Federal Supreme Court, Civil Appeal No. 767 of 2020, judgment of 23 November 2020
A request that the court set off a sum the defendant claims from the plaintiff, such as an employer's demand to deduct a loan from the employee's end-of-service gratuity, is an incidental claim and not a defence on the merits, because judicial set-off requires a judgment establishing the defendant's own right. Under Article 97(2) of the Civil Procedure Law it must be made expressly and unequivocally before the first-instance court, by the ordinary procedure for bringing an action, orally at a hearing recorded in the minutes, or in a memorandum served on the other party, with the fees paid. It cannot be raised for the first time on appeal, and the court cannot order set-off without such a request.
A finance manager who had worked for his employer from May 1988 until March 2019, on a basic monthly salary of AED 15,400 and a total of AED 26,125, sued after the employer ended his service on his reaching retirement age, which he said was unlawful. He claimed leave pay, an end-of-service gratuity of AED 469,700 and compensation for arbitrary dismissal, AED 600,325 in all, with 9 per cent interest. A representative of the employer attended, asked for time to appoint a lawyer and did not come back. The first-instance court awarded AED 400,400 and a return ticket. The employer appealed; before the Court of Appeal it asked for an expert to be appointed and for a loan it had made to the employee to be set off against the gratuity. The Court of Appeal held that request inadmissible because it had not been made at first instance, and upheld the judgment. The Federal Supreme Court rejected the employer's challenge to that ruling. A request for judicial set-off is an incidental claim, not a defence on the merits, because set-off can take place only after a judgment establishes the defendant's own right against the plaintiff. The defendant must therefore ask the first-instance court, expressly and unequivocally, for judgment on its own claim and for set-off, in one of the forms set by Article 97(2) and after paying the fees due; it may not do so for the first time on appeal, and the trial court cannot carry out judicial set-off without such a request. The Court of Appeal had applied the law correctly.
An employer that wants a loan or advance deducted from a departing employee's gratuity must plead it as its own claim, and pay the fee, at first instance; if it does not, it cannot raise the point later in the same case. The case was decided under the 1992 Civil Procedure Law, since replaced by Federal Decree-Law No. 42 of 2022.
| Article 97(2) of Federal Law No. 11 of 1992 (Civil Procedure Law) Decided under this law; it has been replaced by Civil Procedure Code. |
“طلب إجراء المقاصة من جانب الطاعنة بخصم قيمة القرض من المبالغ المستحقة عن مكافأة نهاية الخدمة للمطعون ضده هو من قبيل الطلبات العارضة وليس من قبيل الدفاع الموضوعي”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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