Civil Law and UAE: Simple Fault-Based Liability

1. Meaning of Fault-Based Liability

Fault-based liability means that a person may have to compensate another person because the person's intentional or negligent conduct caused legally recognised damage.

In simple words:

A person acts wrongly + damage occurs + the wrongful conduct causes the damage = liability.

The basic idea is that a person should bear the consequences of harm caused by their wrongful conduct.

Examples:

A driver carelessly hits a pedestrian.

A contractor negligently damages a neighbouring property.

A professional gives careless advice and causes financial loss.

A bank negligently processes a fraudulent payment.

A property manager provides incorrect technical information and causes loss.

An employer negligently creates an unsafe working situation.

2. Fault-Based Liability in the UAE

UAE civil law recognises liability arising from unlawful acts and harmful conduct.

The current Civil Transactions Law contains a broader structure dealing with:

unlawful acts;

causation;

damage;

compensation;

contributory fault;

external causes;

direct and indirect causation;

liability for personal acts;

liability of employers and others in appropriate circumstances.

The current law also expressly recognises that a person may avoid liability where the damage resulted from an external cause such as force majeure, a sudden accident, a third party, or the injured person's own act, subject to the law or agreement.

3. Simple Formula

The easiest formula is:

FAULT → DAMAGE → CAUSATION → LIABILITY → COMPENSATION

For negligence-based liability, it can be remembered as:

DUTY → BREACH → CAUSATION → DAMAGE → REMEDY

Both formulas are useful because UAE civil liability can arise in different forms.

4. Main Elements of Fault-Based Liability

A. Wrongful or Faulty Conduct

The first question is:

Did the defendant do something that the law regards as wrongful?

Fault may arise through:

intention;

negligence;

carelessness;

lack of reasonable precautions;

failure to perform a required duty;

improper professional conduct;

misuse of a right;

failure to prevent a foreseeable risk.

Example

A building owner knows that a staircase is dangerously damaged but does nothing. A visitor falls and is injured.

The failure to take reasonable precautions may constitute fault.

5. Intention and Negligence

Fault is not limited to deliberate wrongdoing.

It may involve:

Intentional fault

The person deliberately causes the harm.

Example:

A person intentionally damages another person's vehicle.

Negligent fault

The person does not intend the harm but fails to exercise reasonable care.

Example:

A driver sends a text message while driving and hits another vehicle.

Gross fault

Very serious carelessness may have stronger legal consequences.

The current Civil Transactions Law expressly refers to fraud or gross fault in the context of agreed compensation.

6. Damage Is Essential

Fault alone normally does not make a civil compensation claim complete.

There must be legally recognised damage or loss.

Damage may include:

Physical damage

bodily injury;

death;

damage to property.

Financial damage

repair expenses;

lost business income;

additional costs;

loss of use;

other proven economic losses.

Moral damage

Depending on the applicable legal rules and circumstances, compensation may also concern recognised non-material harm.

The current law provides that where compensation is not already fixed by law or contract, the court assesses it according to the actual damage sustained.

7. Causation

The claimant must generally establish a connection between:

the defendant's fault → the claimant's damage.

It is not enough to say:

"The defendant acted carelessly."

The claimant must also show:

"That carelessness caused my loss."

Example

A contractor negligently leaves construction material on a public walkway.

A person trips over the material and breaks an ankle.

There is a possible chain:

Negligent conduct → dangerous obstruction → accident → injury → medical expense.

8. Contributory Fault

Fault may sometimes exist on both sides.

For example:

the defendant acts negligently; and

the claimant also acts carelessly.

The claimant's own fault may affect the amount recoverable.

The current Civil Transactions Law expressly provides, in relation to agreed compensation, that the court may reduce compensation where the creditor contributed by their own fault to the occurrence or increase of the damage, and may refuse compensation where the creditor's fault predominates.

This reflects an important civil-law idea:

The injured person's own conduct can affect the final compensation.

9. External Causes

A person may not be liable where the damage resulted from an external cause beyond their control, subject to applicable law or agreement.

Examples include:

force majeure;

sudden accident;

act of a third party;

act of the injured person.

The current Civil Transactions Law expressly recognises these external causes.

Example

A warehouse owner has taken all reasonable safety measures. An extraordinary event completely outside the owner's control causes the damage.

The external cause may defeat or limit liability depending on the facts and applicable law.

