Small- and medium-sized enterprises (SMEs) are widely acknowledged as an essential component of a competitive and efficient market, and are recognised worldwide for their contribution to economic growth, social cohesion, employment and local development. The UAE is no different – indeed which sector in this country is more critical for knowledge creation, innovation and entrepreneurship?

Yet SMEs are faced with significant challenges, which vary significantly from those encountered by larger organisations. It is said that SMEs generally operate under tighter margins. In addition, SMEs are more exposed to the environment in which they operate because, by their very nature, they do not have the same capacity to influence the environment or absorb market volatility as larger firms do.

The fundamental characteristics of SMEs have always been central to the performance of this sector, allowing innovation, speed to market and knowledge creation. However, what is also critical to SMEs is cashflow and transaction pipeline. The findings of a recent Entrepreneur Confidence Survey carried out in the UK revealed that the number one concern for small businesses is the likelihood that customers will delay or cancel existing contracts. In total, 69 per cent of respondents cited delayed or cancelled customer contracts as a business-critical issue, with half of them admitting that it is by far their biggest worry in the short term, ahead of general concerns about cashflow (cited by 59 per cent of respondents).

It is not being suggested that the UK economy be compared to that of the UAE, or Dubai, but lawyers tell us that many businesses are examining their contracts for the first time since they were signed. So, what are the challenges they face in trying to enforce these contracts or collect payment? For many SMEs, the realisation is dawning that these contracts are only valuable if they are enforceable. And so, it is important for businesses in the UAE to understand the options available to them for enforcing contract terms and conditions. There is the perception that this will be a slow, expensive process with uncertainty over the result. But is this really the case?

Efficient and effective settlement of contractual disputes is critical to the functioning of an economy, and is particularly vital in sustaining the SME sector, the knowledge it creates, the innovation it delivers and the talent it employs. The Gulf has always been a region that has supported entrepreneurship. Nowhere is this more so than in Dubai, in particular the commercial zones.

SMEs are dependent on the clarity and certainty of the legal framework in which they operate and need to have confidence in the predictability of the application of the law. It is for this reason, among others, that the DIFC Courts established its Small Claims Tribunal (SCT).

Hearing only cases for amounts less than Dh100,000, the SCT was created to offer access to swift justice, without the need for lawyers to be instructed. Cases at the SCT are heard in front of a Dubai International Financial Centre Courts' judge and, historically more than 90 per cent of cases are resolved in less than two weeks, saving valuable time and expense. The cases are heard in English, which is a common language used in contracts by much of the SME sector in the DIFC.

For the DIFC's smaller businesses this is an easy, expeditious, low-cost answer to tackling contract problems, and enables small- to medium-sized organisations to obtain efficient justice for claims under Dh100,000, supporting their finances and freedom to perform.



- The author is Registrar at DIFC Courts.