terms to artificially raise his salary. The case further complicated when the court consulted the du telecommunications provider over the official summoning phone number yet ultimately concluded that the appeal wasn’t timely, surpassing the 30-day limit stipulated by law.

Request for Rehearing: 500 Dirham Mistake

Once the appeal was rejected, the company tried requesting a rehearing of the judgment. This process follows a specific regulation that strictly outlines procedural requirements, including an accompanying 500 dirham deposit.

However, the employer failed to pay this amount, leading the court to dismiss the application on procedural grounds. The decision referenced Article 173, Section 4, of Federal Law 42, which clearly states that without the security deposit, the request for rehearing cannot be accepted.

The Consequence: Original Judgment Stands

After the rehearing request was denied, the original judgment was reinstated, obliging the company to pay 96,333 dirhams to the former employee and cover all court and legal expenses.

Lesson: Procedural Rules Are Not Formalities

This case aptly demonstrates that the UAE's legal system not only scrutinizes substantive matters but also enforces strict compliance with procedural rules. What seems like an administrative oversight, such as not paying a 500 dirham procedural fee, can have substantial financial implications, especially if it deprives the company of the opportunity to defend against an unfavorable judgment.

For businesses, this serves as a crucial warning: timely responses, ensuring legal representation, and accurately paying prescribed fees are essential to protect their interests in court. For employees, it reveals that the UAE's legal system—if approached correctly and timely—can effectively enforce legitimate claims.

Such precedent-setting cases further strengthen legal certainty in the UAE and make it clear to both parties—employer and employee—that in court, it not only matters who is right but also who can legally assert their case within the deadline.

(The article source is a statement from the labour court in Abu Dhabi.)