UNITED ARAB EMIRATES Law and Practice Contributed by: Stuart Paterson, Janine Mallis and Tania Forichon, Herbert Smith Freehills
1. Fraud Claims 1.1 General Characteristics of Fraud Claims The UAE is a federation of seven different emir - ates and operates a civil legal system. It has federal laws that apply across the country and laws that apply only to specific emirates. Each emirate has the power to retain its own judicial system, with jurisdiction over all matters not assigned to the UAE federal courts under the Constitution, and implement its own legislation. In addition, over 40 multidisciplinary free zones ( “Free Zones” ) exist in the UAE and offer vari - ous advantages to businesses incorporated within them. The Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM), each with its own standalone (offshore) common law legal system and commercial laws, are among the most well-known. English com - mon law directly applies to and forms part of the law of the ADGM, whereas in the DIFC, DIFC law is to be determined first by reference to DIFC statutes, which are supplemented by the common law of England and Wales and other common law jurisdictions. The Free Zones apply different laws and regulations to those applied in the rest of the UAE, although, crucially, UAE criminal law still applies to them. There is close interaction between the civil and criminal justice systems, and this is particularly the case in relation to matters involving fraud. A victim of fraud may choose whether to bring a standalone civil claim for damages arising from the fraudulent conduct before the civil courts or to report the fraud to the police and later join a civil claim to any criminal proceedings which may have been commenced before the criminal court. However, even standalone civil lawsuits will usually be stayed pending any criminal pro -
ceedings. In the absence of a criminal convic - tion of the defendant, the victim is unlikely to succeed in obtaining compensation through the civil route. The UAE Public Prosecution has exclusive juris - diction to pursue criminal cases. It should be noted that a private prosecution – a criminal prosecution started by a private individual or body not acting on behalf of the police or any other prosecuting authority – cannot be brought in the UAE. Criminal Liability Fraud Fraud is primarily treated as a criminal offence, and fewer provisions specifically deal with it under civil law. The crime of fraud is codified in the UAE’s penal code, Federal Decree Law No 31 of 2021, later amended by Federal Decree Law No 36 of 2022 (the “New Penal Code” ). A physical element and a mental element are required. The physical element of a crime con - sists of a criminal act committed or an omission in violation of a law forbidding or requiring it. The mental element of the crime consists of the intention or the error. Article 451 of the New Penal Code provides pun - ishment for a company which: • uses fraudulent practices and assumes a false name; • takes possession for itself or for others of any movable property or written instrument; or • obtains any signature upon such instrument, its revocation or amendment, whenever the intention is to deceive a victim and bring them to surrender the instrument. • In addition, a company, or any of its repre - sentatives, will be punished if they transfer or
396 CHAMBERS.COM
Powered by FlippingBook