Civil Law and UAE: Restitutionary Damages in Complex Claims

1. Meaning of Restitutionary Damages

Restitutionary damages are monetary or proprietary remedies designed primarily to reverse an unjust transfer or benefit rather than simply compensate the claimant for loss.

In a complex UAE civil claim, the claimant may seek several remedies at the same time:

restitution of money paid;

return of property;

restoration after nullity or rescission;

repayment of money paid by mistake;

recovery of property obtained without lawful cause;

value of property that can no longer be returned;

recovery of benefits or accretions;

damages for an independent wrongful act;

interest and consequential monetary relief.

The important point is that restitution and compensatory damages perform different functions. Compensation generally looks at the claimant's loss, whereas restitution looks at the benefit improperly retained by the defendant.

Under the current UAE Civil Transactions Law, Federal Decree-Law of 2025, the statutory framework expressly addresses unjust enrichment and receipt of the undue. Article 274 provides that property taken without lawful ground must be returned and that property acquired without an acquisitive juridical act must be returned, or its equivalent/value where it no longer exists. Article 275 deals specifically with receipt of something that was not due. (UAE Legislation)

2. Statutory Foundation in UAE Civil Law

A. Article 274 — Unjust Enrichment

Article 274 establishes the modern statutory basis for unjust-enrichment restitution.

It essentially covers three situations:

Property taken without lawful ground;

Property acquired without an acquisitive juridical act;

Situations where property becomes incorporated into another's property and physical separation is impossible without damage.

Where property still exists, the law generally contemplates return in kind. Where it no longer exists, the equivalent or value may have to be restored. (UAE Legislation)

Example

A transfers AED 500,000 to B believing that B has a contractual right to receive it. It later becomes clear that B had no legal entitlement.

Depending upon the facts, B may be required to return the AED 500,000.

B. Article 275 — Receipt of the Undue

Article 275 addresses the situation where a person receives something by way of performance even though it was not actually due.

The basic remedy is:

restitution of the thing if it remains available, or its equivalent/value if it no longer exists.

This is particularly relevant to:

mistaken bank transfers;

duplicate payments;

payment after a debt has already been discharged;

payments under an invalid obligation;

payments made to the wrong person.

(UAE Legislation)

3. Restitution After Contract Nullity

A complex restitution claim frequently arises after a contract is declared:

void;

annulled;

rescinded;

terminated;

ineffective;

unenforceable.

The consequences depend on why the contract ceased to operate and which statutory remedy applies.

The basic objective is restoration of the parties' respective positions, so far as legally and practically possible.

Example

A pays B AED 2 million under a contract. The contract is subsequently declared void.

Possible consequences include:

Restitution should not automatically become a disguised claim for every loss suffered by the claimant.

4. Why Restitutionary Damages Become "Complex"

A simple repayment claim is relatively straightforward.

Complex restitutionary litigation becomes difficult when several legal relationships overlap.

For example:

Contract → payment → breach → termination → third-party transfer → increase in value → fraud allegation → restitution → damages

The court may then have to determine:

Was there a valid contract?

Was the payment legally due?

Was the contract terminated or void?

Was there unjust enrichment?

What was the unjustifying factor?

Does the claimant have title to the property?

Is return in kind possible?

If not, what is the appropriate value?

Did the defendant change position?

Are consequential damages also recoverable?

Would awarding both restitution and damages produce double recovery?

Is the claim actually contractual, proprietary, tortious, or restitutionary?

These questions make restitutionary claims particularly important in sophisticated civil litigation.

5. Restitution Is Not Automatically Available Merely Because the Defendant Was Enriched

One of the most important principles emerging from UAE-related restitution litigation is:

Enrichment alone is insufficient.

The claimant normally needs to establish a legally recognised basis for requiring restoration.

This is particularly clear in the DIFC case DAMAC Park Towers Company Limited v Youssef Issa Ward [2015] DIFC CA 006.

The DIFC Court of Appeal explained that, for unjust enrichment under the applicable DIFC legislation, there must be:

enrichment of the defendant; and

an unjust factor affecting that enrichment.

The court found that DAMAC had received money from Ward, but the payments were contractually due and were not made by mistake. Consequently, the necessary unjust basis for restitution was absent. (DIFC Courts)

Important: this is a DIFC authority, applying DIFC law, rather than a federal UAE Civil Transactions Law judgment.

6. Restitutionary Damages Versus Compensatory Damages

Example

A wrongfully obtains AED 1 million from B.

If B can establish restitution, the central question may be:

"How much did A improperly receive?"

In a compensatory claim, the question may instead be:

"What legally recoverable loss did B suffer?"

