Background

Our clients, the defendants in these proceedings, were represented by the Emirati Advocate Mrs. Awatif Al Khouri of Awatif Mohammed Shoqi Advocates and Legal Consultancy, who led the defense throughout this multi-stage civil dispute before the Dubai Courts.

The company claimed against the defendants for the recovery of funds, which they said had been paid over to them over a number of years for purposes associated with the management of its affairs. The claimant sought to recover the funds, together with statutory interest and legal costs.

The defendants, by contrast, raised multiple defenses, including that the dispute should be treated as one arising out of employment relations and therefore had to pass through the Ministry of Human Resources and Emiratisation before reaching court. They also argued, among other things, that the matter was barred by prior criminal proceedings, that limitation principles applied, and that the sums were in reality a gift rather than a recoverable amount. Through Awatif Mohammed Shoqi Advocates and Legal Consultancy, our clients successfully defended the claim in its entirety.

The Court of First Instance (Initial Judgment)

The Court of First Instance ruled that the dispute was an individual labor dispute and that the claimant was required by the relevant federal law to refer the claim to the competent governmental ministry for an attempt at amicable settlement before filing in the civil courts. The court held that it was not clear that this mandatory step had been taken, and therefore, the action was inadmissible. The court ordered the claimant to pay the costs.

Court of Appeal

The claimant filed an appeal. The Court of Appeal held that it was wrong to treat the matter under labor law. The claimant sought to recover money transferred in a commercial context, whereas the defendants sought to argue that the transfers were gifts between family members. Neither side resorted to labor legislation. The court further noted that there was no proof to establish that the accused were registered with the relevant government department or held work licenses. The appellate court, therefore, set aside the judgment of the court of first instance and remitted the matter back to the court of first instance.

Court of First Instance

The Court of Appeal remanded the case to the trial court for a hearing on the merits. Before deciding on the merits, the trial court considered two affirmative defenses. The court dismissed the res judicata defense because the prior criminal proceedings did not result in a definitive civil judgment that barred the current claim. It also rejected the limitation argument, stating that the claim as drafted did not fall into the statutory categories of beneficial acts to which the limitation rule applied.

The court on the merits gave significant weight to the findings of a court-appointed accounting expert who reviewed the company’s financial records. The expert concluded that the defendants owed no duty to return the sums in dispute, as per the company’s own books. The transfers were entered on the debit side of the manager’s current account, and not as obligations due by the defendants. The court found that no recoverable debt had been proven against the defendants, dismissed the entire complaint, and ordered the claimant to pay fees and expenses and a contribution to attorney’s fees.

Conclusion

The present case shows that accounting evidence taken from a company’s books may be conclusive where the existence of a debt is in dispute. Through the diligent efforts of Mrs. Awatif Al Khouri of Awatif Mohammed Shoqi Advocates and Legal Consultancy, the clients secured a dismissal of the claim on merits.