Questions & Answers
Understanding liabilities before signing a debt settlement agreement
Salam Naser,
I was in dispute with a client over non-payments and now it's the time we agreed to sign a settlement agreement.
Her lawyer has sent the agreement letter which has the following two terms in it and which are not clear to me. It will be nice of you if you can guide me accordingly.
"1. Indemnity
The Parties agree that it shall indemnify and keep the other party indemnified from and against all liabilities, costs, expenses, damages and losses (including any direct, indirect or consequential losses, loss of reputation and all interest, penalties and legal and other professional costs and expenses) suffered or incurred by the party arising out of the other party carrying out its obligations under this Settlement Agreement or breach or negligent performance or non-performance thereof."
Confusion, who will be the authority to define these losses...etc? It's a very technical term.
"2. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the Dubai International Financial Centre (DIFC), without giving effect to any choice of law or conflict of law provisions. The Parties consent to the non-exclusive jurisdiction of the DIFC Courts."
Confusion, They're mentioning DIFC law specifically, I don't know the reason. Should it be the UAE courts laws in general?
Your help and suggestion will be highly appreciated.
We would need to study all the clauses in your agreement to be able to comment on the specifics of the indemnity clause.
The clause mentioned above is a standard general indemnity clause and is aimed at ensuring that both parties under the settlement they've reached abide by terms.
DIFC is normally used in case of arbitration and quicker resolution than could be possible in Dubai Courts and leads to quick judgements.
If the jurisdiction as you have mentioned is DIFC, then DIFC is the relevant authority before which the claim for losses may be filed.
It is imperative we study the entire contract before you sign and accept terms therein.
Thanks.
