Dubai court rejects man’s Dh3.15m cheque claim against brother

Dubai: A civil court in Dubai has rejected a lawsuit filed by an Arab national seeking to compel his brother to repay a cheque worth Dh3,150,000, ruling that the cheque was issued strictly as a security and had lost its legal value once its underlying purpose was fulfilled.

The dispute arose from investment agreements between the two brothers dating back several years. In his claim, the plaintiff said he had provided his brother with funds representing his share in a group of jointly held companies.

According to Emarat Al Youm, the defendant issued a Dh3.15 million cheque as a guarantee of his financial obligations. When the plaintiff later attempted to cash the cheque, it was returned unpaid because the account had been closed, prompting legal action after amicable settlement attempts and formal notices failed.

The defendant sought dismissal of the case, citing a binding arbitration clause. However, the court rejected this argument, finding that the clause appeared in an earlier sales contract unrelated to the guarantee cheque in question.

“An arbitration agreement must be invoked before engaging with the merits of a dispute,” the court noted, adding that the clause relied upon did not apply to the present case.

In its detailed judgment, the court referred to Dubai Court of Cassation precedents distinguishing between cheques issued as payment instruments and those provided as security. Citing Article 125 of the Civil Transactions Law, the judges said clear contractual terms constitute binding obligations between parties.

The court found that the cheque originated from a 2016 agreement valuing the investment at Dh21 million, allocating the plaintiff a 15 per cent share, with guarantee cheques intended to expire after about two years. A new contract signed in 2019 explicitly stated that all earlier guarantee cheques, including the disputed one, would have no legal or penal effect.

The court dismissed the claim and ordered the plaintiff to bear legal costs and fees.