The United Arab Emirates (UAE) has a population of almost 10 million, of which around 90% are expatriate workers. Although the consistent sunny weather and relatively relaxed environment are attractive, these are in reality additional benefits to the primary reasons that draw immigrants to the UAE. The business opportunities provided by the country’s central location, its own economic growth and proximity to other rapidly-expanding markets, relatively free trade environment, high financial liquidity and tax-free income are all reasons to attract hard-working people from all over the world.
However, the high level of investment and spending in the region also creates many opportunities for dishonest behaviour by people who have been placed in positions of responsibility and trust. This article gives a brief overview of one of the most commonly used criminal offences available to victims in such situations.
Breach of trust
The primary law governing crimes in the UAE is Federal Law No. 3 of 1987, as amended (Penal Code). While there are several provisions in the Penal Code to deal with offences that would be relevant to business, such as those relating to fraud, bribery, corruption and dishonoured cheques, there is one offence that is particularly well-suited to the all-too-frequent scenario of a trusted adviser, an employee or a business partner taking advantage of their position to the detriment of their principal, employer or partner. This offence is known as breach of trust.
The breach of trust offence is created by article 404 of the Penal Code, an unofficial translation of which is as follows:
Article 404: Whoever embezzles, uses or dissipates funds, securities or any other moveable property, with the intention to prejudice the interests of the rightful owner, whenever such property was committed to the offender in a fiduciary character by way of trust, lease mortgage, loan for use, or proxy, shall be punished by detention or a fine.
In the application of this provision, a proxy shall be considered to be any partner in joint property, any agent of necessity with respect to the property of the concerned party and any person to whom anything is committed to be used for a specific matter for the benefit of its owner or for the benefit of another.
The wording of the breach of trust provision explicitly considers that partners of joint property are holders of that joint property on trust for each other. In practice, this extends to include partners in a company with respect to the funds of the company.
This provision therefore allows employers or business partners, who have been targeted by criminal employees or business partners, to seek justice and compensation for losses suffered by them as a result of the criminal acts of the other party.
A conviction for breach of trust attracts a punishment with the aim of deterring people in the UAE from committing the offence. The Penal Code provides for a penalty of confinement or a fine, the length or amount of which are to be determined by reference to the sentencing provisions of the Penal Code and which depend on the categorization of the offence.
As a breach of trust is categorized as a misdemeanour, the available sentence is currently imprisonment of between one month and three years and a fine of between 100 and 30,000 UAE dirham (US$27 and 8,167).
A modern option
In some scenarios, it may be possible to prosecute an offender under Federal Law No. 5 of 2012 (Cyber Crimes Law), if a computer was used to commit the offence. The Cyber Crimes Law carries harsher penalties than the equivalent offence under the Penal Code provisions alone. It is available in the following situations:
- Forgery of an electronic document;
- Knowing use of a forged electronic document;
- Using an IT system to obtain property fraudulently or without legal right;
- Using an IT system to unlawfully access bank account details; or
- Accessing a work IT system beyond the limits of permission.
Practical examples of these situations could include accessing accounting records or bank details of employees or clients in order to steal or fraudulently obtain funds or to amend invoices so that payments are made to the offender’s account.
Although breach of trust is a criminal offence, the civil law system of the UAE allows a victim of a crime to file a case as a civil claimant. The victim’s claim will run alongside the criminal complaint and allows the victim to request compensation. This will depend on the outcome of the criminal case – if the crime is proved, determination of the precise quantum of damages will be referred to the civil court.
Joining a criminal complaint as a civil claimant also has the benefit of giving the victim access to the public prosecution, in order to file memoranda and submit evidence in support of the case. This ability to inform the public prosecution about the case in the victim’s (or their lawyer’s) own words is often a great assistance to the public prosecutor and can include the use of expert reports to present the evidence in a clear and convincing manner, increasing the chances of a successful prosecution and, therefore, a judgment for compensation in the victim’s favour.
The UAE is a place of opportunity. Unfortunately, this applies just as much to criminals as it does honest and hard-working individuals. However, thanks to the breadth of the breach of trust provision, a variety of factual situations can easily be caught by the Penal Code. When combined with a civil complaint for damages, this is an extremely useful tool for those who have fallen victim to white-collar crime.
Andrew Hudson is a senior associate and Omar Khattab is an associate of Al Tamimi & Company
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