Judgment No. 1739 of 2026, Court of First Instance (Abu Dhabi)

Text of the Preliminary Decision: Decision on Violation, Grounds of Appeal, Response to the Grounds, Procedural History, Judgment File

In the session held at the Abu Dhabi Commercial Court of First Instance

On 22 Muharram 1448 H, corresponding to 07/07/2026 AD

Presided over by the Judge: Dr. Mohammed Abdullah Amer Al-Humaidan

The court considered Case No.: 1739-2026-Commercial Simple - M-R-B-A-Z-T Commercial (Simple) Head Office

Registered on: 06/04/2026

Subject: Financial Claim

After hearing the oral arguments, reviewing the documents, and deliberation,

The following judgment was issued:

The Reasons

The facts of the case are that the two plaintiffs contracted with the first defendant to invest financial sums in the second defendant company. The plaintiffs delivered the said amount to the defendants, but when they requested the return of the amount as agreed, the defendants refused to return it without justification. For these reasons, the plaintiffs filed this lawsuit, and their final claims, according to the memorandum submitted on 23/06/2026, are as follows:

1. Termination of the Memorandum of Understanding dated 01/05/2024 between the plaintiffs and the first defendant, and all its consequences, by restoring the contracting parties to the state they were in before the contract, and obligating the defendants jointly and severally to pay the first plaintiff an amount of AED 420,000 and to pay the second plaintiff an amount of AED 65,000, with legal interest at a rate of 12% from the date of the claim until full payment, and compensation of AED 25,000 for their loss of profit.

2. Obligating them to pay the fees and expenses.

Their counsel attached to the statement of claim a file of documents containing, among other papers, the memorandum of understanding sought to be terminated, a copy of a bank statement, and a decision from the Alternative Dispute Resolution administration.

The case was deliberated in its sessions, where the plaintiffs' counsel and the first defendant, in his personal capacity and as the manager of the second defendant, appeared. He submitted a response memorandum in which he requested the dismissal of the lawsuit for being unfounded. He added in his memorandum that the first plaintiff is the one actually managing the second defendant company based on a power of attorney granted to him by the first defendant, and as a result of his mismanagement, the second defendant company incurred losses. He attached documents including a copy of a power of attorney granted by the first defendant to the first plaintiff to manage the second defendant company. The court reserved the case for judgment at today's session.

Regarding the subject matter of the lawsuit, Article 272 of the Civil Transactions Law No. (5) of 1985 states that '1- In bilateral contracts, if one of the contracting parties does not perform his obligation under the contract, the other contracting party may, after giving notice to the debtor, demand performance of the contract or its termination. 2- The judge may order the debtor to perform immediately or grant him a specific period, and he may rule for termination and compensation in any case if there is a reason for it.' Article 380 of the same law states that '1- The debtor shall be compelled, after being given notice, to perform his obligation in kind, if possible...'

It is established, according to Article (83) of the Commercial Companies Law, that 1/ A limited liability company shall be managed by one or more managers as decided by the partners in the articles of association... 2/ Unless the manager's appointment contract, the articles of association, or its internal regulations restrict the powers granted to the manager, he shall be authorized to exercise full powers in the management of the company, and his actions shall be binding on it, provided that they are accompanied by a statement of the capacity in which he is acting.

It is also established that the text in Article (84) thereof states that every manager in a limited liability company is liable to the company and the partners for any fraudulent acts he commits, and he is also obliged to compensate the company for any losses or expenses incurred due to misuse of authority or violation of the provisions of any applicable law, the company's articles of association, his appointment contract, or a serious error on the part of the manager. Any provision in the articles of association or in the manager's appointment contract that contradicts the provisions of this clause shall be void. This means that the manager is obliged to act with honesty and good faith, not to misuse his powers by squandering the company's funds or acting in a way that affects its credit, and not to use the company's funds to achieve personal gains. In other words, he must act in a manner consistent with being an agent for the partners and the company, acting in good faith to achieve the interests of his principal, not his personal interest. It is also established that the trial court has the full authority to ascertain and understand the facts of the case, and to examine and weigh the evidence and documents submitted to it, balancing them and accepting what it finds convincing and rejecting the rest - including expert reports. It has the authority to interpret the wording of contracts, agreements, and all other documents and disputed terms in light of the general rules of contract interpretation, and to deduce what it deems to best reflect the intention of the contracting parties and to ascertain their common intent, as long as its judgment is based on valid reasons derived from what has a fixed origin in the documents. (Appeal No. 497 of the year...)

---

...2026 Commercial - Abu Dhabi Court of Cassation - session of 16/06/2026).

