Natural justice and international litigation

International court judgments aren’t always enforceable in Scotland — especially if the individual or business affected wasn’t given a fair chance to respond. A recent case highlights what can happen when natural justice isn't properly observed.

Smash and grab litigation?

Most construction professionals are familiar with “smash and grab” adjudications — fast-track decisions where a contractor gets paid simply because the other side didn’t issue a payment notice in time.

But what about smash and grab litigation?

That’s how things may have felt for Scottish company Monitox Limited when a Dubai court awarded a six-figure judgment against it — just 23 days after it received a demand for payment. The ruling was issued without any hearing and based solely on paperwork the UAE-based pursuer Papel Payment Services Provider LLC submitted.

Papel then asked the Court of Session in Scotland to enforce the Dubai judgment, prompting the court to consider whether doing so would breach the principles of natural justice under Scots Law.

Case background

Papel provided electronic money services to Monitox under a contract governed by UAE law, which was subject to the exclusive jurisdiction of the Dubai courts.

After the firms’ relationship broke down, Papel terminated the contract and issued two invoices which weren’t paid. As such, Papel sent a payment notice under the UAE payment order procedure.

The UAE payment order procedure

UAE legislation provides a swift means of recovery of undisputed debts. Papel triggered the procedure, and the process unfolded quickly —

• 7 September 2023 — Papel sent Monitox a payment notice.

• With no response within five days, Papel lodged its claim with the court.

• 27 September 2023 — With no response, Papel applied for an ex parte judgment

• 30 September 2023 — The Dubai court granted the judgment, requiring Monitox to pay US$130,725.00 and £26,874.99, plus interest and legal costs

Monitox did not appeal within the relevant timeframes, and this led to the current Scottish enforcement proceedings.

Scottish court proceedings and defence

Monitox argued that although it had agreed to UAE jurisdiction, it wasn’t properly notified of the payment order or how to challenge it.

It argued Papel’s notices —

• Were published in Arabic in a UAE newspaper

• Were sent directly to Monitox in Arabic — a language no-one at the company could properly understand

• Were followed by a partly translated version — but this lacked any detail about the appeal process, including deadlines, the relevant court, or the right to challenge

• Misstated the amount due, using Dirhams instead of the correct US Dollar and Sterling figures

The crux of Monitox’s argument was the Scottish court should refuse to enforce the Dubai judgment because it breached the principles of natural justice. Monitox’s view was that two main issues were —

• The entire payment process was contrary to natural justice

• The notification of the payment order judgment in Dubai offended the principles of natural justice

Under Scots Law, a foreign judgment won’t be enforced if it was made in breach of natural justice — particularly if —

• The defender wasn’t given proper notice; or

• Had no meaningful opportunity to be heard

The Court of Session’s decision

Lord Braid accepted that the UAE’s payment order procedure wasn’t inherently unfair — and Monitox had accepted those rules by contract. The court therefore, focussed on the notices given by Papel.

Because Monitox had not received sufficient, comprehensible notice of the judgment or how to appeal, it had no real opportunity to challenge the debt. Enforcing the judgment would therefore breach fundamental Scottish principles of natural justice.

As such, the Dubai ruling was not enforceable in Scotland.

What does this mean for your contracts?

For businesses entering into international contracts, this case offers clear, practical takeaways —

• Understand the process — If you’re agreeing commercial contracts with a cross-border aspect, seek advice from specialists with knowledge of that jurisdiction. For example, make sure you know how judgments are issued and how they might be enforced

• Understand termination provisions and consequences — for example, what are the payment entitlements?

• Giving notice — Notices must comply with the contract and be in a language the recipient understands. Always include full information about appeal rights, deadlines, and procedures and serve as the contract requires (eg post, courier, personal service)

• Don’t delay if served — If you receive notice of a foreign legal process — even one that seems informal — seek legal advice quickly. Timeframes can be extremely short

• A note of caution — The judgment here implies that even though Monitox could have translated the notices, it still did not get fair notice; this is another nuance — and potential risk — businesses need to bear in mind and underscores the need to act swiftly

If you’d like to discuss a commercial contract, please do get in touch. Alternatively, you can read more of the firm’s commentary in our news and views section.