Judges rule that assets were moved in order to avoid paying back investors. Dubai: After discovering that a group of defendants intended to divert assets and hinder the recovery of investors’ funds in a real estate investment dispute dating back to 2008, a Dubai court ordered them to collectively pay Dh5 million in compensation, along with legal interest and court expenses. The Dubai Courts of First Instance recently ruled that the defendants had committed fraud and deception by transferring valuable assets to related parties without payment, thereby blocking the enforcement of court rulings that had previously been rendered in favor of a group of Danish investors.
Investment contracts and disagreements The plaintiffs used a brokerage firm to invest in real estate developments under two investment agreements they executed in 2008. Conflicts over unpaid investment amounts and returns resulted from the projects’ eventual failure. Two of the defendants and the investors came to a settlement in 2012, when one of the defendants offered a personal guarantee for the repayment of the invested amounts. Nevertheless, the court determined that the defendants’ later acts compromised this settlement. Suspicions were raised by asset transfers.
According to court documents, the brokerage firm and the project developer reached a settlement in 2013 whereby the brokerage firm obtained real estate units worth Dh27 million as the ultimate payment of their claims. A third defendant’s business acquired the units in 2014. The court concluded that the transfer was meant to protect assets from creditors, including the investors, because there was no proof that it was done for value. A previous ruling was mainly unenforced. The Court of Cassation upheld the investors’ 2019 final commercial decision, which required the first and second defendants to pay more than Dh25.4 million plus 9% annual interest.
The investors filed the current claim for damages because, despite starting enforcement actions, court documents showed that just about Dh3 million of the more than Dh35 million owed had been retrieved. The court rejects procedural objections By contesting the legitimacy of the investors’ legal standing and powers of attorney, as well as by submitting counterclaims and motions to include more parties, the defendants sought to obstruct the proceedings. The investors had appropriate legal standing, their representation was legitimate, and the procedural applications were baseless, the court ruled, rejecting all such objections. Fraud and liability findings
The court determined that the defendants’ activities amounted to fraudulent behavior that directly harmed the investors by depriving them of their money for over ten years, based on an expert report. Despite the investors’ claims for Dh85 million in damages, the court evaluated the evidence and found the defendants jointly and severally guilty, awarding Dh5 million in compensation. Interest and expenses In addition to the compensation, the court mandated that the defendants pay Dh3,000 in legal expenses, court costs, and 5% yearly legal interest from the date the decision becomes official until full payment.
