Khaberni - The Primary Civil Court in Dubai ruled that a person criminally convicted of fraud in an Arab country is obligated to pay more than 10 million dirhams to a person of the same nationality, after it was proven that he had taken $2.7 million from the victim's money, in addition to a sum of 500,000 dirhams as compensation to the latter for material and moral damages, following his deception involving investment in a fictitious entity, before the accused fled abroad.
The facts of the case date back to the accused deceiving the victim into establishing a securities trading company in an Arab state, where he enticed him with the prospect of substantial financial gains in exchange for investing money, prompting the victim to transfer $2.7 million through bank transfers, in hopes of achieving a legitimate investment return.
According to the victim’s statement in his lawsuit, the accused took possession of the transferred sums and failed to fulfill the obligation of returning them, before fleeing outside that state, coming to the UAE, only to find out later that the referred-to company was unlicensed and not registered with the Securities and Exchange Authority, and had no legal existence whatsoever, having been used as a front to siphon investors' money.
The court explained that the same facts were subject to criminal investigations there, resulting in a judgment by a criminal court in that country, sentencing the accused to 15 years in absentia and a hefty financial penalty, after proving his appropriation of the victim's and others' money without right before fleeing and refraining from implementing the verdict or returning the appropriated amounts.
During the lawsuit's examination in Dubai courts, the accused argued that the state courts lacked jurisdiction to consider the dispute, and that the presented documents were merely uncertified photocopies, besides arguing that the case had expired by statute of limitations. However, the court addressed these defenses, confirming that the criminal judgment issued from that Arab country is documented and certified from the relevant authorities in that country and the UAE, making it valid for contention according to enforceable international agreements.
The court also rejected the jurisdictional challenge, clarifying that according to the letter from the Securities and Exchange Authority, the entity alleged by the accused to have been established was not licensed to engage in activities involving receiving money for employment and investment, nor was it registered in the directory prepared for this purpose, negating the existence of the company legally, and confirming that the accused received funds in his personal capacity, whether directly from the public or through bank accounts in the name of a fictitious entity, which established jurisdiction for the state's courts after proving his presence within the UAE.
Regarding the argument that the lawsuit had expired by the statute of limitations, the court emphasized that the present lawsuit was not a claim for restitution of money paid without right, but rather a compensation claim arising from a fraud offense, and does not follow the statute of limitations specified in civil laws, confirming that this type of lawsuit does not lapse unless the criminal case is dismissed by a final and conclusive judgment, which was not accomplished in the case of the accused, since the criminal judgment issued against him was in absentia and had not become final.
The court affirmed that tort liability only arises when its three elements are present, comprising the error, the harm, and the causative relationship, all of which were established in the lawsuit, where the error involved deceiving the victim into establishing a fictitious company for receiving money, and the taking of huge sums illegitimately, while the damage was substantiated in depriving the victim of his money for years, losing investment opportunities, and the emotional and moral damage endured, as well as bearing the costs and hardships of litigation.
Regarding the estimation of compensation, the court explained that the material damage does not just relate to the loss of the amount taken, but also extends to lost profits, and deprives the victim of the enjoyment of his funds for years, along with the moral damages represented in anxiety, psychological stress, and fear of losing rights. The court pointed out that estimating the compensation falls within the factual matters independent to the merits court, which can award total compensation without a detailed accounting of each element of damage.
The court concluded by obligating the accused to reimburse an amount of $2.7 million or its equivalent in UAE dirhams, and to pay a compensation of 500,000 dirhams for material and moral damages, with legal interest at a rate of 5% annually from the date the judgment becomes final until full payment, in addition to imposing the costs of the lawsuit and legal expenses.