The two concepts can overlap, but they should not be confused.

7. Case Law

Case 1 — DAMAC Park Towers Company Limited v Youssef Issa Ward [2015] DIFC CA 006

Facts

Ward had made substantial payments under a property reservation arrangement. Following disputes concerning payment obligations and termination, he sought restitution of the money paid.

The DIFC Court of First Instance had ordered restitution of approximately AED 2.626 million. The Court of Appeal reversed that aspect.

Principle

The Court of Appeal held that unjust enrichment requires more than enrichment.

The defendant must have been enriched and the enrichment must be affected by an unjust factor. The payments were made voluntarily under the contractual arrangement and were legally due. Therefore, the retention was not unjust on the facts. (DIFC Courts)

Importance

This case demonstrates that:

A claimant cannot convert every contractual payment into a restitution claim merely because the relationship subsequently breaks down.

8. Case 2 — Youssef Issa Ward v DAMAC Park Towers Company Limited [2014] DIFC CFI 001

This was the earlier Court of First Instance decision in the same dispute.

The CFI found the termination wrongful and ordered DAMAC to return approximately AED 2.626 million under the applicable DIFC restitution provisions. (DIFC Courts)

The Court of Appeal subsequently reversed the restitution conclusion.

Importance

This case is useful for understanding appellate development of restitutionary doctrine.

It demonstrates that:

termination;

breach;

restitution; and

unjust enrichment

must each be analysed separately.

It also illustrates why the final appellate decision should be distinguished from the first-instance judgment.

9. Case 3 — Dagny v Dag & Company International Limited [2011] DIFC CFI 007

This case concerned alleged mistaken payment and the defence of change of position.

The court considered the questions:

Was there a mistake?

Did the mistake cause the payment?

Was the recipient actually entitled to receive the payment?

If not, had the recipient changed position in circumstances making restitution unjust?

The court recognised the significance of good-faith change of position. An innocent recipient who receives money by mistake and changes position in good faith may, depending on the circumstances, have a defence to repayment. (DIFC Courts)

Importance

This is highly relevant to complex repayment actions because it shows that:

Receipt of money ≠ automatic full restitution.

The circumstances surrounding the recipient's conduct matter.

10. Case 4 — Dag & Company International Limited v Dagny [2013] DIFC CA 001

The DIFC Court of Appeal considered the same restitutionary dispute.

The Court emphasised that change of position must be considered according to the particular circumstances. Mere expenditure of money does not automatically establish a defence; the relevant question is whether the recipient's position changed in such a way that requiring repayment would itself be unjust. (DIFC Courts)

Importance

The case demonstrates the balancing involved in sophisticated restitution claims:

Claimant's right to restitution

versus

Recipient's good-faith change of position.

11. Case 5 — Basin Supply Corporation v Rouge LLC & Claude Barret [2018] DIFC CFI 057

This case involved a loan and alternative restitutionary arguments.

Basin argued that, if the loan arrangement were not legally enforceable, restitution could nevertheless arise through unjust enrichment.

The claimant identified possible unjust factors including:

mistake;

total failure of consideration;

payment pursuant to a void contract.

The court considered Article 48 of the DIFC Damages and Remedies Law and the approach adopted in DAMAC v Ward. (DIFC Courts)

Importance

The case illustrates an important litigation technique:

A claimant may plead restitution in the alternative where there is uncertainty concerning the validity or enforceability of the underlying contract.

However, the claimant still has to identify the legal basis for restitution.

12. Case 6 — Larmag Holding B.V. v First Abu Dhabi Bank PJSC & Others [2019] DIFC CFI 054

This is particularly valuable for complex restitutionary claims involving property, securities and third-party transactions.

Larmag claimed restitution relating to bonds and a coupon payment. The court considered Articles 318 and 319 of the then UAE Civil Code concerning property transferred without lawful cause or without an applicable juridical disposition.

The court held that the claimant seeking restitution under those provisions needed the appropriate title to, or immediate right to possess, the relevant property. Larmag's restitutionary claim concerning the coupon therefore failed on that basis, although other proprietary and damages issues were separately considered. (DIFC Courts)

Importance

This case demonstrates that a restitution claim can fail because of a standing/title problem, even where the defendant appears to have obtained a benefit improperly.

It is therefore essential to ask:

Who legally owns the benefit that is being claimed back?

13. Case 7 — Mahesh Srichand Tourani v Dusty Tourani & Duzty LLC [2018] DIFC CFI

The claimant sought repayment of approximately AED 14.947 million and also pleaded unjust enrichment.

The court considered whether the money had been:

a gift;

a loan; or

an unjust enrichment.

