A claim filed against a deceased person can be cured by joining the heirs; rescinded partnership refunds net of sums received

The principle

A claim or appeal brought against a person who had already died is not void beyond repair: it may be corrected by joining the heirs at the same level of court, by a memorandum or new statement filed with the case management office within the time limit, since the purpose of adversarial proceedings is then achieved (Articles 13, 14 and 16 of the Civil Procedure Law). On rescission of a partnership agreement that was never actually implemented, the parties are restored to their prior position, so sums the investor admitted receiving as profits are treated as a return of capital and deducted from the refund.

The case and the decision

An investor sued his partner, and a medical centre whose letterhead and seal appeared on the documents, for rescission of a memorandum of understanding and a partnership agreement (October 2018) to open spinal and orthopaedic centres in Riyadh, Jeddah and other Saudi cities, with capital of AED 60 million shared equally. He had paid AED 30 million, in two instalments, into the medical centre's account; the partner opened only one centre in Riyadh, registered it in his own name and never recorded the investor's 50% share. The partner had died before the claim was filed, and his heirs were joined later. The courts below rescinded the agreement and ordered repayment of AED 30 million plus AED 1 million in compensation.

The chamber referred the question of a claim brought against a deceased person to the General Assembly, which unanimously adopted the principle that such a claim or appeal may be corrected by joining the heirs at the same level of court, through a memorandum or statement filed with the case management office within the prescribed time, because the aim of adversarial proceedings between living parties is then met; the Civil Procedure Law (Articles 13, 14 and 16) favours validity over nullity where the purpose of a procedure is achieved.

Deciding the appeal, the General Assembly upheld the findings on standing (the centre received the money) and on rescission under Articles 267, 272 and 274 of the Civil Transactions Law, based on the partner's breach as found by the expert. It rejected reliance on Cabinet Resolution No. 5 of 2020 (COVID-19 as an emergency), whose effect was confined to the UAE while the contract was to be performed in Saudi Arabia, and whose period post-dated the 2019 deadlines. However, the investor had admitted, in a Public Prosecution file, receiving AED 700,000 as partnership profits. Applying Article 14 of the Evidence Law, and because the partnership was never actually formed, that sum was a return of capital, not profit, and had to be deducted. The General Assembly partly quashed the decision and reduced the award from AED 31 million to AED 30.3 million.

Laws applied

In the court’s words

“بإقرار المبدأ الذي يقضي بإجازة تصحيح شكل الدعوى أو الطعن باختصام ورثة المتوفى”

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

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