With Dubai becoming the hub for the region, a vast quantity of goods pass through to reach to the rest of the Middle East. As many know, with the movement of the goods come the requirement for customs clearance and the need for companies to be familiar with customs regulations in order to avoid being penalised under the law.
It has been noted in recent years that the number of customs cases for breaching customs regulations has increased, which comes as no surprise with the increase of goods passing through Dubai. Customs cases are not heard about as much as other types of cases and this is mainly due to such cases having a unique progression route that differs from other more typical commercial/ civil cases.
Before we explain how a customs case starts and the route it goes through, one important point to note is that Customs Courts do not exist in Dubai (or generally in the UAE). Although there are references to Customs Courts and their procedures in the relevant laws (especially the GCC Unified Customs Law which is the main law that regulates customs for all GCC member countries) these Courts are not in existence in the UAE.
In the absence of the Customs Courts, and also any criminal element to the nature of the case, the legal department of each Emirate’s customs office deals with the case and issues an order against the breaching party.
A typical customs case starts with the customs office being alerted to a breach of the customs regulations being committed, as a result of which they delegate the task of investigating the breach to their audit department. The audit department’s investigation task involves, amongst other things, going through the records the customs office holds for the breaching party and visiting the premises of the breaching company to meet the key business people and carry out an inspection.
With the conclusion of their task, the audit department issues a report to confirm whether or not a breach has been committed. If a breach has been committed then the audit department will transfer the file to the legal department to issue an order against the breaching company penalising them for their action. The breaching party will then be notified of this order and asked to comply with the penalties imposed, which in most cases consists of paying the back dated duties and fine, payable within 14 days from the date of the notification.
The breaching party has the right to challenge this order by filing an appeal against it within 15 days from the date of the notification of the order and such appeal will result in staying the execution of the order pending the outcome of the appeal.
The appeal should be filed before the same Legal Department that issued the order but will be looked at by a grievance committee that consists of the heads of different departments of the customs office including the head of the legal and audit department. The decision issued by the grievance committee in the appeal will be final and not subject to further appeal. This means that if the grievance committee upholds the order then the breaching party is expected to comply with it.
Despite the fact that the number of customs cases are increasing and the life cycle of these cases, as explained above, seems simple, many companies do not exercise their right to challenge the order and tend to settle it upon issuance.
If the right to appeal and challenge an order exists then it is available for you to exercise it regardless of the entity issuing the order which is sought to be challenged. We have dealt with cases where we successfully challenged orders (including employing our advocacy skills before the grievance committee) without our clients’ relationship with the Customs office being affected. In fact, the grievance committees are all open to any appeal before them and will givem the appellants every opportunity they need to assist the committee in reaching a decision.
As for not being aware of the appeal option, no one should be blamed for this savethe party itself. There is an old adage that ignorance of the law is no excuse. Any party (especially companies that deal with goods) should be familiar with the laws/customs regulations of the region or seek legal advice on these regulations. What happens in practice is that due to the absence of Customs Courts, parties tend not to take customs cases seriously and do not (even in high value orders) involve lawyers and seek their advice and simply proceed with settling. We hope this changes in the future and that parties start to take customs cases seriously. Of course, one hopes that in the near future a Customs Court is established in the UAE to deal with these cases especially in light of the fact that each year the number, and value, of the cases are increasing and becoming more complicated. After all, the Customs Courts and their procedures are mentioned in the law so why don’t they exist?