The court emphasised the claimant's burden to prove the claim. Ultimately, the advance was treated as a gift on the facts, defeating the repayment and restitutionary theories. (DIFC Courts)

Importance

The case demonstrates that the characterisation of the original transfer is fundamental.

A transfer described retrospectively as a "loan" or "unjust enrichment" cannot succeed merely because the recipient still possesses the money.

14. Case 8 — Roberto's Club LLC & Emain Kadrie v Paolo Roberto Rella [2013] DIFC CFI 019

The dispute involved numerous repayment claims, including advances, rent, expenses and medical payments.

The court distinguished between amounts that were contractually or otherwise repayable and amounts for which an unjust-enrichment basis was not established.

The judgment illustrates the importance of examining each individual payment separately, rather than treating a large collection of payments as one restitutionary transaction. (DIFC Courts)

The resulting order required repayment of certain advances and expenses while dismissing claims relating to medical expenses. (DIFC Courts)

Importance

This is particularly useful for complex claims involving:

multiple transfers;

multiple contractual provisions;

different beneficiaries;

expenses;

advances; and

alternative causes of action.

15. Case 9 — Karthi Keyan Venkataramana v Ahmed Mohammad Abdul Rahman Ali [2025] DIFC CFI 110

This recent DIFC decision is especially useful for the relationship between contract and unjust enrichment.

The claimant brought a contractual loan claim and alternatively relied upon unjust enrichment.

The court observed that where a contract governs the relationship and contains express obligations, it is difficult to use unjust enrichment as an alternative mechanism simply to replace the contractual arrangement. The court ultimately ordered repayment of AED 5 million plus interest. (DIFC Courts)

Importance

The principle is:

Restitution should not normally be used to bypass an applicable contractual allocation of rights and obligations.

This is highly relevant to complex commercial disputes.

16. The Problem of Double Recovery

One of the most important issues in restitutionary damages is double recovery.

Suppose:

Defendant fraudulently obtains property worth AED 10 million.

Claimant seeks return of the property.

Claimant alternatively seeks AED 10 million as its value.

Claimant also seeks damages for the same loss.

The claimant ordinarily cannot recover the same economic loss twice.

The Larmag litigation illustrates this problem. The court expressly recognised that if the claimant obtained damages for the wrongful misappropriation of the bonds, it could not also obtain a payment representing the same bonds because that would constitute double recovery. (DIFC Courts)

Therefore:

Restitution + damages ≠ automatic cumulative recovery.

The court must identify the distinct legal interests and losses involved.

17. Restitution in Kind Versus Monetary Restitution

The preferred remedy can depend upon whether the original benefit still exists.

A. Property still exists

Return of the actual property may be appropriate.

B. Property has disappeared

The equivalent or value may have to be restored.

C. Property has been transferred to a third party

The case becomes substantially more complicated.

Questions may include:

Was the third party a bona fide purchaser?

Does the claimant retain proprietary rights?

Can tracing be established?

Is an account required?

Should the claimant seek value rather than the asset?

Are damages a more appropriate remedy?

The Larmag litigation demonstrates this complexity because the dispute involved bonds transferred among different entities and questions concerning actual restitution, value and damages. (DIFC Courts)

18. Restitution and Unjust Enrichment

The basic analytical structure can be expressed as:

Benefit received

↓

Benefit obtained at claimant's expense

↓

No adequate legal basis for retention / recognised unjust factor

↓

No applicable defence

↓

Restitution

But this should not be mechanically applied to every payment dispute.

The court may first determine whether there is:

a contract;

a statutory entitlement;

a gift;

a valid payment obligation;

a proprietary claim;

a tortious claim; or

another juridical basis.

19. Change of Position Defence

A complex restitution claim may be affected where the defendant:

received the benefit innocently;

believed it was entitled to retain it;

changed its position;

did so in good faith; and

would suffer injustice if required to make full restitution.

The Dagny decisions demonstrate this principle in the DIFC context. (DIFC Courts)

However:

Simply spending the money is not necessarily enough.

The circumstances of the expenditure and the recipient's knowledge are important.

20. Restitution and Fraud

Fraudulent acquisition can create a much more complicated claim.

A claimant may potentially plead:

restitution;

unjust enrichment;

return of property;

proprietary relief;

damages for wrongful conduct;

tracing;

account of benefits;

interest.

The Larmag litigation demonstrates how restitutionary and damages claims may coexist where property was allegedly obtained through deceitful conduct. (DIFC Courts)

The claimant must nevertheless avoid claiming the same economic recovery twice.

21. Restitution and Contractual Remedies

A useful sequence is:

Step 1 — Identify the contract

Was there a valid contract?