10. Fault-Based Liability vs Strict Liability

These concepts should not be confused.

Fault-based liability

The claimant generally needs to establish wrongful conduct/fault and the other elements of liability.

Example:

A driver negligently causes an accident.

Strict or no-fault liability

Liability may arise even without proving ordinary negligence where a particular legal rule imposes responsibility.

Example:

Certain statutory regimes may impose liability based on the activity, possession, control, or relationship involved.

Therefore:

Fault-based liability focuses on wrongful conduct, while strict liability focuses on a legally defined source of responsibility that may not depend on proving ordinary fault.

11. Duty of Care and Fault

In negligence cases, fault is commonly analysed through the idea of a duty of care.

The questions are:

Was there a duty?

What was the required standard of care?

Was that standard breached?

Did the breach cause the damage?

What damage was legally recoverable?

This structure is particularly explicit under the DIFC Law of Obligations.

For example, Article 17 of the DIFC Law of Obligations requires a duty of care, breach of that duty, and loss caused by the breach.

12. Standard of Care

The standard asks:

What would a reasonably careful person in the same circumstances have done?

The standard changes according to the activity.

Driver

Must drive with reasonable care.

Doctor

Must meet the applicable professional standard.

Bank

Must exercise appropriate care within the scope of its duties.

Engineer

Must act with appropriate professional skill.

Landlord/property manager

May have duties relating to information, premises, and foreseeable risks.

Employer

May owe appropriate duties concerning employees and workplace matters.

13. Foreseeability

A court may ask whether the type of harm was reasonably foreseeable.

Example:

A shop owner leaves liquid on the floor without warning.

A customer slips.

A fall may be a foreseeable consequence of leaving the floor in a dangerous condition.

But if the claimed loss is extremely remote and unforeseeable, recovery may be more difficult.

14. Proximity

There must generally be an appropriate legal relationship between the parties.

Not every person affected indirectly by another person's conduct automatically receives a negligence claim.

This is particularly important in:

shareholder claims;

financial advice;

professional advice;

pure economic loss;

third-party claims.

15. Pure Economic Loss

Pure economic loss means financial loss without corresponding physical injury or property damage.

Examples:

loss of investment;

loss of business opportunity;

loss caused by negligent information;

financial loss caused by professional advice.

Such claims can involve additional requirements concerning:

assumption of responsibility;

reliance;

reasonable reliance;

proximity;

causation.

The DIFC Court of Appeal has expressly discussed these requirements in Gate Mena DMCC/Huobi Mena FZE v Tabarak Investment Capital Ltd & Christian Thurner.

16. Fault in Contract and Tort

Fault can appear in different legal relationships.

Contract

A party fails to perform a contractual obligation properly.

Example:

A contractor negligently performs defective work.

Tort/unlawful act

A person causes damage independently of a contractual obligation.

Example:

A negligent driver injures another person.

Both

Sometimes the same conduct may create both contractual and non-contractual issues.

The correct legal basis must therefore be identified before calculating compensation.

17. Employer and Employee Liability

A business may face liability arising from acts of its employees where the applicable legal requirements for employer responsibility are satisfied.

Example:

A construction worker negligently drops an object and injures a passer-by while performing work.

The court may examine:

who employed the worker;

what the worker was doing;

whether the act occurred in connection with employment;

whether the employer has statutory or civil responsibility;

causation;

extent of damage.

The current Civil Transactions Law separately addresses liability arising from personal acts and related forms of responsibility.

18. Professional Fault

Professional liability is another important area.

Examples include:

lawyers;

doctors;

engineers;

accountants;

financial advisers;

architects;

consultants.

The court may examine the professional standard applicable to the activity.

Example

An engineer negligently approves an unsafe design.

A building later suffers damage.

The issues may include:

professional duty → breach → causation → repair cost → other proven losses.

19. Fault in Banking Transactions

Banks may face liability where they fail to perform a legally recognised duty.

This is particularly important where:

fraudulent payment instructions are involved;

suspicious transactions are ignored;

account security issues arise;

contractual duties are breached.

Aegis Resources DMCC v Union Bank of India (DIFC Branch)

In Aegis Resources DMCC v Union Bank of India (DIFC Branch) [2020] DIFC CFI 004, the court considered fraudulent payment instructions and the bank's duty of care.

