Civil Law and UAE Fraud Claims

1. Introduction

Fraud claims in the UAE can arise in both contractual and non-contractual contexts. A fraudulent act may involve a false statement, concealment of an important fact, manipulation of documents, dishonest inducement into a contract, fraudulent transfer of assets, or deceptive commercial conduct.

Under the UAE civil-law framework, fraud can have several consequences:

• cancellation or avoidance of a contract;
• restitution of amounts paid;
• compensation for proven loss;
• tort/delict liability;
• liability for fraudulent misrepresentation;
• consequences under commercial-fraud legislation; and
• in appropriate circumstances, separate criminal liability.

A particularly important distinction is between fraudulent misrepresentation affecting consent to a contract and civil liability for damage caused by an unlawful act.

The UAE Civil Code provisions historically contained in Articles 185–192 address contractual deceit/misrepresentation, while Articles 282 onward address civil liability for unlawful harm. Current UAE legal materials also reflect the transition to the new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, which entered into force on 1 June 2026 and renumbered many of these provisions.

2. Meaning of Fraud and Deceit

Under the former Article 185 of the UAE Civil Transactions Law, misrepresentation occurs where one contracting party deceives the other through trickery by words or conduct, causing the other party to consent to something to which it otherwise would not have consented. Deliberate silence can also constitute misrepresentation under Article 186 where the concealed fact was such that the victim would not have entered into the contract had it known the truth.

Thus, UAE civil fraud generally involves two broad components:

A. Material element

There must be conduct capable of creating or reinforcing a false impression.

Examples include:

• false financial statements;
• fabricated documents;
• false ownership representations;
• concealment of material defects;
• false statements concerning licences;
• fraudulent accounting information;
• misleading representations concerning a company's financial position.

B. Mental element

There must generally be an intention to mislead for an illegitimate purpose.

The Dubai Court of Cassation has described fraud as involving a material element and an intangible element consisting of the intention to mislead for an unlawful purpose.

3. Fraudulent Misrepresentation

Fraudulent misrepresentation is particularly important where a person enters into a contract because of deception.

For example:

A sells a business to B and represents that the business has AED 10 million in annual revenue, knowing that the actual revenue is AED 2 million. B relies upon the representation and purchases the business.

The central questions would be:

1. Was the statement false?
2. Did A know it was false?
3. Was it intended to influence B?
4. Did B actually rely upon it?
5. Would B have entered into the transaction without it?
6. Was the deception sufficiently serious under the applicable civil-law provisions?
7. What loss resulted?

4. Fraud by Deliberate Silence

Fraud does not necessarily require an express false statement.

A person may potentially commit actionable deceit by deliberately concealing a material fact where the circumstances impose an obligation to disclose it.

The former Article 186 expressly recognised deliberate silence concerning a fact or circumstance as misrepresentation where the victim would not have entered into the contract had the truth been known.

Examples may include deliberately concealing:

• serious structural defects;
• insolvency;
• ownership disputes;
• regulatory restrictions;
• existing litigation;
• material liabilities;
• defects in goods;
• restrictions affecting the subject matter of a transaction.

However, mere silence is not automatically fraud. The claimant must establish why the omission was legally significant and why it affected consent.

5. Fraud and Gross Unfairness

An important feature of UAE contractual fraud law is the historical requirement associated with Article 187.

Where misrepresentation was accompanied by gross unfairness (ghubn/lesion), the deceived party could seek cancellation of the contract.

UAE judicial authorities have treated these requirements as cumulative in the relevant circumstances: the claimant must establish both the deceit and the required degree of gross unfairness.

Therefore:

Fraud alone does not necessarily mean that every contract is automatically cancelled.

The precise remedy depends upon the applicable statutory provisions, the nature of the fraud, the seriousness of the deception, the effect upon consent, and the evidence.

6. Fraud Must Affect Consent

The purpose of fraudulent misrepresentation rules is principally to protect genuine contractual consent.

The claimant therefore normally needs to establish that the deception was material enough to influence the decision to contract.

For example, a trivial inaccurate statement that had no effect on the transaction is materially different from:

• false ownership;
• false financial information;
• false regulatory status;
• concealment of a fundamental defect.

The Dubai Court of Cassation has emphasised that the fraudulent means must be sufficiently serious to affect the other contracting party and induce it to conclude the contract.

7. Mere Lying Is Not Always Sufficient

An important UAE judicial principle is that mere lying does not automatically establish legally actionable deceit.

