Dubai court obligates company to pay Dhs5 million to investors

Dubai Civil Court of First Instance obligated a company to pay a compensation of Dhs5 million to investors plus a legal interest of 5 per cent per annum from the date the judgment became final until full payment.

The company was also obligated to pay the incurred expenses and Dhs3,000 in lawyer’s fees.

Earlier, the investors partnered with the company in projects after signing agreements aimed at investing their funds and achieving agreed-upon returns. It was revealed later that the company owner’s actions caused them significant financial harms and hindered their access to their dues.

The case dated back to 2008 when investors decided to inject their money into investment projects through a company. The invested funds totaled Dhs40 million and investment agreements were signed stipulating the company’s commitment to managing those funds and achieving specific returns.

Under the agreements, the investors paid over Dhs29 million but after the company breached its obligations, they resorted to the courts of law and final court rulings were issued obligating the company to pay their financial dues.

Those rulings, however, were not fully put into practice, as only a limited part of the amounts awarded were collected, while the majority remained unpaid because the company took actions that led its funds to be smuggled and its financial obligations to be cleared. This prevented the investors from receiving their dues, which exceeded Dhs40 million.

The documents and expert reports showed that the company subsequently entered into settlements and financial transactions with other parties, under which it relinquished financial rights and assets in exchange for real estate units valued at approximately Dhs27 million without notifying investors or transferring any part of that value to pay their dues.

The court affirmed that the ruling issued in this case was not meant to refund the value of the investment but was a compensation for the harms that had befallen the investors due to the company’s fraudulent actions, which prevented them from collecting their money and deprived them of benefiting from it for many years.

The court concluded that the elements of legal liability were present and estimated the compensation for the harms at Dhs5 million plus legal interest and expenses.