Dubai court obliges two companies and their managers to pay Dhs2 million to an auto agent

The Dubai Commercial Court settled a dispute over the infringement of an exclusive commercial agency for a car brand by ordering two companies and their managers, jointly and severally, to pay Dhs2 million in compensation to the commercial agent. The court also ruled for an annual interest of 5% from when the judgment became final until full payment, along with court fees, expenses, and legal costs.

The plaintiff, who has held the exclusive commercial agency for the car brand in the UAE since 2020 and operates a local branch in Dubai, filed a lawsuit seeking Dhs10 million for material and moral damages and lost profits. This claim followed accusations that two companies had been promoting the sale of new cars with the same brand in the local market via social media, offering competitive pricing, bank financing, and free vehicle registration.

An expert committee was appointed to investigate the matter and found that there were no import transactions recorded under the names of the companies or their managers since January 2024. However, the committee did confirm the sale of a new 2025 model vehicle based on conversations, invoices, and documentation concerning possession, inspection, and registration with relevant authorities.

Evidence revealed prior online posts advertising the sale of vehicles within the country, which included details on financing options, registration procedures, and specifications. In contrast, no comparable online activity was identified for the second company during the inspection. Additionally, it was established that the vehicle had entered the local market through a separate company.

The court dismissed objections concerning electronic evidence, invoices, and the timing of advertisements. It determined that the verified sale, supported by promotional evidence, sufficiently proved an infringement of exclusive rights. The court also ruled that the subsequent removal of these advertisements did not diminish their evidentiary relevance for the period they were active.

The court reiterated that free zones in the country fall under UAE legislation unless explicitly exempted. It also emphasized that the Commercial Agencies Law forbids the import or trade of products associated with a registered commercial agency without authorization from the designated agent or their consent.

In its final ruling, the court found that the violations caused significant harm to the authorized agent. This included lost profit opportunities, decreased market share, reputational damage, and costs incurred in regaining customer trust. While the claimant initially sought compensation of Dhs10 million, the court determined Dhs2 million to be an appropriate amount.

Additionally, the court held that the managers of both companies were directly involved in the infractions, making them personally liable for their actions. They were, therefore, ordered to jointly and severally pay the awarded sum of Dhs2 million. All other claims presented in the case were rejected.