In Dubai Court of Cassation Case No. 30 of 224, the Court was reported as stating that a lie alone is insufficient unless it is demonstrated that the deception prevented the other party from properly verifying the truth despite the representation. The claimant bears the burden of proving the relevant elements of deceit and gross unfairness where cancellation is sought.

This makes evidence particularly important.

A claimant should establish not merely:

"The defendant said something untrue."

but rather:

"The defendant deliberately created a false impression, intended me to rely upon it, I relied upon it, and the deception materially affected the transaction."

8. Burden of Proof

The party alleging fraud ordinarily bears the burden of establishing the facts constituting the fraud.

Evidence may include:

• contracts;
• emails;
• WhatsApp messages;
• financial statements;
• bank records;
• invoices;
• accounting records;
• company documents;
• expert reports;
• witness evidence;
• correspondence;
• property records;
• corporate records;
• forensic evidence.

The claimant should establish the connection between the fraudulent conduct and the loss claimed.

9. Fraud and Civil Damages

Fraud can produce a claim for compensation in addition to, or independently from, contractual remedies.

The UAE civil-liability framework generally requires examination of:

1. Wrongful conduct

There must be an actionable act or omission.

2. Damage

The claimant must establish actual legally compensable harm.

3. Causation

The fraudulent conduct must have caused the relevant loss.

UAE fraud-and-asset-tracing materials describe the civil-liability framework as covering compensation for harm caused by deception, including direct and, where legally established, consequential damage.

10. Types of Damages

Depending on the facts and applicable law, a fraud claimant may seek compensation for:

• money directly lost;
• property wrongfully transferred;
• transaction expenses;
• consequential loss;
• loss of profits where sufficiently established;
• restoration of benefits obtained through the transaction;
• other proven financial harm.

However, speculative damages are not automatically recoverable.

The claimant should demonstrate the amount and causal relationship between the fraudulent conduct and the claimed loss.

11. Fraud and Contract Cancellation

Cancellation/rescission is one of the most significant remedies in a fraud case.

Suppose:

A sells property to B while deliberately concealing a material legal defect.

If the applicable requirements for avoidance are established, B may seek cancellation and restoration of the parties to their previous positions.

The court may therefore examine:

• whether deception occurred;
• whether the deception was material;
• whether it induced consent;
• whether the statutory requirements for cancellation are satisfied;
• whether restitution is possible;
• whether additional damages are justified.

12. Fraud by a Third Person

Fraud can also be complicated where the false representation was made by someone other than the actual contracting party.

The former Article 190 addressed situations where a third person made the misrepresentation and the contracting party knew about it.

This can arise where:

• an agent makes fraudulent statements;
• an intermediary misrepresents a transaction;
• a broker provides false information;
• a consultant acts on behalf of a contracting party.

The legal question becomes whether the principal can be held responsible for the third person's conduct under the applicable agency and civil-law rules.

13. Fraudulent Agency and Apparent Authority

Fraud claims involving agents can become particularly complex.

For example:

A company representative falsely tells a purchaser that a company owns certain assets.

The court may need to determine:

• whether the representative had actual authority;
• whether the principal knew of the representation;
• whether the representation was made within the apparent scope of authority;
• whether the claimant reasonably relied on it;
• whether the principal benefited from the transaction.

The recent Khaled Salem Musabeh Humad Al Mheiri v John Cameron [2025] DIFC CA 008 illustrates how these issues can become significant where a person's representations are allegedly made through an intermediary or agent. The DIFC Court of Appeal specifically considered the interaction between Articles 185, 186, 187 and 190 of the UAE Civil Code and questions of authority and knowledge.

14. Fraud in Commercial Transactions

Fraud can also arise independently of ordinary contractual disputes.

The UAE has specific legislation addressing commercial fraud, including Federal Law No. 19 of 2016 on Combating Commercial Fraud.

The legislation addresses deceptive conduct concerning goods and services, including false or misleading representations.

Potentially relevant conduct includes:

• counterfeit goods;
• false descriptions;
• misleading commercial representations;
• altered products;
• deceptive advertising;
• non-conforming goods.

Thus, one transaction can potentially create contractual, civil, regulatory and criminal consequences, depending upon the conduct.

15. Fraud and Evidence

Fraud cases are highly evidence-dependent.

Documentary evidence

Particularly important documents include:

• original contracts;
• amendments;
• invoices;
• bank transfers;
• accounting records;
• corporate resolutions;
• property records;
• correspondence.

Electronic evidence

Electronic communications may be important where fraud occurred through:

• email;
• messaging applications;
• online platforms;
• electronic signatures;
• digital records.

Expert evidence

Financial experts may be necessary to establish:

• actual revenue;
• concealed liabilities;
• diverted funds;
• inflated valuations;
• financial loss;
• tracing of assets.

