Geoffrey Cox QC and William Frain-Bell triumph in a ‘legal first’ before The Dubai World Tribunal in a seven figure damages claim under UAE law for negligent misstatement on the part of a non-contracting third party

 

Geoffrey Cox QC and William Frain-Bell have won AED 35m for the successful Claimant in Greenfield Trading Company FZC v Nakheel PJSC DWT/0038/2011 in what is believed to be the first decision of its kind in the UAE. The Claimant, Greenfield Trading Co an international hotel developer had purchased a large waterfront plot in the iconic Dubai Waterfront Development to build a hotel resort on. The plot had originally been marketed for sale by the Defendant Nakheel who had produced the original plot specification details. Greenfield, whilst not having a contractual relationship with Nakheel argued that Nakheel was negligent in that it had misstated the features of the plot and that Greenfield had relied upon representations from Nakheel to the effect that the plot was suitable for the development of an international standard hotel resort complex.

 

It was only after the purchase price had been paid that Greenfield discovered the existence of a mosque and holy land within the perimeter of the purchased plot. In finding that Nakheel was liable, the Dubai World Tribunal, consisting of retired Court of Appeal justices, Sir Anthony Evans, Sir John Chadwick and Sir David Steel found that the plot documentation, along with statements made by Nakheel employees, all of which had been upon by Greenfield were the cause of its loss of the AED 35m that Greenfield - relying upon certain assurances from Nakheel - had paid by way of a deposit to secure the purchase of the plot.

 

This is a landmark decision, not only for the Dubai World Tribunal but also for the UAE. The legal basis of the claim was a claim for compensation under Article 282 of the UAE Civil Code (the governing law of the contract), which states that any harm done to another shall render the doer liable to make good the harm.

 

The Tribunal in its judgment said that, ‘So far as we are aware, there is no judgment in the Dubai Courts that has either upheld or denied a claim for financial loss caused by a negligent misstatement made by the defendant or for which the defendant was responsible…both parties in the present case accepted that the English authorities are relevant to the correct interpretation of Article 282 and we take them into account accordingly.’

 

The English authorities referred to on behalf of the Claimant included So v HSBC Bank plc and anr. [2009] 1 CLC 503 and Maker v PWC LLP [2011] EWHC 3855. When considering the facts of the case the Dubai World Tribunal stated that, ‘…Liability is not lightly imposed in the absence of a contractual relationship between the parties, and it is necessary to take account of all the circumstances in which the statement is made before holding that the person who made it is liable for the consequences of its being wrong, when it was made negligently i.e. without taking reasonable care to ensure that it was correct. Among the relevant circumstances when the statement is made in answer to an enquiry are – by whom was the enquiry made? For what purpose? Was the purpose made known at the time? What was the status of the person to whom the enquiry was addressed? Was the statement specific or in general terms? Was it made deliberately, not casually? Was it intended to be relied upon, and was it in fact relied upon? And as regards causation, was the alleged loss a foreseeable consequence of the statement being incorrect, so that it can be regarded as being a proximate cause of the loss?’