Dubai Court of Cassation (General Assembly), Appeal No. 3 of 2021, judgment of 27 January 2021
Under Article 63(1) of the Civil Procedure Regulation (Cabinet Resolution No. 57 of 2018), a creditor must first serve on the debtor a demand to pay within at least five days before applying for a payment order. The demand is an essential step: if its service is void and the debtor relies on the defect, the order must be declared inadmissible, and the petition for the order is no substitute because it is not served on the debtor. Under Article 156 of the former Civil Procedure Law, where a judgment concerns a joint obligation, its annulment for a defect personal to one debtor, such as void service on him, does not benefit the other co-debtors, unless their obligation depends on his, as with guarantors of the principal debtor.
A vehicle supplier received twelve cheques totalling AED 2,049,275, drawn on a customer company's account and signed by an individual, which were returned unpaid. After a notarised demand it obtained a payment order against the company and the signatory for that sum with 9 per cent interest. On the signatory's appeal, the Court of Appeal set the order aside and declared it inadmissible against both, holding that the demand served on the signatory at the company's premises was void. The supplier appealed in cassation, and the chamber referred the appeal to the General Assembly on two questions: whether to depart from the principle that the petition for a payment order replaces the demand, and how to resolve conflicting judgments on whether one joint debtor's success on a personal defect benefits the others.
The Assembly held that procedure is a matter of public order. Under Article 63(1) of the Regulation the creditor must first require the debtor to pay within at least five days, by any method of service in the Regulation; this step is essential, and if its service is void and the debtor relies on that, the order is inadmissible. The petition is not served on the debtor and cannot replace the demand. Under Article 156 of the Civil Procedure Law, the general rule is that an appeal benefits only the appellant, with exceptions for indivisible subjects, joint obligations and cases requiring particular parties. But a judgment annulled for a defect personal to one joint debtor, such as void service on him, does not benefit the others, unless their obligation depends on his, as guarantors depend on the principal debtor. The Assembly departed from the contrary principles.
Applying them, the Assembly found that the process server, finding the company's premises closed, had affixed the demand there instead of seeking an inquiry and publication under Article 6 of the Regulation, so the demand on the signatory was void. But that defect was personal to him. The Assembly partly quashed the judgment and, deciding the appeal, declared the order inadmissible against the signatory only, leaving it in force against the company.
Payment orders on bounced cheques are routinely sought against companies and their signatories together. A creditor needs a valid prior demand on each debtor; but a defect in serving one signatory does not unravel the order against the company that remains liable. The principle on joint debtors applies generally to appeals in joint obligations.
| Articles 6 and 63(1) of Cabinet Resolution No. 57 of 2018 on the Regulation of the Civil Procedure Law Decided under this law; it has been replaced by Civil Procedure Code. |
| Article 156 of Federal Law No. 11 of 1992 (former Civil Procedure Law) Decided under this law; it has been replaced by Civil Procedure Code. |
| Article 20 of Dubai Law No. 13 of 2016 on the Judicial Authority in the Emirate of Dubai (referral to and majority of the General Assembly) |
“ولا تعد العريضة التي تقدم لاستصدار أمر الأداء بديلا عن الإعلان بالتكليف بالوفاء”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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