Khaberni - The Al Ain Court for Civil, Commercial, and Administrative Claims in the United Arab Emirates ruled that a trading broker must repay a young man the amount of $124,361, which he had lost in trading operations in record time due to breaching their agreement and using a high-risk trading method and trading amounts exceeding the invested funds, leading to severe losses for the plaintiff.
In detail, a young man filed a lawsuit against a trading broker, requesting the termination of their agreement, demanding the reimbursement of the agreed amount of $124,361, and the payment of 50,000 dirhams as compensation for moral and literary damages. Additionally, he requested appointing an expert in digital trading to verify the broker’s (defendant's) trading on the futures platform contrary to their agreement, to calculate all resulting losses, and for the court to rule based on the expert’s findings, with the defendant bearing all legal fees, costs, and attorney's fees.
While the expert appointed by the court concluded that there was no written and signed agreement between the parties regarding the subject of the lawsuit, it was evident from the exchanged messages that the relationship between the parties was based on the plaintiff depositing funds into his account on a trading platform, while the defendant managed the portfolio for a fee (30%) of the profits. The defendant's declared goal was to achieve daily cumulative profits ranging from 1% to 5%, with a set loss limit of (-8%) per trade.
The report revealed that the plaintiff had deposited an amount in digital dollars (USDT), totaling $135,501 into his account on the trading platform. On handing over his account login details (username and password) to the defendant, who began trading transactions using the account on the same day he received the login details, it became apparent from the technical examination of the completed transactions on the plaintiff's account on the trading platform that the operations were carried out using a high-risk and unprofessional trading style, resulting in financial losses that exceeded the declared limits in the messages exchanged between the parties through WhatsApp, particularly concerning the (-8%) loss limit which the expertise found the defendant did not adhere to in his trading contracts.
The report indicated that the trader used the (TAKER) system in executing the trades, leading to the account incurring high fees amounting to more than $46,000 within a few days, which contributed to increasing the total losses. Based on this, the final results indicate that the total accumulated losses amounted to $124,361, pointing out that if the court rests in the exchanged messages via WhatsApp and considers them as an agreement between the parties, the defendant had breached the declared technical commitments, used a high-risk trading method, and margin-traded figures exceeding the amount of funds invested in the account, resulting in him paying high platform fees and causing severe losses to the plaintiff in record time with uncalculated trade risks.
The court explained in the reasons for its ruling that it is settled jurisprudence that in bilateral contracts, if one of the contracting parties breaches the commitments imposed by the contract, the other party has the right to request the termination, and the termination of the contract returns both parties to the state they were in before the contract was made. It is also established under civil transactions law that the contract must be executed according to its content and in a manner consistent with good faith, not limited to obliging the contracting party to what is stated therein but also covering what is required by law, custom, and the nature of the act.
The court noted that it is confident in the results of the expert report, as it proved the defendant's breach in fulfilling his contractual commitments "the declared technical obligations and using a high-risk trading style that did not consider the professional customs known in risk management, and trading on margin with figures exceeding the amount of money invested in the account," leading to significant losses for the plaintiff in record time. It also found that the plaintiff did not breach any contractual obligations, thus he is entitled to request the termination of the contract under Article 272 of the Civil Transactions Law.
Regarding the compensation claim, the court noted the proven breach of the broker (defendant) in fulfilling his obligations, which constitutes a fault obliging liability on his part, leading to the plaintiff suffering both material and moral damages deserving compensation. The court ruled to terminate the contract subject to the lawsuit and obliged the defendant to reimburse the plaintiff $124,361, pay the plaintiff 10,000 dirhams in damages, and cover all legal fees, expenses of the lawsuit, the appointed expert’s fee, and 500 dirhams as attorney's fees.
