Dubai Court of Cassation (General Assembly), Appeal No. 2 of 2023, judgment of 31 October 2023
Under Article 298 of the Civil Transactions Law a claim for damages for a harmful act is barred three years after the victim actually learned of the harm and of the person responsible, and in any case after fifteen years. Where the act is also a crime, the civil claim survives as long as the criminal action does: while the criminal action can still be brought, moved or pursued, the victim has an excuse that suspends the civil period (Article 481(1)). Prosecution investigation steps interrupt criminal limitation, so the civil period starts only when the criminal proceedings end, by a final criminal judgment or a decision that there is no case to answer. The Assembly departed from judgments that disregarded prosecution investigations.
A contracting company sued its former chief executive and vice-chairman (who held office from 2008 until 2016 and 2017) and the signatory of its Saudi subsidiary for AED 470.5 million. It alleged that, without the board's conditions being met, the executive bought a 10 per cent stake in a Saudi real estate developer and had the subsidiary sign a construction contract of about SAR 1.7 billion, causing heavy losses. An internal investigation led to a complaint registered by the public funds prosecution (No. 4 of 2018) and an international wanted notice. The court of first instance awarded AED 365,881,538; the Court of Appeal held the claim against the executive barred by the passage of time. The company appealed in cassation.
The commercial chamber referred the appeal to the General Assembly because the chambers differed: some gave no effect to prosecution investigations where no criminal case had been filed, while others held that the civil period is suspended while the criminal action may be brought or pursued.
The Assembly explained that Article 298 creates a short limitation running from actual, not presumed, knowledge of the harm and of the person responsible, and that under Article 298(2) a claim arising from a crime is not barred while the criminal action is still admissible. The existence of the right to bring or pursue the criminal action is an excuse under Article 481(1) suspending the civil period until the criminal action ends by a final judgment or otherwise. Under Articles 20 and 21 of the Criminal Procedure Law criminal limitation is interrupted by investigation, accusation, trial or inquiry steps. By the required majority, the Assembly adopted the second line.
Applying it, the Assembly held that the prosecution's investigation was still ongoing, so the civil period had not begun when the company sued in September 2020. It quashed the judgment and remitted the case to the Court of Appeal.
Companies pursuing former directors or executives for misappropriation often file a criminal complaint first. The judgment confirms that the three-year civil limitation does not run while the investigation or prosecution is alive, and starts only from the final criminal outcome, so pursuing the criminal route first does not cost the company its civil claim.
| Articles 298 and 481 of Federal Law No. 5 of 1985 (Civil Transactions Law) — text of articles 298, 481 Decided under this law; it has been replaced by Civil Transactions Law 2025. |
| Articles 20 and 21 of the Criminal Procedure Law (limitation of the criminal action and its interruption) |
| Article 20 of Dubai Law No. 13 of 2016 on the Judicial Authority in the Emirate of Dubai (referral to and majority of the General Assembly) |
“فإن سريان مدة عدم السماع المنصوص عليها في المادة 298 سالفة الذكر بالنسبة له يقف ما بقي الحق في رفع الدعوى الجنائية أو تحريكها أو السير فيها قائمًا”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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