Dubai Court Dismisses Dh10.8-Million Embezzlement Claim In Restaurant Dispute

The Dubai Criminal Court has cleared two men accused of embezzling more than Dh10.8 million in a high-profile restaurant investment dispute, ruling that the case is a civil matter rather than a criminal offence.

The prosecution had alleged that the defendants misappropriated funds entrusted to them to secure a 50 per cent stake in a Dubai-based restaurant. The payments, totaling Dh10,809,231, were made over two years under a Memorandum of Understanding (MoU) dated 1, May, 2019, between the investor's company, Park House Investment, and the defendants' firm, Four Forent Facility Management.

However, the Court ruled that the money was transferred as part of a commercial agreement to buy restaurant shares and cover operational expenses, rather than under a legally recognised“contract of trust” - such as a deposit, lease, or agency - which is required under UAE law to classify a breach as criminal embezzlement.

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Vishal Tinani, legal advisor on the case, said the ruling underscores a key principle in UAE criminal law.“Simply failing to meet contractual obligations, even when large sums are involved, does not automatically constitute a criminal offence. Criminal breach of trust requires the funds to be transferred under a legally recognised fiduciary arrangement, with intent to misappropriate,” he explained. He added that the ruling also serves as a reminder for investors to structure agreements with clear fiduciary responsibilities and safeguard clauses if they wish to preserve the option of criminal action in cases of misappropriation.

The Court's decision clarifies the boundary between civil and criminal liability in investment disputes, providing guidance for companies and investors navigating large-scale commercial deals in Dubai.

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