Dubai Court orders contracting company to repay Dhs1.97m to insurer

A Dubai court has ordered a contracting company and its owner to pay Dhs1.973 million to an insurance company. This amount serves as reimbursement for payments made by the insurer on behalf of the contracting firm to cover outstanding worker entitlements and travel tickets. The ruling follows a decision in a collective labor dispute that mandated the company to settle the claims of 373 workers. The court also awarded 5% annual interest, accruing from the date the judgment becomes final until full payment is made, in addition to legal fees.

In the details of the case, the insurance company filed a lawsuit seeking to compel the contracting firm and its owner to pay approximately Dhs1.97 million. The insurer explained that it acted in its capacity as a member and manager of an insurance pool, representing other member insurance companies, under an insurance policy for private-sector workers, established in agreement with the Ministry of Human Resources and Emiratisation. This policy grants the insurer the right to seek recourse against the employer to recover any compensation paid to covered workers.

The insurer noted that, in May 2026, the Collective Labor Disputes Committee issued a decision requiring the contracting firm to pay the entitlements of 373 workers, totaling Dhs2.959 million; this decision was subsequently referred to the Execution Court. Following this, the insurance company deposited Dhs1.942 million into the Dubai Courts' treasury to cover the entitlements of 331 workers who were verified as eligible for compensation under the terms of the policy. Furthermore, the insurer covered travel tickets for 25 workers, amounting to Dhs31,085, bringing the total sum paid to Dhs1.973 milion. The owner of the contracting company attended the hearings, representing both himself and the company. He requested the appointment of a financial expert to examine the insurance policy and relevant financial documents, and argued that he should not be held personally liable simply by virtue of being the owner and manager of the business.

The court affirmed that the insurance company had fulfilled its obligations toward the covered workers. It further noted that, upon paying the compensation, the insurer steps into the shoes of the insured parties, gaining the right to seek recovery from the party responsible for the damage. The court found that the contracting company’s failure to pay its workers’ dues forced the insurance company to cover those amounts—a situation that satisfies the elements of liability and warrants compensation.

The court clarified that the defendant company is a sole proprietorship, meaning its financial assets are not legally distinct from those of its owner. Consequently, the owner may be named as a defendant alongside the company, and any judgment may be enforced against his personal assets. Accordingly, the court ordered both the company and its owner to pay the full amount, plus 5% annual interest from the date the judgment becomes final until full payment is made, in addition to legal fees.