UAE Supreme Court orders government agency to pay company damages for license revocation

Short

An Abu Dhabi company providing e-services since 2009 has had its business license revoked by its competent authority.

The company challenged the revocation decision for lack of merit in federal court.

The company asked the federal courts:

(1) cancellation of the decision to revoke the license, and

(2) compensation of 100 million dirhams.

The federal trial and appellate courts ordered the revocation of the license set aside, but denied an award of damages to the company.

The Federal Supreme Court overturned the lower court rulings and awarded the company AED 500,000 in damages for loss of profit.

Liability to indemnify

In reviewing the government agency’s liability to indemnify, the Supreme Court said:

“And since it is established in case law and case law of administrative law, and the position of this jurisdiction, that when a judgment is rendered in annulment of a decision rendered by the administration on its non-contractual actions and that the judgment acquires the force of res judicata, the element of error in issuing the administrative decision and its violation of the law are established and the liability for compensation for damages is manifest.

Right to pecuniary damages

In dealing with the right to damages, the Supreme Court held:

“And since damage as the second pillar of liability is damage to the financial interest of the injured person, it includes loss suffered by the injured person and loss of profit, provided that the damage is actual, that it actually happened, and it turned out to be proven with certainty, or that it will inevitably happen in the future.

Legislative basis

To quantify the damages due to the company, the Supreme Court relied on Section 282 of the Civil Transactions Act and took into account a court-appointed expert report (obtained from the lower courts) and estimated the damage as follows:

“Article 282 of the Civil Transactions Law states that any act that causes harm to a third party obliges the perpetrator to repair the harm, and since the government agency had withdrawn the license from the business by a decision that the court annulled by a judgment which had the authority of res judicata, and that [cancelled] administrative decision was at the origin of the damage suffered by the company, and as a result, the compensation for the damage depends on the extent of the damage, and that to determine the elements, the court delegated an expert who[…]indicated in its report that the decision to revoke the company’s license prevented it from providing services to the public and resulted in the loss of the company’s customers that it had held since 2009…since the compensation is estimated for the damage suffered by the injured party, and that no provision of the law provides that imposes a precise criterion in the estimation of the compensation, the court sets it at an amount of 500,000 Dirhams according to the elements of the aforementioned damage…”