16. Six Important UAE/DIFC/ADGM Case Laws

Case 1 — Federal Supreme Court Case No. 524 of 2000, 18 April 2000

This Federal Supreme Court decision is significant for the proposition commonly described as "fraud vitiates transactions."

An ADGM judgment discussing UAE law records that the principle was recognised by the Federal Supreme Court in Case No. 524 of 2000 concerning fraudulent misrepresentation.

Importance

The case demonstrates the importance of fraudulent conduct in determining whether a transaction can stand where consent has been fundamentally compromised.

Case 2 — Dubai Court of Cassation Case No. 270 of 2023

The Dubai Court of Cassation explained fraud as involving:

• a material element, consisting of conduct capable of creating or reinforcing a false belief; and
• an intangible element, consisting of the intention to mislead for an illegitimate purpose. 

Importance

This case is particularly useful for establishing that intent matters. An inaccurate statement does not necessarily amount to civil fraud without the required fraudulent intention.

Case 3 — Dubai Court of Cassation Case No. 231 of 2020

The Court considered Articles 185 and 186 and explained that fraudulent consent may arise through:

• fraudulent verbal conduct;
• fraudulent actual conduct;
• deliberate silence concerning a material fact.

It also emphasised the need for fraudulent intention and sufficiently serious deception capable of inducing the contract.

Importance

This is a major authority for distinguishing:

ordinary contractual mistake

from

intentional deception affecting contractual consent.

Case 4 — Dubai Court of Cassation Case No. 30 of 224

This decision addressed the distinction between ordinary lying and legally actionable deceit.

The Court emphasised that mere lying does not necessarily establish fraud and that the claimant must establish the relevant deceptive conduct and its material effect on the transaction.

Importance

It is particularly useful in commercial litigation where a party alleges that another party supplied inaccurate information during negotiations.

Case 5 — Ras Al Khaimah Court of Cassation Case No. 48 of 2025

The Ras Al Khaimah Court of Cassation addressed deceit and gross unfairness and stated that, in the relevant context, the claimant must establish both elements.

The Court also recognised that the assessment of gross unfairness depends upon the circumstances surrounding the transaction and the parties.

Importance

This authority is significant for understanding the high evidentiary burden associated with cancellation based upon fraud and gross unfairness.

Case 6 — Khaled Salem Musabeh Humaid Al Mheiri v John Cameron [2025] DIFC CA 008

This recent DIFC Court of Appeal decision involved alleged fraudulent representations and UAE-law provisions concerning misrepresentation.

The Court discussed:

• Article 185;
• deliberate silence under Article 186;
• gross cheat under Article 187;
• third-party misrepresentation under Article 190;
• authority of an intermediary; and
• the elements required to establish deceit. 

Importance

It is especially useful where fraud allegations involve agents, representatives or intermediaries rather than a straightforward false statement by the contracting party itself.

17. Additional Comparative UAE Financial-Centre Authority

Union Properties PJSC & Anor v Trinkler & Partners Ltd & Others [2026] ADGMCFI 0010

This ADGM decision is useful for comparative analysis of civil fraud because it identifies the traditional elements required to establish deceit, including:

1. false representation;
2. knowledge of falsity or recklessness;
3. intention that the claimant rely upon it;
4. actual reliance and resulting loss; and
5. dishonesty or equivalent moral impropriety.

The decision also distinguishes a representation of existing fact from a mere promise about future performance.

Because ADGM applies its own common-law-based legal framework, this should be treated as comparative UAE financial-centre authority rather than a direct statement of onshore UAE Civil Code law.

18. Fraud and Limitation

Limitation is an important issue and must be analysed according to the legal system governing the particular dispute.

This is especially important in the UAE because:

• onshore UAE courts operate under UAE federal/local legislation;
• DIFC Courts apply DIFC legislation in their jurisdiction; and
• ADGM Courts apply their own legal framework.

For example, Salem Dwela v Damac Park Towers Company Limited [2018] DIFC CFI 083 concerned limitation and the pleading of fraud. The DIFC Court stressed that a claimant must properly identify and plead the cause of action being relied upon.

The later DIFC appellate history of the dispute demonstrates why the precise characterisation of a claim as contractual, fraudulent misrepresentation, negligence or another cause of action can materially affect limitation analysis.

19. Fraudulent Transfer and Asset Tracing

Fraud litigation frequently extends beyond obtaining a judgment.

A fraudster may attempt to:

• transfer money to another company;
• place assets in another person's name;
• move assets offshore;
• create sham transactions;
• transfer property;
• conceal beneficial ownership.

