"Dubai discrimination" supported the dismissal of the case

Signing a mistake that costs a foreign bank 27 million dirhams

The "court" ruled the restitution and nullity of the bail contract subject of the case.

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The Dubai Court of Cassation upheld a ruling by the Commercial Court of First Instance, and the Court of Appeal upheld it, rejecting the lawsuit of a foreign bank, demanding a local company to pay 27 million and 232 thousand dirhams, as a guarantor for a businessman, borrowed 27 million and 232 thousand dirhams, and evaded payment, so he returned The bank is against the guarantor (the company), and the court rejected his claim due to the signing of the guarantee or surety contract by the director of the defendant company, who does not legally have the power to borrow from banks or guarantee others in the company’s name, which is something that the plaintiff bank did not pay attention to, or hedging From him before the loan granted him.

The case papers stated that the plaintiff bank provided banking facilities to a person, consisting of a loan of 27 million and 232 thousand dirhams, with the guarantee of the defendant company, and when the original debtor failed to pay the value of the loan owed by him, the bank filed a guarantee case against the company under the guarantee contract.

The defense attorney of the defendant company, the International Center for Advocacy and Legal Consultation, made a contradictory claim calling for the cancellation of the bail contract because it was issued without having any capacity, as it was in violation of the provisions of the annex of the company’s incorporation contract, which does not allow its manager to sign on behalf of the company by guaranteeing it for the loan.

In the second degree of litigation, and based on an appeal filed by the bank, the Court of Appeal ordered the delegation of a tripartite committee of banking experts, who concluded in their report that the company’s manager, according to the appendix of the articles of incorporation, did not have the authority to borrow from banks or guarantee others in the name of the defendant company. And it was necessary for the plaintiff bank to check the accuracy and good scrutiny in the provisions of the contract annex, as a document indicating the authority of the director to sign on behalf of the company, because the borrowing, guarantee or guarantee operations with their legal effects require clear clauses that entitle those powers, which is something that the annex of the Memorandum of Association referred to lacking mechanism.

The court ruled the dismissal and nullity of the bail contract that is the subject of the lawsuit, as it was carried out without a legal basis, given that the guarantee contract on which the plaintiff bank is based is frustrated, as it is not enforceable in the defendant company.

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