Dubai court orders firm to refund Dhs1.38m to an insurance company

The Civil Court in Dubai ordered a company to pay Dhs1.380 million to an insurance company, after the insurance company liquidated the insurance policies and paid the dues of 86 workers on behalf of the defaulting company, in implementation of a decision issued by the Labour Disputes Settlement Committee.

The court also ordered the company to pay legal interest at 5% annually from the date of the judicial claim until full payment.

The details of the case, according to the lawsuit documents, date back to when the insurance company, that was responsible to cover workers registered with the Ministry of Human Resources and Emiratisation, filed a lawsuit demanding that the appellee company be compelled to refund an amount of Dhs1.380 million, representing the value of the labour compensation it paid on its behalf, in addition to legal interest, fees, and expenses.

The insurance company explained that the labour insurance system, approved by the Cabinet as an alternative to bank guarantees, allows workers to receive their dues if the employer defaults, provided that the insurer retains the right to recourse against the employer to recover what was paid.

According to the documents, a decision was issued by the Disputes Settlement Committee obliging the appellee to pay labour dues amounting to more than Dhs4.09 million to 86 workers.

Later, the court addressed the insurance company to liquidate the workers' insurance coverage in implementation of the decision, where it was found that an amount of Dhs1.380 million was due within the limits of the prescribed insurance coverage.

The court affirmed that the insurance company transferred the amount to the Enforcement Department of Dubai Courts in October 2025 for the benefit of the beneficiary workers, but the appellee company refrained from returning these amounts.

The court indicated in the reasoning of its judgment that the insurance policies issued to workers explicitly stipulated the right of the insurance company, after paying compensation and labour dues, to recourse against the employer and recover what was paid on its behalf.

The court ordered the defendant company to pay Dhs1.380 million to the insurance company, in addition to legal interest at 5% annually from the date of the judicial claim until full payment, as well as fees, expenses, and attorney's fees.