Dubai court orders company to pay $588,000 in chemical supply dispute

The Commercial Court in Dubai ordered a company to pay $588,000, equivalent to Dhs2.15 million, to a chemicals supplier company, plus 5% annual interest from the due date in October 2023 until full payment, in addition to court fees, expenses, and legal costs.

This decision came after the court affirmed that plaintiff shipped the goods ordered which were received, but the full value was not paid.

The details of the case date back to when a company filed a lawsuit demanding that two companies jointly pay a debt of $588,000, representing the remaining amounts due for chemical material supplies shipped to an Arab country under purchase orders totaling $925,920.

The lawsuit documents showed that one of the companies had issued a letter before the start of commercial dealings, acknowledging its guarantee of the other company's obligations and its commitment to pay any outstanding invoices or dues if the latter failed to pay.

The plaintiff company allegedly fulfilled its obligations, supplied the agreed-upon materials, and issued the corresponding invoices.

During the court proceedings, the representative of the first company argued that the court lacked international jurisdiction and also claimed that the goods did not conform to specifications and were subsequently destroyed.

The court appointed an expert to examine the dispute, whose report revealed that the supplier company fully fulfilled its contractual obligations, and the chemical materials were shipped, delivered, and received without any objections at the time of delivery.

The report also affirmed there was correspondence and explicit acknowledgments of the debt and partial payment, adding that the total value of the supplies amounted to $925,920, of which $337,858 were paid, leaving $588,062 owed by the two appellee companies.

The court rejected the plea of lack of jurisdiction, affirming that part of the supply contract was executed within Dubai, given that the goods were shipped from the emirate to outside the UAE, which indicates the jurisdiction of UAE courts to hear the dispute.

The court also rejected the claim regarding the non-conformity of the goods to specifications, noting that the shipments were received without objection during 2023, while the destruction reports submitted were prepared approximately two years later, which proves there were no defects in the goods at the time of delivery.

The court concluded that there was no legal standing against the first company after it was proved that it had been struck off and its legal registration canceled before the lawsuit was filed, which led to the cessation of its legal personality and its non-existence legally at the time the lawsuit was filed.