The Dubai Court of Cassation, headed by Judge Zuhair Ahmed Bassiouni, has overturned a ruling issued by the Court of First Instance in Dubai, which was supported by the Appeal Court, not to accept a lawsuit filed by a female citizen employee for declaring her insolvency, and its consequences, as a result of her inability to pay money owed to two parties, one of them an Islamic bank, The second is another personal plaintiff, arguing that the debts owed by the plaintiff are the result of commercial transactions between the employee and the defendant.
In the merits of its first ruling, which was upheld by the Court of Appeal, the Court of First Instance said that “the plaintiff demanding the declaration of its insolvency did not clarify in the circumstances of its claim whether the debts owed by it were due to negligence, default or intentional, and that these debts are due to the purchase of 53 thousand and 582 real estate shares in one of the major companies And bank facilities were granted by the bank under a murabaha share sale contract, on the basis of which the bank purchased the shares in their favor, and accordingly the two courts considered them a merchant for practicing a commercial business according to the provisions of the Federal Trade Transactions Law, and concluded that their insolvency was subject to the bankruptcy law and not insolvency ».
The attorney for the plaintiff, lawyer Mohamed Al-Awami Al-Mansoori, lodged an appeal before the Court of Cassation confirming that the ruling of the court of first instance - which was upheld by the Appeals Court - was marred by a mistake in the application of the law and corruption in the inference and lack of reason, as he added to his client the trader's capacity, although she does not have any Business licenses or partnership or do business regularly professionally, but it's just an employee.
The defense asserted that the characteristic of commercial work based on the murabahah contract with the Islamic bank does not confer the status of the merchant on the customer of the bank, as it is merely a procedure by Islamic banks in personal loans, and his client does not know anything about these shares, demanding to prove their insolvency in accordance with Federal Insolvency Law No. 19 For the year 2019, considering that the first verdict is flawed in order to overturn it.
The Court of Cassation ruled that the contested ruling was overturned, confirming in the merits of its ruling that the appeal was challenged in its place, based on Article 2 of the bankruptcy law issued by Federal Law Decree No. 9 of 2016, which states that bankruptcy rulings apply to companies subject to the provisions of commercial companies, or Any person who enjoys the status of merchant in accordance with the provisions of the law. Evidence that the debtor may be declared bankrupt when it is proven that he is a merchant and stopped paying his commercial debt at the due date as a result of the turmoil in his financial position, or the availability of objective conditions for his bankruptcy.
The Court of Cassation stated that to acquire the status of a merchant, a person must engage in commercial business in his name and account, and take it as a trade for him, confirming that the proof of this rests with the claimant and not the person who confirms that he is not a merchant.
The court indicated that the appellant is an employee, and she receives a monthly salary, and she does not have the status of a merchant, adding that the court of first instance attributed the plaintiff's submission to the bankruptcy law in its first ruling because its debt is the result of commercial business without the Court showing the nature of the business that it engaged in, whether in its name or To her account, and whether or not she took a habitual trade for her, so it is a judgment that is flawed with insufficient causation, and he has not examined the suit of the appellant, what is wrong with it and must be reversed.
On the basis of the foregoing, the Court of Cassation overturned the contested ruling from the Court of First Instance on December 29, 2019, and the Court of Appeal confirmed it on March 11, 2020, and referred the case to the Court of Appeal for further review.
The person acquiring the trader's capacity is entrusted to engage in commercial business and to take it as a trade.