Step 2 — Identify the event

Did the contract:

terminate?

become void?

become impossible?

get rescinded?

get repudiated?

Step 3 — Identify the payment

What exactly did each party provide?

Step 4 — Identify the legal basis

Was the payment:

due?

mistaken?

fraudulent?

made under a void contract?

unsupported by consideration?

Step 5 — Determine the appropriate remedy

Possible remedies include:

return in kind;

repayment;

equivalent value;

damages;

interest;

proprietary relief.

22. Complex Restitutionary Claim — Hypothetical Example

Assume:

A Company pays AED 20 million to B under a development agreement.

Later:

the agreement is declared invalid;

B transfers AED 5 million to another company;

AED 10 million is invested;

AED 5 million remains in B's bank account;

the investment increases to AED 14 million;

B argues that some payments were contractually due;

the third-party company claims it received the AED 5 million in good faith.

A court may have to separately analyse:

This is the essence of a complex restitutionary damages claim.

23. Restitutionary Damages and Interest

Interest can create another layer of complexity.

The court may need to distinguish between:

principal restitution;

compensation for loss of use of money;

contractual interest;

statutory interest;

judgment interest.

Interest should therefore not automatically be treated as part of the underlying restitutionary principal.

In the earlier Ward first-instance decision in the DIFC, for example, interest was addressed separately from the restitutionary amount. (DIFC Courts)

24. Important Procedural and Evidentiary Issues

A claimant should normally be prepared to prove:

1. The original transfer

Bank statements, receipts and payment records.

2. Legal basis

Contract, invoice, agreement, court order or other juridical basis.

3. Why the benefit became unjustified

For example:

nullity;

mistake;

absence of legal cause;

failure of consideration;

wrongful termination;

fraud.

4. Defendant's enrichment

The claimant must identify what the defendant actually received.

5. Ownership/title

Especially where restitution concerns property or securities.

6. Current location of the benefit

Particularly important where assets have been transferred.

7. Valuation

Where return in kind is impossible.

8. Absence of double recovery

The pleadings should clearly distinguish alternative remedies.

25. Main Difficulties in UAE Restitutionary Claims

The major difficulties can be summarised as follows:

A. Characterisation

Is the claim actually:

contractual;

restitutionary;

proprietary;

tortious;

statutory?

B. Unjust factor

Why is retention legally unjustified?

C. Existing contractual rights

A valid contract may explain why the defendant was entitled to receive the money.

D. Change of position

An innocent recipient may raise a defence in appropriate circumstances.

E. Property tracing

The benefit may have moved through several accounts or entities.

F. Third-party rights

Restitution may affect persons who were not parties to the original transaction.

G. Valuation

The value of an asset may change significantly between receipt and judgment.

H. Double recovery

The claimant cannot ordinarily obtain overlapping recovery for the same loss.

26. Distinction Between Restitution, Repayment and Damages

These remedies may arise from the same factual dispute but they are not interchangeable.

27. Six Core Principles for Examination

For an exam answer, remember:

Restitution focuses on restoration rather than ordinary compensation.

Article 274 of the current UAE Civil Transactions Law establishes the statutory framework for unjust enrichment. (UAE Legislation)

Article 275 addresses receipt of an undue payment. (UAE Legislation)

Enrichment alone does not necessarily establish a restitutionary entitlement.

Existing contractual rights can defeat an unjust-enrichment theory.

Change of position, title, third-party rights and double recovery are critical in complex claims.

28. Case-Law Revision Table

These cases are DIFC authorities, not federal UAE mainland precedents. They are particularly useful for understanding restitutionary concepts within the UAE's mixed legal environment. (DIFC Courts)

29. Conclusion

Restitutionary damages in complex UAE civil claims are fundamentally concerned with restoring benefits that the law does not permit a person to retain. The current federal Civil Transactions Law expressly regulates unjust enrichment and undue receipt through Articles 274 and 275. (UAE Legislation)

The difficult cases arise when restitution overlaps with:

contractual termination;

nullity;

mistaken payments;

fraud;

proprietary rights;

third-party transfers;

valuation;

change of position;

interest; and

compensatory damages.

The central analytical rule is therefore:

First identify the legal basis of the transfer; then determine why retention has become unjustified; then identify the appropriate form and amount of restoration; and finally ensure that the claimant does not obtain double recovery.

For UAE civil-law research, the federal Civil Transactions Law should be distinguished from DIFC authorities, because DIFC cases apply a separate legal framework. The DIFC decisions nevertheless provide useful comparative illustrations of how sophisticated restitutionary disputes involving contracts, mistaken payments, property and unjust enrichment can be analysed.