The court found that the bank owed a duty, in accordance with the Quincecare principle applicable in the case, to refrain from paying where it had reasonable grounds for believing that the instructions were an attempt to misappropriate funds. The court found the bank negligent. It also considered, but rejected on the evidence, contributory negligence by Aegis.

Principle

A bank's liability can depend upon:

the nature of the mandate;

the circumstances;

the bank's knowledge;

reasonable grounds for suspicion;

causation;

contributory negligence.

20. Important Case Laws

Case 1: Shihab Khalil v Shuaa Capital PSC [2009] DIFC CFI 017

Facts

The claimant was a minority shareholder and alleged that the defendant had breached a duty of care through the management of a company.

Principle

The DIFC Court discussed the negligence framework and stated that a negligence claim requires both:

lack of due care; and

loss caused by that carelessness.

It also applied the concepts of:

reasonable foreseeability;

proximity;

fairness, justice and reasonableness.

The court ultimately rejected the proposed duty of care in the particular shareholder/company circumstances.

Importance

This case shows that:

Not every economic loss automatically creates a negligence claim.

A legally recognised duty must exist.

21. Case 2: Aegis Resources DMCC v Union Bank of India [2020] DIFC CFI 004

Facts

Aegis suffered loss following fraudulent payment instructions.

Principle

The court found that the bank had a duty of care in the circumstances and that it was negligent in making payments despite reasonable grounds for suspicion.

The court also examined contributory negligence and whether Aegis itself had acted unreasonably. It ultimately did not find contributory negligence established on the evidence.

Importance

The case demonstrates:

Bank duty + breach + causation + damage = possible liability.

It also shows that the claimant's own fault may be examined.

22. Case 3: Haya Spa LLC v Harper Real Estate / Hasan Real Estate [2016] DIFC SCT 150

Facts

Haya Spa leased premises and alleged that incorrect information concerning the AutoCAD floor plan caused problems with the premises and resulted in additional costs and delay.

Principle

The DIFC Small Claims Tribunal awarded AED 194,400 in damages for negligence. The judgment dealt with incorrect information concerning the premises and the resulting losses.

Importance

This case is useful for understanding:

negligent information;

property-related duties;

reliance;

causation;

financial loss.

23. Case 4: Faizal Babu Moorkath v Expresso Telecom Group Ltd [2023] DIFC CFI 008

Facts

The claimant alleged that his former employer's failure to cooperate with visa cancellation caused him loss of employment opportunity and earnings.

Principle

The court explained that under Article 17 of the DIFC Law of Obligations, negligence requires:

a duty of care;

breach; and

loss caused by the breach.

The court also emphasised that actionable loss must be established. The claimant did not prove that the alleged failure caused the claimed loss of earnings.

Importance

The case shows:

Even where careless conduct is alleged, compensation cannot be awarded without proof of actionable loss and causation.

24. Case 5: Gate Mena DMCC / Huobi Mena FZE v Tabarak Investment Capital Ltd & Christian Thurner [2023] DIFC CA 002

Facts

The dispute concerned digital assets and alleged responsibilities in relation to transactions involving cryptocurrency.

Principle

The DIFC Court of Appeal discussed the requirements for negligence and pure economic loss.

For certain economic-loss claims, the court considered:

duty;

breach;

causation;

assumption of responsibility;

reliance;

reasonable reliance.

Importance

The case demonstrates that fault-based liability can operate in modern areas such as:

cryptocurrency;

digital assets;

financial technology;

custody arrangements;

digital transactions.

25. Case 6: Ludiala v Lucaan Limited [2020] DIFC SCT 139

Facts

The claimant brought various claims against a former employer, including claims for compensation.

Principle

The court examined the claimant's allegations and the evidentiary requirements for establishing loss. A claimant cannot simply assert that an event caused financial or other harm; the connection between conduct and legally recoverable loss must be established.

Importance

The case is useful for remembering:

Proof of loss and causation is essential.

26. Case 7: Alawwal Capital JSC v Rasmala Investment Bank Limited [2023] DIFC CFI 038

Facts

Alawwal invested in a trade-finance fund and later claimed substantial losses. It alleged, among other things:

misrepresentations;

breach of fiduciary duty;

breach of statutory duty;

negligence.

The judgment considered the alleged representations, investment losses, disclaimers and the regulatory framework.

Principle

The case demonstrates the importance of carefully analysing:

what was actually represented;

whether the representation was false;

whether the claimant relied upon it;

whether reliance was reasonable;

whether the representation caused the loss;

what losses are legally recoverable.

