Dubai Court acquitted resident investor of 100,000,000 dirhams debts

Ahmed Moawad - | UAE

The Court of Appeal in the United Arab Emirates upheld the ruling issued by the Court of First Instance exempting a resident of the Emirates, an Arab national, from debts originally estimated at 100 million dirhams.

The Dubai Court of Cassation confirmed the verdict, citing the fraudulent partnership and administration of a Gulf man for three firms formed by his brother in his name and ordering his removal from the partner registry.

To prove partnership and actual management of the defendant brother in the aforementioned companies, it ruled to add his name instead of the plaintiff in the register of partners and commercial licenses for those companies and to publish the ruling in two widely circulated newspapers.

A Gulf citizen filed a lawsuit in Dubai Courts, stating that he granted his brother a legal power of attorney in October 2016, certified by a notary public, allowing him to establish companies of all kinds, sign contracts for the purchase or sale of shares, change the trade name, and more. All procedures.

According to the plaintiff's defense attorney, Mohamed Najib, the plaintiff's brother's agency required the defendant to manage the companies' technical, administrative, and financial aspects by terminating bank transactions, signing checks, appointing employees, terminating their services, and relinquishing the plaintiff's shares in the company. Company, paid or unpaid.

He said the defendant brother bought shares in a contracting company with branches, altered its name, and registered them in his wife's name under the agency contract. The two brothers' side contract stated that the plaintiff would only be a guarantor of those companies' commercial licenses, with shares registered in his name for official purposes. Plaintiff signed the contract as a witness, not a party with rights or obligations.

Later, the plaintiff was astonished by legal rulings against the defendant corporations, and after inquiry and investigation, it became obvious that they owed 100 million dirhams.

The plaintiff canceled his agency to his brother, the defendant, in October 2021 and asked the judiciary to invalidate his actions of introducing him as a fictitious partner in those companies due to proven fraud and unfairness on the defendant's part, who took advantage of the agency and mismanaged them, causing heavy losses and debts.

The plaintiff identified a previous litigation between the defendant and another person who possessed interests in one of the defendant companies, in which he admitted to being the partner and manager. He produced evidence that he was fully engaged in managing companies in 2017 and commercial licenses for his private companies.

The defense of the defendant brother submitted a memorandum requesting that the complaint against him and his wife (the fourth defendant) be rejected for lack of legitimacy, proof, and interest.

After the court appointed an accounting expert, the report showed that the defendant brother and another partner handled all financial matters, banking transactions, corporate budgets, and profit and loss distribution.

The expert report found that the defendant brother owns all shares in the defendant companies and pays all their bills, and that his wife and his plaintiff brother's partnership is a farce.

Based on the findings and records, the court found that the plaintiff was a fictional partner who did not contribute money or enjoy profits and exonerated him of company debts.

After rejecting the initial ruling, the defendant and his wife appealed to the Court of Appeal, which referred the case back to an expert, who confirmed that the first appellant manages those companies and pays their debts. all.

The court of appeal upheld the previous verdict and ordered the appellants to pay fees and expenses after reviewing the case, papers, expert report, and pleadings.

Brother and wife appealed first-instance and appeal verdicts to the Court of Cassation, bringing the dispute to a close. The ruling's inaccuracy in interpreting the law, lack of reason, and infringement of the right of defense by ending up with a fake partnership between the brothers in violation of written proof were criticized in their appeal.

In response, the Court of Cassation said that formality is the agreement of two parties to execute an apparent, unreal act that conceals their relationship and that the trial court can extract or deny it.

The court affirmed the initial and appeal findings on partnership formality and absolved the fictional partner brother of company debts.

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Ahmed Moawad
Ahmed Moawad
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