Month: October 2017

Breach of Trust (UAE)

Any action that goes against the implicit trust granted by an agreement between the trustor (the person giving the trust) and the trustee (the person entrusted) is known as breach of trust

For a breach of trust to have taken place, some specific elem Mrs should exist.

1- The person in breach must obtain possession of an object either on the basis of trust, usage, lease or mortgage for breach of trust to happen

2- A breach of trust can only apply to a moveable object such as money or a document.

3. To be classed as a breach of trust, the object in question needs to be obtained, damages or wasted or lost without proper authority having been granted. This is a specific difference to theft or fraud as an actual physical damage must be suffered.

4- Where a shareholder prevents other shareholders from exercising their rights for personal gain, a clear breach of trust exists.

Theft in Dubai

Theft is considered as the removal or taking of someone else’s property or assets with the intention of retaining possession without their permission.

This is considered a serious crime in the UAE and the punishment available to a judge can range from a fine to a jail sentence. A jail sentence would usually be between 6 months and 3 years but can be even higher in specific circumstances. The sentence can rise as high as 7 years for theft in the workplace by an employee or even higher if a lethal weapon is used in carrying out the crime. Some common examples of theft cases and typical penalties are:

  • Using a vehicle without the permission of the owner – jail sentence of one year or AED 10,000 fine.
  • Employee theft, stealing from their employer’s office – jail sentence of 5 to 7 years.
  • Grazing. Eating food in a store or supermarket without paying.
  • Failing to pay for a meal consumed in a restaurant can be treated as a crime but will be up to the judge to determine if the refusal to pay is valid. A valid reason might be that the food was not as ordered by the person or that it was of poor or inedible quality.
  • If a bank or money exchange accidently hands over a higher amount of money than the person is entitled to (such as a counter withdrawal or cheque encashment) it would be considered theft if the person deliberately keeps the additional money.

HEBA in the UAE

The unconditional and immediate transfer of property without any consideration (payment or reservation) by one person to another is known as Heba, under muslim law.

In other countries, the term GIFT may be similar to what is known as HEBA but for the purpose of this article, we are referring to the donation of property to another person without the expectation of anything in return.

Once Heba has occurred, the transaction is final. In the event Heba was granted during a period of sickness, however, this could be contested by the potentially rightful heirs of the property in question. Similarly, if the donation was made under threat or duress, it can be revoked which also applies to cases where the gift was granted because of dishonest or deceitful action. For his to be revoked it must be by court order

There are 2 conditions whereby Heba can be granted at a future date which relate to death and birth. Heba can be granted whereby the transfer of the property occurs on the death of the current owner. It is also possible to enact Heba for the benefit of an unborn child provided that the child is born within 6 months of the Heba being given.

As with most aspects of law, it is strongly advisable to have any Heba you wish to grant clarified in writing and to have a witness to further authenticate its validity. In principal, Heba can be given verbally but has a strong possibility to be contested later if this cannot be verified clearly.

An important point to note. Heba can be refused by the person it has been granted to so may be advisable to ensure the intended recipient is happy to receive it.

Arbitration in UAE

Arbitration is an alternative dispute resolution court in the UAE and has been increasingly used as the chosen jurisdiction to settle matters that require a legal path to be followed. The fact that arbitration is on the rise and more commercial companies are inclined towards it’s use may be largely attributed to the fact that proceedings may be conducted in English. With a very high percentage of the population being expatriate who conduct much of their business in the English language, it follows that they may be more inclined to seek legal remedies in the same language.

Moreover, in arbitration a special body can be established to handle certain types of dispute which can result in quicker judgments (without appeal and cessation proceedings) making them cost effective overall when compared to broader and full UAE courts process.

Recent years have continued to see both local and international investors attracted to investing in the construction sector which has enhanced Dubai’s reputation as an important international real estate investment market. The recent slump (decline or correction depending on your view) that has impacted the real estate market since 2008 did not halt a continuous influx of investment in the construction sector. For this reason, there are a growing number of disputes concerning many aspects of the delivery and release of such properties with the documentation having specified arbitration proceedings as the jurisdiction for any legal remedy.