Dubai Court of Cassation | Judgment dated 12 August 2026

A Dubai Court of Cassation judgment provides important guidance on the allocation of contractual responsibility between a UAE bank and a foreign investment custodian, particularly where a customer seeks recovery of assets held outside the UAE.

The Court upheld the distinction between funds maintained directly with the bank and an investment portfolio held by a separate UK-based institution. It confirmed that the bank’s involvement in facilitating the investment relationship did not, on the contractual arrangements established in the proceedings, make it responsible for the custody or repayment of the portfolio assets.

The decision also addresses the importance of identifying the correct legal entity in cross-border financial disputes and the limits of arguments concerning foreign sanctions where those sanctions did not form the legal basis of the challenged judgment.

Background

The dispute arose from a banking relationship in the UAE under which a customer maintained deposit accounts and accessed investment services through a UK-based brokerage and custody arrangement.

Following the proposed closure of the banking relationship, the customer sought access to funds held in the bank accounts and to an investment portfolio maintained through the foreign institution.

The customer commenced proceedings seeking recovery of the account balances and investment assets, together with related relief and compensation.

The Dubai Court of First Instance ordered the bank to pay approximately AED 2.11 million in respect of the relevant account balances but rejected the remaining claims, including recovery of the foreign-held investment portfolio from the bank.

The Court of Appeal upheld that judgment. The customer subsequently appealed to the Court of Cassation, challenging the contractual characterisation of the bank’s role, the treatment of the foreign custodian and the rejection of the remaining claims.

The bank’s contractual role was decisive

A central issue was whether the bank’s involvement in establishing and facilitating the investment relationship made it responsible for the assets held by the foreign institution.

The customer argued that the bank had acted as its agent, facilitated the opening of the investment account and transmitted investment instructions. On that basis, the customer maintained that the bank should bear responsibility for the investment portfolio and the conduct of the foreign custodian.

The Court rejected that argument on the facts.

It upheld the lower courts’ interpretation of the contractual documents, under which the bank’s role was limited to facilitating the customer’s direct relationship with the foreign investment institution, transmitting instructions and communicating information.

The investment account and portfolio were subject to the foreign institution’s own contractual terms.

The Court found no basis in the evidence for treating the bank as having custody or control of the investment portfolio or as being responsible for its management and continued operation.

The decision therefore illustrates an important principle: a bank’s involvement in arranging access to investment services does not, without more, establish responsibility for assets held and controlled by a separate institution.

The contractual allocation of functions remains decisive.

Identifying the correct legal entity

The judgment also addresses a significant procedural issue in cross-border financial litigation.

The customer had sought to join a locally registered branch of the foreign brokerage group to the proceedings concerning the investment portfolio.

The Court distinguished that branch from the UK company identified in the investment account documentation as the institution responsible for custody of the assets.

It found that the customer had not established a sufficient basis for treating the locally registered branch as the relevant contracting or liable entity, or for attributing the UK company’s obligations to it.

The Court therefore upheld the refusal to join the branch.

This aspect of the judgment reinforces the importance of identifying the correct contracting party when financial services are provided through international corporate structures.

A shared commercial name or group relationship does not, by itself, establish that one entity is liable for another’s contractual obligations.

Foreign sanctions did not determine the outcome

The customer also challenged the treatment of restrictions said to arise from UK sanctions.

The Court rejected that ground of appeal because it did not address the actual basis on which the lower courts had dismissed the portfolio claim.

Their decision rested on the contractual allocation of responsibility and the finding that the relevant assets were held by the foreign institution, rather than on the application of UK sanctions against the customer.

The distinction is important.

The judgment should not be read as establishing that foreign sanctions automatically govern banking relationships in the UAE or that their existence necessarily releases a UAE financial institution from its contractual obligations.

The Court’s determination was narrower: the sanctions argument did not undermine the contractual findings on which the challenged judgment was based.

Compensation required proof of loss

The Court also considered the customer’s claim for compensation arising from the closure of the banking relationship and the alleged inability to access funds and investments.

It reaffirmed that contractual liability requires the relevant elements of breach, damage and causation.

Even where a contractual breach is established, compensation is not automatic. The claimant must demonstrate that compensable loss resulted from that breach.

The lower courts had found that the customer had not sufficiently established the alleged additional damage.

The Court of Cassation upheld that assessment, declining to reopen factual findings that fell within the lower courts’ discretion and were supported by the evidence.

Practical Significance

The judgment offers useful guidance for banks, investment intermediaries, financial institutions and customers involved in cross-border investment arrangements.

First, contractual documentation should clearly distinguish between introducing or facilitating an investment relationship, transmitting instructions, managing investments and holding assets in custody. These functions may involve different legal responsibilities.

Second, parties pursuing claims involving international financial groups should identify the precise entity that contracted with the customer, held the assets and assumed the relevant obligations.

Third, restrictions affecting foreign-held assets should be examined separately from the contractual responsibilities of a UAE-based intermediary. The existence of a foreign sanctions issue does not dispense with the need to establish the legal basis of the claim against each defendant.

Finally, claims for compensation must be supported by evidence of actual loss and its causal connection to an established breach.

Conclusion

The Dubai Court of Cassation judgment reinforces the importance of contractual responsibility in cross-border banking and investment disputes.

A financial institution’s role in facilitating access to an investment platform does not necessarily make it responsible for assets held by a separate foreign custodian. Liability depends on the contractual obligations undertaken, the functions actually performed and the evidence establishing breach and loss.

For parties involved in international investment arrangements, the decision highlights a fundamental consideration: the institution through which an investment relationship is established is not necessarily the institution legally responsible for custody of the assets.

DISCLAIMER

This publication is provided for general information only. It does not constitute legal or regulatory advice and should not be relied upon as such. The outcome of any matter depends on its particular facts, contractual documentation and applicable law. Specific legal advice should be obtained before taking or refraining from taking any action.