Dubai Court Holds Major UAE Bank Liable For Negligence Over Unauthorised Transfers

A Dubai court has ruled against a major UAE bank, holding it liable for professional negligence after it failed to promptly implement customer instructions to revoke banking access, a lapse that led to unauthorised electronic transfers and substantial financial losses.

 

In its judgment, the court found that the bank breached its duty of care by allowing a former authorised signatory to retain access to a corporate customer’s electronic banking system despite receiving clear and complete instructions to remove that access.

 

The dispute involved a UAE-based company operating in the maritime and logistics sector, which maintained multiple foreign-currency accounts with the bank. According to court records, the company had formally instructed the bank to revoke the authority of a former signatory and disable all related electronic banking access after concerns arose over the misuse of company funds.

 

Despite receiving the required mandate change forms and supporting corporate documents in line with its own procedures, the bank failed to act in a timely manner. As a result, multiple unauthorised electronic transfers were carried out within a short period, causing significant financial loss to the company.

 

The court appointed an independent banking expert to examine the sequence of events. The expert’s report confirmed that the bank delayed implementing the customer’s instructions and verified the value of the unauthorised transfers executed during that period.

 

In parallel criminal proceedings, the individual responsible for the transfers was later convicted under a final criminal judgment, reinforcing the unlawful nature of the transactions, the court noted.

 

The bank sought to dismiss the civil claim, arguing that it was not responsible for the losses. However, the court rejected those arguments, ruling that financial institutions are under a strict obligation to act promptly on customer instructions and to safeguard corporate accounts, particularly with respect to electronic banking access.

 

The court concluded that the bank’s failure to revoke the former signatory’s access constituted a direct error that caused financial harm. It ordered the bank to repay the full value of the unauthorised transfers, along with legal interest and court costs.

 

The litigation was led by UAE-based legal consultancy Kaden Boriss, which advised the company throughout the dispute, including regulatory escalation, coordination with criminal proceedings and representation during the expert appointment and trial phases.

 

Legal observers said the ruling reinforces the high standard of professional accountability imposed on banks in the UAE and serves as a warning that failures to promptly implement security-related customer instructions can give rise to civil liability, even when the institution involved is a major national lender.

 

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