Dubai Court: Electronics firm's Dh1.2 million lawsuit dismissed

Dubai: A Dubai court has dismissed a lawsuit filed by an electronics company seeking more than Dh1.2 million in damages from its former CEO, ruling that the case was brought through the wrong legal channel.

The Dubai Civil Court (Court of First Instance) found that the dispute was, in substance, an employment-related matter and should have first been referred to the Ministry of Human Resources and Emiratisation, as required by law, before being taken to court.

The company, according to Emarat Al Youm, had accused its former executive, who previously oversaw operations in its electronics division, of causing significant financial and commercial losses through poor inventory management, disruption of supply chains and unilateral decision-making without approval from senior management.

In its statement of claim, the company asked the court to appoint a commercial and accounting expert to examine its financial records, inventory, loss reports and supply chains, and to assess the extent of product shortages and damage. It sought Dh1.228 million in compensation, an additional Dh100,000 in damages, plus legal interest.

The company said the defendant had been granted broad executive and administrative powers, including full oversight of operations, suppliers, warehouses, distribution and work teams. 

It alleged that, within a short period, his decisions led to the loss of key suppliers, supply-chain disruptions, declining sales and reputational damage, in addition to the loss and damage of large quantities of products and spare parts.

Following the end of the employment relationship, the company said it conducted a comprehensive inventory audit, which revealed substantial shortages and losses documented in internal reports. These findings, it said, showed that direct losses exceeded Dh1.25 million, prompting the legal action.

During proceedings, the defendant argued that the case should not be admitted, stating that the dispute was essentially a labour matter and should have been presented first to the Ministry of Human Resources and Emiratisation, in line with employment law procedures.

In its reasoning, the court said the documents showed that the defendant was employed under a contract issued by the ministry, and that the alleged acts occurred during the performance of his duties. As such, the claims fell within the scope of obligations governed by the Labour Relations Law.

The court cited Article 54 of the law, which requires parties to pursue amicable settlement procedures through the ministry before resorting to litigation, noting that this requirement relates to public order and cannot be bypassed.

The court found no evidence that the company had filed a complaint with the ministry before bringing the case, concluding that it had failed to follow the legally prescribed process. It therefore ruled the case inadmissible on procedural grounds and exempted the company from court fees.