It is judicially established that understanding the true facts of the case is a matter within the discretion of the trial court, and in this regard, it may assess the documents submitted, weigh their evidence, accept what it finds convincing, and reject the rest, as long as its conclusion is sound and not contrary to what is established in the records. It is not obliged to follow the litigants in all their arguments as long as the truth it has become convinced of and for which it has provided evidence entails a conclusive response to those arguments. It may also adopt the findings of an expert's report based on its reasons, and in doing so, it is not obliged to respond to objections raised against the report it has adopted in whole or in part, as its adoption in this manner indicates that it found nothing in these objections worthy of a response beyond what the report contained. Furthermore, the expert is not obliged to perform his work in a specific manner as long as what he does achieves the purpose of his appointment and without being bound by what the litigants prefer, as his work is ultimately subject to the court's assessment, which may adopt it if it is satisfied with it or reject it if it has doubts. Its assessment cannot be challenged as long as it is not based on non-existent documents or on existing documents that contradict what it has established or from which it is logically impossible to deduce what it has deduced [Appeal No. 59 of 2025 Commercial - Abu Dhabi Cassation - session of 20/02/2025].

Since it is established that the plaintiffs entered into an agreement with the first defendant on 01/05/2024, under which the plaintiffs would invest financial amounts with the first defendant, and that agreement stipulated in clauses 3 and 4 that the first plaintiff would invest an amount of AED 420,000 and the second plaintiff would invest an amount of AED 65,000, and it was also agreed in clause 5 of the same agreement that the first defendant would return that amount upon request. Since it is established that the plaintiffs filed this lawsuit to claim those amounts delivered to the first defendant according to that agreement, and that claim in its essence is a request to enforce the aforementioned memorandum of understanding, their request is therefore consistent with the correct reality and law, as the return of the amount was not contingent on any condition to be met but merely on the request. This is not altered by the first defendant's argument that the first plaintiff is the one managing the second defendant company, as there is no connection between the management of the company and its making profits or losses and the plaintiffs' claim, since the amounts paid by them were not sums contributed for participation in the second defendant company, with their entitlement being linked to the existence of profit or loss in the company. Furthermore, the first defendant is the manager of the second defendant company according to the articles of association and is therefore responsible for it, and issuing a power of attorney to the first plaintiff to manage the company is not sufficient to absolve the first defendant of his responsibility as a manager. The first defendant did not provide any evidence of the non-delivery of the investment amount stated in the memorandum by the plaintiffs. Therefore, based on the foregoing, the court concludes to rule for the termination of the memorandum of understanding concluded between the plaintiffs and the first defendant as will be stated in the operative part, and consequently, the court orders the first defendant to pay the first plaintiff an amount of AED 420,000 and to pay the second plaintiff an amount of AED 65,000.

Regarding the claim for interest at a rate of 12% from the date of filing the lawsuit until full payment, it is established by the judiciary that (delay interest awarded to the creditor upon his request is nothing more than compensation for the damage he suffered due to the debtor's default despite his ability to pay the debt upon its maturity and preventing him from benefiting from it. It is calculated from the date of the judicial claim if the debt is of a known amount not subject to the court's discretion, and from the date the judgment becomes final if the court has wide discretion in assessing the adjudicated debt). (Appeal No. 87 of 2022 Commercial – Abu Dhabi Court of Cassation – session of 22/03/2022).

Since the court has concluded to obligate the first defendant to pay the adjudicated amount to the plaintiffs, and this amount is known, his default in payment is established, and thus the conditions for the plaintiffs' entitlement to delay interest as compensation for the delay are met. The documents were devoid of any evidence of an agreement on the calculation of interest between the parties, and the documents were also devoid of any prevailing market interest rate. Therefore, the court rules for the accrual of delay interest on the amounts awarded to each of the plaintiffs according to the amount awarded to him as will be stated in the operative part, at a rate of 2% from the date of filing the lawsuit on 04/06/2026 until full payment, provided it does not exceed the principal debt.

Regarding the plaintiffs' claim for compensation of AED 25,000 for material and moral damages, it is established under Article (87) of the same law that a creditor may claim supplementary compensation in addition to delay interest if he proves that the damage exceeding these interests was caused by the debtor's fraud or gross negligence. (Appeals No. 217 of 2025 Commercial Cassation - Abu Dhabi Court of Cassation - session of 29/04/2025).

Since the plaintiffs bear the burden of proving the occurrence of damage to them due to the first defendant's fault, other than his fault in delaying the payment of the plaintiffs' dues which is compensated by the awarded interest, but he failed to do so. Therefore, this claim is unfounded, and the court rules to dismiss it in accordance with Article 87 of the Commercial Transactions Law.

Regarding the lawsuit expenses, including attorney's fees, the court obligates the first defendant to pay the appropriate amount thereof, in accordance with Articles 133 and 135 of Decree-Law No. 42 of 2022 concerning the Civil Procedure Law.

For these reasons,

The Court has ruled: -

---

The Court rules:

1. The termination of the Memorandum of Understanding dated 01/05/2024, executed between the plaintiffs and the first defendant.

2. To obligate the first defendant to pay the first plaintiff an amount of AED 420,000, with legal interest on that amount at a rate of 2% annually from the date of 04/06/2026 until full payment, not to exceed the principal amount.

3. To obligate the first defendant to pay the second plaintiff an amount of AED 65,000, with legal interest on that amount at a rate of 2% annually from the date of 04/06/2026 until full payment, not to exceed the principal amount.

4. To obligate them to pay the appropriate court fees and an amount of AED 200 for attorney's fees.

5. To dismiss all other claims.