Importance

It is a useful modern example of fault-based claims in the financial-services context.

27. Case 8: Punjab National Bank, DIFC Branch v NMC Healthcare LLC & Others [2023] DIFC CFI 079

This case is useful in understanding complex financial negligence claims.

The DIFC Court considered the elements of negligence, including:

existence of a duty;

scope of the duty;

breach;

causation;

economic loss.

The court emphasised the importance of identifying the precise duty allegedly owed and proving the connection between the alleged breach and the loss. The case is particularly useful for understanding why a broad allegation of negligence is not enough.

28. Fault-Based Liability in Construction

Construction disputes frequently involve fault-based arguments.

Examples:

Contractor fault

defective workmanship;

unsafe work;

failure to follow specifications;

negligent construction;

failure to protect property.

Engineer fault

negligent certification;

inadequate inspection;

defective design advice.

Employer fault

failure to provide access;

incorrect instructions;

failure to disclose information.

Consultant fault

defective professional advice;

inadequate supervision.

The court normally needs evidence establishing:

duty → required standard → breach → causation → damage.

Expert evidence can therefore be extremely important.

29. Fault and Damage Must Be Distinguished

A useful examination distinction is:

Fault

What did the defendant do wrong?

Damage

What harm actually occurred?

Causation

Did the fault cause that harm?

Quantum

How much compensation should be awarded?

Example:

A contractor negligently damages a building.

Fault: negligent work.

Damage: structural damage.

Causation: negligent work caused the damage.

Quantum: reasonable repair cost and other legally recoverable losses.

30. Fault and Compensation

Compensation is intended to address the legally recognised damage caused by the responsible party.

The current Civil Transactions Law states that, where compensation is not otherwise determined, the court assesses compensation according to the damage actually sustained.

Potential heads of loss may depend upon the circumstances and applicable law, including:

repair costs;

medical expenses;

property loss;

proven financial loss;

loss of use;

other consequential losses;

recognised moral harm.

The claimant must establish the loss rather than simply estimate it without evidence.

31. Burden of Proof

In a fault-based claim, the claimant generally needs evidence supporting the essential elements of the claim.

Useful evidence may include:

contracts;

photographs;

invoices;

medical records;

expert reports;

emails;

messages;

bank records;

technical reports;

witness evidence;

CCTV;

electronic records.

Example

If a claimant says:

"The contractor's negligence caused AED 500,000 of damage",

the claimant should normally provide evidence explaining:

what the contractor did wrong;

what damage resulted;

why the contractor's conduct caused it;

how AED 500,000 was calculated.

32. Fault-Based Liability and Good Faith

Good faith is an important general civil-law principle.

A party should not deliberately or improperly exercise legal rights to cause unjustified harm.

The current Civil Transactions Law also states that lawful exercise of a right does not generally create liability, while unlawful exercise of a right can create liability. It identifies circumstances such as intent to cause harm, conflict with law/public order/public morals, disproportion between benefit and harm, and exceeding established custom.

Thus:

Lawful right → normally no liability

but

Abusive/unlawful exercise of right → possible liability.

33. Direct and Indirect Causes

Causation can become complicated when several events contribute to the damage.

Example:

Contractor makes a defective installation.

Heavy rain occurs.

Water enters the building.

Equipment is damaged.

The court may need to determine:

whether the defective work was a substantial cause;

whether the rain was an external cause;

whether another person's conduct contributed;

whether the loss was foreseeable;

whether the claimed damage is too remote.

This is why causation is often one of the most difficult parts of a civil-liability claim.

34. Fault of Several Persons

Sometimes more than one person contributes to the damage.

Example:

Contractor performs defective work.

Engineer negligently approves it.

Employer gives incorrect instructions.

Claimant also fails to take reasonable precautions.

The court may need to determine the responsibility of each participant according to the applicable rules.

35. Fault-Based Liability and Digital Transactions

Modern UAE disputes may involve:

hacking;

negligent cybersecurity;

fraudulent payment instructions;

cryptocurrency;

smart contracts;

digital assets;

electronic signatures;

data breaches;

AI-generated information.

The basic legal questions remain similar:

Who owed the duty?

What was the required standard of care?

Was there a breach?

Did the breach cause the loss?

Was the loss legally recoverable?

The Aegis case demonstrates how traditional negligence principles can be applied to modern electronic-payment fraud.

