On the morning of 10 February 2004 Kish Air Flight 7170 crashed
on its approach to Sharjah International Airport. All but three of
the plane's passengers were killed.
Among the victims was a wealthy 42-year-old Emirati national who
was the sole breadwinner for his wife and eight children. In 2007,
following the publication of the General Civil Aviation Authority
report which concluded that pilot error was the cause of the
accident, his family began legal action against the airline,
demanding AED 14 million in compensation for the death (including
financial and moral damages). Two years later, the UAE Federal
Supreme Court upheld the decision of the Sharjah Court of First
Instance to award just AED 864,000 to the aggrieved family.
For those UAE residents who have been badly injured in the
workplace or for those families who have suffered the loss of a
loved one because of somebody else's negligence, this story
will be a familiar one. The UAE courts have always proved far more
reluctant to award substantial damages in personal injury claims
than in other more established jurisdictions. While it is true to
say that there is no barrier under UAE law which prevents litigants
pursuing claims in the civil courts for loss of earnings or
economic loss in addition to claims for physical injury,
significant awards have been few and far
between.
The insurance industry has therefore historically been protected
from large payouts as a result of this judicial conservatism. Added
to this is the fact that culturally the UAE is significantly less
litigious than countries like, for example, the USA. The
explanation for this latter trend is multi-faceted.
Financial compensation payable to an injured party in the UAE
compromises two separate parts: firstly by way of Diya or Arsh
(Diya being the financial remedy following a criminal conviction
for wrongful death and Arsh being the mechanism whereby a
percentage of Diya is paid to a victim who has suffered a bodily
injury as a result of a criminal act) and secondly civil
damages.
Depending on the financial status of the victim, it is common
for only Diya and Arsh to be claimed. A litigant with limited means
would often decide only to pursue criminal proceedings against the
individual or entity that caused them damage (rather than put
themselves through what would almost certainly become a lengthy and
expensive civil trial) and claim Diya and/or Arsh in the aftermath
of the criminal conviction.
The reality is, therefore, that civil claims that could be worth
substantial sums of money in other jurisdictions frequently become
frustrated in the UAE because of the litigation process, as most
litigants simply do not have the resources or the stamina to pursue
the matter.
In the long run, however, there is no room for complacency among
insurers who write the business likely to be impacted by these
sorts of claims. While the legal system in this jurisdiction
remains that of a relatively young, developing state, as it matures
and evolves with time it is entirely possible that the market will
be called upon to respond to larger damages awards.
As judgments are not published in the UAE, it is admittedly
difficult to accurately gauge the trends in this regard. Yet recent
evidence does indicate that litigation is generally on the rise and
we are also aware of a gradual increase in the amounts awarded to
claimants in personal injury type cases. For instance, we are now
occasionally encountering awards of AED 1-2 million in these sorts
of claims, although so far this has been mainly at the Court of
First Instance level and such awards have typically been decreased
on appeal.
Nevertheless, one only has to look at the how the pendulum has
swung in favour of litigants in other formerly developing legal
jurisdictions such as Hong Kong to see that the status quo in the
UAE is not guaranteed to remain indefinitely. Throughout much of
the 1980s and 1990s awards for personal injury claims in Hong Kong
were similarly small, only for the efforts of a crusading legal aid
department to reverse the trend – a crusade that has
resulted in a dramatic increase in the actuarial forecasts for
personal injury and death claims in the Asia re/insurance
market.
While such a crusade is unlikely to be repeated in the UAE,
other factors could reverse the status quo and the market should
not assume that the UAE will forever remain a low claims
environment.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
Specific Questions relating to this article should be addressed directly to the author.
A recent ruling of the Dubai Court of First Instance questions de novo the UAE courts’ compliance with their obligations under international enforcement instruments in the enforcement of foreign arbitral awards.
A discussion on the fact that applications for strike out are being increasingly used in the civil litigation process as a means to test, at an early stage, the courts view of the merits of a claim.
Commercial disputes before the State Courts in the UAE are characterised by exchanges of written submissions with little, if any, taking of witness evidence or oral advocacy.
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