Losing a lawsuit or complaint does not make the claimant liable for abuse of the right to litigate

Abu Dhabi Court of Cassation, Commercial Appeals Nos. 954 and 962 of 2024, judgment of 7 October 2024

Court
Abu Dhabi Court of Cassationمحكمة النقض - أبوظبي
Case
Abu Dhabi Court of Cassation, Commercial Appeals Nos. 954 and 962 of 2024, judgment of 7 October 2024
Arabic citation
الطعنان رقما 954 و962 لسنة 2024 تجاري، جلسة 7/10/2024
Topics
Civil law · Courts & arbitration · Company law
Laws applied
Civil Transactions Law 1985 (repealed)
Civil Procedure Code
Evidence Law
The judgment
Read it on adjd.gov.ae ↗ (ADJD judgments service (Abu Dhabi Court of Cassation), Id 109834; principles from ADJD Technical Office, 'مجموعة الأحكام والمبادئ القانونية' 2024, p. 716)
Summary written
31 October 2026
Print

The principle

A person who uses a right lawfully is not liable for resulting harm to others (Articles 104 to 106 of the Civil Transactions Law). Abuse exists only in the cases listed exhaustively in Article 106, all marked by an intent to harm or a reckless disregard of serious harm. Going to court is a right open to all and gives rise to liability only if it is diverted from its purpose and used vexatiously to harm the opponent; the failure of a complaint or claim does not in itself show abuse. An unregistered business partnership that takes none of the forms in the Companies Law is void as a matter of public order.

The case and the decision

Two parties signed partnership agreements in 2016 to carry out construction projects together. After the projects were completed and earlier final judgments had settled accounts between them, the defendant continued to assert that the partnership subsisted and that money was owed to him, having previously sued the company on the basis of an employment relationship. The company sued for a declaration that the partnership had ended and AED 100,000 compensation for the harm caused by his claims. The first-instance court declared the agreements terminated, awarded AED 50,000 compensation for abuse of the right to litigate and held his counterclaim for an account barred by res judicata. The Court of Appeal set aside the compensation award. Both sides appealed in cassation.

The Court first rejected an objection that the claims were below the AED 500,000 threshold: under Articles 50, 51(4) and 175(1) of the Civil Procedure Law, a claim concerning the validity or termination of a contract is valued by the subject of the contract. On the merits, it held that the partnership, formed in 2016 without taking any of the forms in Article 9(1) of the Companies Law (Federal Law No. 2 of 2015) and without the notarised Arabic memorandum required by Article 14, was a concealed arrangement and void as a matter of public order; declaring the agreements ended had the same effect as declaring them void. The counterclaim was barred because the account had been finally settled (Article 87 of the Evidence Law). On compensation, under Articles 104, 105 and 106 of the Civil Transactions Law, lawful use of a right attracts no liability; abuse requires one of the Article 106 cases, whose common feature is an intent to harm. Litigation is a right available to all, and losing a claim or complaint may be due to weak evidence or other reasons. The Court of Appeal had permissibly found no bad faith, since the defendant believed his rights were at risk. Both appeals were dismissed.

Why it matters

Counterclaims for 'malicious litigation' rarely succeed: a business must show that the other side litigated to harm it, not merely that it lost. The decision also shows that informal construction partnerships that are never registered as companies are treated as void, with accounts settled under the parties' agreement.

Laws applied

Articles 104, 105 and 106 of Federal Law No. 5 of 1985 (Civil Transactions Law) — text of articles 104, 105, 106
Decided under this law; it has been replaced by Civil Transactions Law 2025.
Articles 9, 14, 16 and 374 of Federal Law No. 2 of 2015 (Commercial Companies Law)
Decided under this law; it has been replaced by Commercial Companies Law.
Articles 50, 51(4) and 175(1) of Federal Decree-Law No. 42 of 2022 (Civil Procedure Law) — text of articles 50, 51, 175
Article 87 of Federal Decree-Law No. 35 of 2022 (Evidence Law) — text of article 87

In the court’s words

“وأن حق الالتجاء الى القضاء من الحقوق المباحة المكفولة للكافة فلا يكون من استعمله مسؤولاً عما ينشأ عن ذلك من ضرر للغير”

Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.

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Source. Summary written by Polaris from the judgment published by the Abu Dhabi Court of Cassation on adjd.gov.ae (ADJD judgments service (Abu Dhabi Court of Cassation), Id 109834; principles from ADJD Technical Office, 'مجموعة الأحكام والمبادئ القانونية' 2024, p. 716), read on 31 October 2026. Party names are anonymised in the court’s publication.
Published for general information by Polaris Corporate Services FZ-LLC. It is not legal advice. This page is a summary written by Polaris; it is not the judgment and is not an official translation. Read the judgment on the court’s official service before relying on it. A judgment decides the dispute before the court; its weight in a later case depends on the court, the facts and any later change in the law or in the court’s own case law.

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