Federal Supreme Court Ruling on Partner Liability and Piercing Corporate Veil in an LLC (Commercial Appeal No. 291 of 2025)

Judgment summary

In Commercial Appeal No. 291 of 2025, the UAE Federal Supreme Court examined a commercial dispute where two partners closed an LLC's operations and set up a competing free-zone entity under the same name to divert clients and assets. The Court held that while partner liability in an LLC is generally limited to their shares, an exception applies when partners commit gross fault, fraud, or misuse the corporate veil to seize company assets. The Court overturned the appellate ruling that denied the damaged partner's claim for 2022 company profits, confirming that a damaged partner may personally sue misconducting partners in their personal assets.