Case Study: Papel Payment Services Provider LLC v Monitox Limited

Background 

In 2023, Papel Payment Services Provider LLC, a Dubai based company, and Monitox Limited, a company registered in Scotland, entered into a supply of services contract. This contract included explicitly stated that it was to be governed by the law of the UAE and that the courts of the Emirate of Dubai were to have exclusive jurisdiction to settle all disputes or claims arising out of the contract. 

Papel’s relationship with Monitox worsened, prompting Papel to end their service supply contract. Afterward, Papel sent two invoices to Monitox requesting payment. When Monitox did not settle these invoices, Papel pursued recovery by applying for a payment order and securing a judgment from the Dubai Commercial Court of First Instance. 

Papel then sought a “decree conform” order from the Court to enforce the Dubai judgment against Monitox in Scotland. For such an order to be granted, the Court must be satisfied that the original judgment was not obtained through fraud and that the initial legal action resulting in the foreign judgment was properly served. Even if the original case was undefended, a decree conform action can still be challenged. Additionally, common law defences – often grounded in public policy – may be raised and will be carefully considered by the Court on their individual merits. 

The issue before the Court was whether the judgment obtained by Papel violated Scots law principles of natural justice. Monitox contended that it had not been given a fair opportunity to challenge the payment order that resulted in the judgment. The Court considered evidence from both parties, including expert testimony from a UAE-based lawyer regarding UAE law. 

In making its decision, the Court examined the legal process under UAE law relevant to this case. Evidence was presented showing that the procedure used by Papel was established under UAE law to offer a “swift and efficient” means for creditors to recover undisputed debts. To utilise this process, the following conditions must be satisfied: 

1. The debt must be for a fixed amount and must have been unequivocally acknowledged by the debtor; 

1. A demand for payment must be served on the debtor specifying exactly what is due to be paid and allowing a period of 5 days for the debtor to make payment. Service of this notice is to be by an official server of documents in the UAE, Tableegh and whilst the notice is in Arabic, it may be translated if Arabic is not the recipient’s first language. Service may be made by a variety of means, including by email; and 

1. If no payment is made within the 5 days, the creditor can apply to the Court for a payment order against the debtor, and this is to be granted by the Court within three days. The application for the payment order is written in Arabic, is not translated and is not required to be served on the debtor. 

The payment demand was sent to Monitox by Tableegh via email, which included a telephone number and was written in Arabic. The email contained a PDF of the demand along with an English translation. Although a Monitox employee received the email, the Court of Session accepted evidence that the employee did not open the PDF and therefore did not read the demand. Since the debt remained unpaid, Papel applied to the Dubai Commercial Court of First Instance for a payment order, which was granted three days later. Papel emailed the payment order to Monitox on October 5 and 13, 2023. The second email included a partial English translation; however, this translation incorrectly stated a sum significantly higher than the amount awarded by the Court in the payment order. There was no English translation of the section informing Monitox of its right to file a grievance or appeal. Additionally, the order was published in a local Arabic-language newspaper. 

Papel argued that the Court should grant the order allowing enforcement of the judgment against Monitox in Scotland. They compared the UAE’s fast-track debt recovery process to Scotland’s summary diligence procedure, which allows creditors to enforce deeds or contracts registered for execution without first obtaining a court decree. Papel maintained that Monitox had ample opportunity to dispute the debt but failed to do so, and that the Dubai procedure used to secure the payment order was fair. Therefore, Papel contended that the enforcement order should be granted in Scotland. 

Conversely, Monitox argued that it had not received adequate notice of the UAE proceedings before the payment order was issued, constituting a breach of natural justice. As a result, Monitox asserted that the Scottish Court should refuse to grant the enforcement order sought by Papel. 

The Decision 

The Court agreed with Monitox. They found that there had been a breach of natural justice due to the way in which the payment order was obtained by Papel. Although Papel technically gave Monitox notice of the payment order on three occasions, the first notice was entirely in Arabic. The second notice included some English, but it misstated the amount ordered to be paid and omitted any English explanation of the right to appeal or the relevant deadlines. Additionally, payment order was advertised only in Arabic in a newspaper unlikely to be accessed by anyone connected to Monitox. As a result, the Court found that Papel’s service of payment order on Monitox in October 2023 was insufficient. 

The Court decided that there was a breach of natural justice, as Monitox was not given any real chance to present its defence in the UAE. Therefore, Papel was not entitled to the order sought to make Monitox pay the due payments and the action was disposed of by the Court. 

 What does this decision mean for award/judgment enforcement between the UAE and the UK? 

This decision highlights just how tricky it can be to enforce foreign judgments, especially between countries like the UAE and the UK, which have very different legal systems and ideas of justice. The Scottish Court of Session made it clear that for a foreign judgment to be enforced in Scotland, it must meet basic standards of fairness under Scots law. In this case, the Court found that Monitox hadn’t been given a real chance to challenge the payment order from the UAE – partly because they weren’t properly notified and faced language barriers. 

The case also shows that differences in legal procedures can have a big impact on enforcement. The UAE’s fast-track debt recovery process is built for speed and efficiency, but it may not meet the UK’s stricter standards for fairness and due process. So even if a judgment is perfectly valid under UAE law, it could still be blocked in the UK if it clashes with the UK’s idea of what a fair legal process looks like. 

For businesses and lawyers working across the UAE and UK, the key takeaway is this: just because you win a judgment in one country doesn’t mean it will automatically be enforced in the other. It’s crucial to ensure that legal proceedings – from how documents are served to giving parties a fair chance to respond – meet the standards of the country where you want the judgment enforced.