Aluminium manufacturer fined Dh3.1m over contract breach and forged transfer in Dubai

Dubai: An aluminium foil manufacturer has been ordered to pay more than Dh3.12 million to a foreign company in compensation for breaching contractual obligations and failing to deliver agreed quantities, after its manager was criminally convicted of forging a bank transfer receipt.

The ruling was issued by the Dubai Civil Courts following a dispute stemming from a commercial relationship between a European company and a UAE-based manufacturer for the supply of 245 tonnes of aluminium across several shipments.

Court documents, according to Emarat Al Youm, show that the claimant paid instalments totalling $1.17 million in line with payment terms set out in invoices issued by the supplier. 

However, the defendant failed to deliver part of the agreed quantity, valued at about $488,000, and later withheld the remaining shipments without refunding their value, despite repeated demands.

The manufacturer subsequently presented what it claimed was a bank transfer receipt indicating that the outstanding amount had been returned. The document was later proven to be forged.

A final criminal judgment convicted the company’s manager of forgery in an unofficial document, after establishing that the transfer receipt had been fabricated to mislead the claimant into believing the remaining funds had been repaid.

During the civil proceedings, the court appointed an independent expert, who concluded that the total amount owed by the defendant stood at $749,607. This figure included the value of undelivered goods and an additional balance acknowledged in earlier email correspondence as a creditor amount that remained unpaid. The expert confirmed that the claimant had fully complied with its contractual obligations, while the defendant had defaulted without justification.

The report further found that the claimant suffered financial harm by being deprived of the use of its funds from the date they became due. Compensation for lost profit was assessed at 5 per cent per year, in line with the risk-free return standard applied in the UAE.

In its reasoning, the court held that the relationship between the parties constituted a contract of sale, not a recurring supply contract. The defendant’s failure to deliver the full quantity justified rescinding the contract for the undelivered portion, while preserving the legal effects of what had already been executed.

The court ordered the termination of the disputed sale contract and directed the defendant to pay Dh2.75 million in outstanding amounts, in addition to Dh376,857 in material damages. Legal interest of 5 per cent annually will accrue from the date the sums became due until full payment, alongside court fees and expenses.