36. Mainland UAE vs DIFC

This distinction is extremely important.

Mainland UAE

The UAE federal Civil Transactions Law applies, subject to special legislation and jurisdictional rules.

The new Federal Decree by Law No. 25 of 2025 is now the current Civil Transactions Law and entered into force on 1 June 2026.

DIFC

DIFC has its own laws, including the DIFC Law of Obligations.

The negligence structure under Article 17 expressly addresses:

duty;

breach;

causation;

loss.

Therefore, DIFC cases are especially useful for explaining fault-based liability concepts.

Important warning

DIFC decisions are not automatically binding precedent for mainland UAE courts.

They should be used as:

illustrative authorities for understanding civil-liability principles, unless the dispute is governed by DIFC law and falls within DIFC jurisdiction.

37. Simple Examples for Exams

Example 1 – Road Accident

A driver speeds through a red light and hits a pedestrian.

Fault: careless/reckless driving.

Damage: bodily injury.

Causation: collision caused the injury.

Result: possible compensation liability.

Example 2 – Dangerous Shop Floor

A supermarket knows that water has spilled on the floor but does not clean it or place a warning sign.

A customer slips.

Fault: failure to take reasonable precautions.

Damage: injury.

Causation: dangerous floor caused the fall.

Result: possible civil liability.

Example 3 – Bank Fraud

A bank receives suspicious payment instructions and has reasonable grounds to suspect fraud but processes the transaction anyway.

Fault: possible breach of banking duty.

Damage: financial loss.

Causation: payment caused or contributed to the loss.

Result: possible liability, depending on the facts.

The Aegis case provides a useful illustration.

Example 4 – Construction Defect

A contractor negligently installs waterproofing.

Water enters the building and damages equipment.

Fault: negligent construction.

Damage: property damage.

Causation: defective waterproofing caused water ingress.

Remedy: potentially repair costs and other legally recoverable losses.

Example 5 – Professional Advice

An adviser negligently provides important investment information.

The client reasonably relies on it and suffers a proven loss.

The court may examine:

professional duty;

assumption of responsibility;

reliance;

reasonable reliance;

breach;

causation;

quantum.

38. Important Defences

A defendant may argue:

1. No fault

"I acted reasonably."

2. No duty

"I did not owe this claimant the alleged duty."

3. No causation

"My conduct did not cause the loss."

4. Contributory fault

"The claimant's own conduct contributed to the damage."

5. External cause

"The damage resulted from an independent event."

6. No actionable damage

"The claimant has not proved legally recoverable loss."

7. Excessive quantum

"The amount claimed is unsupported or excessive."

39. Key Case-Law Principles in One Table

These decisions are primarily DIFC authorities, so they should not be presented as automatically binding on mainland UAE courts.

40. Fault-Based Liability – Short Revision Notes

Remember:

F – Fault

Was the defendant's conduct wrongful, intentional or negligent?

D – Damage

Did the claimant suffer legally recognised damage?

C – Causation

Did the fault cause the damage?

P – Proof

Can the claimant prove the loss?

R – Remedy

What compensation or other remedy is legally available?

D – Defences

Is there contributory fault, an external cause, or another defence?

41. Exam Definition

Fault-based liability in UAE civil law is the legal responsibility arising when a person's intentional or negligent wrongful conduct causes legally recognised damage to another person, subject to the applicable rules on causation, contributory fault, external causes, proof and compensation.

42. One-Line Memory Formula

WRONGFUL CONDUCT → FAULT → DAMAGE → CAUSATION → PROOF → COMPENSATION

And for negligence:

DUTY → BREACH → CAUSATION → LOSS → REMEDY

Conclusion

Fault-based liability is one of the central ideas of UAE civil liability. The basic purpose is to connect wrongful conduct with the damage it causes and to provide an appropriate civil remedy.

The most important points are:

There must be legally relevant wrongful conduct or fault.

The claimant must establish damage.

There must be a sufficient causal connection.

The loss must be legally recoverable.

The claimant's own fault can affect compensation.

External causes may exclude or reduce liability.

Professional, banking, construction and digital activities can all generate fault-based liability.

Mainland UAE and DIFC rules must be distinguished.

DIFC negligence cases provide particularly clear examples of duty, breach, causation and loss.

Under the current UAE Civil Transactions Law, compensation is linked to the damage actually sustained, subject to the applicable legal rules.