Dubai Court Orders Dh1.35M Repayment as Profits Ruled Separate From Capital

The Dubai Civil Court has ordered an Arab national to immediately repay Dh1.35 million in investment capital to his business partner, ruling that earlier profit distributions do not eliminate the legal obligation to return the principal amount.

The court rejected the defendant’s argument that he should be absolved of liability because he had already paid over Dh1 million in commercial profits during the course of the business relationship.

The ruling underscores a key legal principle in the UAE business environment: financial returns distributed during an investment cycle are distinct from the original capital and do not give an investment manager the right to retain the principal sum.

According to court records, the plaintiff had transferred Dh1.35 million to the defendant a few years ago under a mutual commercial agreement. The funds were intended for investment in a local car trading business, which initially generated returns.

However, the relationship later deteriorated after the defendant retained the entire principal amount and failed to meet ongoing obligations or return the seed capital, despite repeated formal demands from the investor.

During proceedings, the defence argued that the claim should be dismissed, citing that the plaintiff had already received Dh1.1 million in dividends and profits during the business tenure, claiming this effectively settled the matter.

The court, however, firmly rejected this position, holding that profit distributions and return of capital are legally separate obligations. It ruled that the defendant remained bound to return the full principal upon request.

The court also relied on digital evidence, including WhatsApp exchanges between the parties, which confirmed that the Dh1.35 million was clearly provided as investment capital intended for eventual return, weakening the defence’s claims.

The court directed the defendant to repay the full Dh1.35 million, along with 5 per cent annual legal interest from the date of filing the case until full payment, in addition to litigation costs.

 For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004. Follow The Law Reporters on WhatsApp Channels.