Federal Supreme Court, Commercial Appeal No. 776 of 2020, judgment of 29 December 2020
Tort liability requires that the harmful act be the direct or effective cause of the loss claimed. Identifying the fault and assessing causation are for the trial court, but it must give sound reasons showing beyond doubt that the loss was the inevitable result of the harmful act. An employer cannot be held liable for its employee's wrongful act, even one established by a criminal conviction, unless the court examines whether that act actually caused the loss, here unauthorised bank transfers made by other means.
A businessman with companies operating in Dubai had told his banks that he was travelling and given them his mobile number, and had left several transfer orders signed in blank with his manager so that funds could be sent to him if needed. While abroad he found his mobile line cut off; on his return he learned that his SIM card had been replaced on a request made in his name, and money had been transferred out of his accounts without his authority. Several people were convicted of forgery and bribery offences, including an employee of a telecom company who had accepted a bribe to swap the card. The businessman sued the individuals involved, a bank and the telecom company in Sharjah for AED 3.07 million plus AED 200,000 in compensation. The first-instance court held the claim inadmissible against two of the defendants for lack of standing, ordered three defendants to pay AED 2.085 million jointly and six defendants to pay AED 200,000 jointly. The Court of Appeal raised the first sum to AED 3.07 million against three defendants and ordered several defendants, now including the telecom company, to pay AED 200,000 jointly. The telecom company appealed in cassation. The Federal Supreme Court held that the Court of Appeal had found the company liable for its employee's acts, relying on the criminal judgment, without examining whether the SIM swap caused the loss. The transfers had been carried out directly with a bank employee, not through telephone banking, after the businessman had authorised one of his staff to make transfers and handed him signed transfer orders, which were then misused. Causation was an essential question that could change the outcome on the company's liability, and the judgment was quashed for insufficient reasoning and breach of the law.
Victims of account takeovers may sue every party in the chain, as the claimant did here. The ruling requires a concrete causal link between each defendant's act and the loss: a telecom operator answering for its employee's misconduct is liable only if the swap actually enabled the loss, not where the money left through signed instructions handed to the bank. The case was decided under the general tort rules of the 1985 Civil Transactions Law, since replaced by Federal Decree-Law No. 25 of 2025.
| Federal Law No. 5 of 1985 (Civil Transactions Law), tort liability and liability for the acts of employees (the judgment cites no article) Decided under this law; it has been replaced by Civil Transactions Law 2025. |
“من شروط المسؤولية التقصيرية هو أن يفضي الفعل الضار للضرر المطلوب التعويض ويكون سببه المباشر أو المنتج”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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