Court finds company breached contract after halting payments
The Fujairah Federal Court of Appeal has upheld a ruling requiring a company and its partners to pay Dh4,943,018 to an individual after failing to settle the remaining value of an agreement involving the transfer of a commercial licence and the right to use an industrial land plot in the emirate.
The court amended the interest rate awarded in the initial judgment from 12 per cent to 5 per cent annually, calculated from the date the lawsuit was filed until full payment, provided the interest does not exceed the principal debt.
Dispute over licence transfer
Case records show that the dispute began when the plaintiff filed a lawsuit demanding payment of the outstanding balance of an agreement valued at $1.633 million, payable in instalments. The agreement covered the waiver of a commercial licence and the usufruct right to an industrial plot measuring 9,688 square metres in one of Fujairah’s industrial zones.
According to court documents, the company paid the first instalment but later stopped making payments, despite the plaintiff completing the transfer of the licence and associated rights to a local authority in line with approved procedures.
Counterclaim rejected
In response, three defendants filed a counterclaim seeking to annul the agreement and demanding Dh1.199 million along with Dh200,000 in compensation. They argued that the plaintiff did not own the land, but only held usufruct rights, while ownership belonged to a local authority.
The Court of First Instance rejected the counterclaim and ruled that the third, fourth and fifth defendants were jointly liable to pay the claimed amount with 12 per cent interest. The case against the first and second defendants was dismissed due to lack of legal standing.
Expert panel findings
During appeal proceedings, the court consolidated the appeals and appointed a three-member expert committee to examine the contractual relationship and assess compliance with the agreement.
The expert report concluded that the appellants had materially breached the contract by failing to pay the remaining consideration, while the claimant had duly executed the transfer in accordance with approved legal procedures.
Court endorses lower court reasoning
The appellate court endorsed the lower court’s findings in full, including dismissal of claims that the agreement was void due to alleged lack of knowledge regarding ownership status or assertions that the agreed price was inconsistent with market value. It also confirmed the absence of legal standing for two defendants who were not parties to the contract.
The court further ruled that allegations of forgery raised during appeal were legally ineffective, noting that the appellants had previously challenged the agreement on substantive grounds, including alleged deception and unfairness.
Interest rate amended
While affirming liability, the court modified the interest awarded, setting it at 5 per cent annually from the date of claim until payment, capped at the principal debt.
The appeals were dismissed in all other respects, with each appellant ordered to bear the costs of their respective appeal proceedings.
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