Consequently, civil proceedings can involve:

• tracing;
• restitution;
• freezing or preservation measures;
• disclosure;
• recovery of misappropriated property;
• enforcement against identified assets.

UAE civil-liability materials recognise separate rules concerning misappropriation and restoration of property or benefits obtained from another's property.

20. Fraud Versus Breach of Contract

This distinction is extremely important.

A party should therefore avoid automatically describing every contractual breach as "fraud."

21. Fraud Versus Negligent Misrepresentation

There is also an important difference between:

Fraudulent misrepresentation

The person intentionally or knowingly creates a false impression or deliberately conceals material information.

Negligent misrepresentation

The person may provide inaccurate information without the same fraudulent intention, but breaches an applicable duty of care.

Innocent misrepresentation

An inaccurate representation may exist without fraudulent or negligent conduct, depending upon the applicable legal framework.

Correctly identifying the cause of action is essential because the applicable elements and remedies can differ.

22. Practical Elements of a UAE Fraud Claim

A strong civil fraud claim should normally address:

Step 1 — Identify the representation

Precisely state:

What was said, written, concealed or done?

Step 2 — Establish falsity

Demonstrate why the representation was false.

Step 3 — Establish knowledge or intention

Show evidence that the defendant:

• knew the information was false;
• deliberately concealed it; or
• intended to mislead.

Step 4 — Establish reliance

Explain how the claimant relied upon the deception.

Step 5 — Establish inducement

Show that the deception materially influenced the transaction.

Step 6 — Establish loss

Quantify the financial or other legally recognised damage.

Step 7 — Establish causation

Connect the fraud directly to the loss.

Step 8 — Identify the remedy

Depending upon the case:

• cancellation;
• restitution;
• damages;
• recovery of property;
• other appropriate civil relief.

23. Defences to Fraud Claims

A defendant may argue:

A. No false representation

The statement was true or substantially accurate.

B. No fraudulent intention

Any error was innocent or made without an intention to deceive.

C. No reliance

The claimant did not actually rely upon the statement.

D. Independent knowledge

The claimant already knew the relevant facts.

E. No causation

The claimant's loss resulted from another event.

F. No actual damage

The claimant cannot establish compensable loss.

G. Insufficient seriousness

The alleged conduct did not reach the statutory threshold for avoidance.

H. Limitation

The claim was brought outside the applicable limitation period.

I. Incorrect cause of action

The pleadings fail to establish the specific elements of the fraud claim.

24. Fraud Claims in Corporate Transactions

Corporate transactions create particularly significant fraud risks.

Examples include:

• acquisition of a company based on falsified accounts;
• undisclosed liabilities;
• false ownership representations;
• fraudulent shareholder resolutions;
• manipulation of corporate records;
• concealment of litigation;
• false representations concerning regulatory licences;
• diversion of company assets.

Due diligence therefore becomes important.

A claimant may need to demonstrate exactly which information was provided, by whom, when, and how it affected the transaction.

25. Fraud in Real-Estate Transactions

Real-estate fraud can involve:

• false title representations;
• forged documents;
• double sale;
• undisclosed encumbrances;
• false authority to sell;
• fraudulent valuation;
• fictitious property transactions.

These disputes can require examination of:

• title records;
• sale agreements;
• powers of attorney;
• payment records;
• registration documents;
• correspondence;
• expert evidence.

26. Conclusion

UAE civil fraud law focuses heavily on deception, intention, materiality, reliance, causation and proof of loss. Fraud can arise through an affirmative false statement or, in appropriate circumstances, deliberate concealment of a material fact.

The principal lessons from UAE judicial authorities are:

1. Fraudulent intention is important.
2. A mere contractual breach is not automatically fraud.
3. Mere inaccuracy or ordinary lying does not necessarily establish actionable deceit.
4. The deception must generally have a material connection with the transaction.
5. The claimant bears the burden of proving the relevant elements.
6. Cancellation may require additional statutory requirements, including gross unfairness under the applicable regime.
7. Fraud can generate both contractual and independent civil-liability consequences.
8. Agency and third-party representations can substantially complicate liability.
9. Evidence and causation are central to damages claims.
10. The applicable limitation period and legal regime must be identified carefully, particularly when distinguishing onshore UAE law from DIFC or ADGM law.

The UAE framework is therefore best understood not as treating every dishonest commercial act identically, but as providing different civil consequences depending upon whether the conduct constitutes fraudulent inducement, deliberate concealment, unlawful harm, misappropriation, contractual breach, or another legally recognised