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DUBAI COURTS TURN DOWN INSURANCE COMPANY PETITION

According to the case-sheet, the AIC was the insurance company responsible for the construction of Deira City Center. The United Arab Emirates Company (AAAC) was among the companies which were sub-contracted works for the city centre. The AAAC was responsible for installing three coolers to control the temperature at all hotels, offices and apartments under the project.

In turn, the AAAC entered into a contract with the KTC in July 1996 to provide, install, and run an automatic system for treating the water supplied to the three coolers for one year. The three coolers were successfully delivered and installed in September 1997, and the cooling system started working. It was under a warranty for one year which expired in September 1998.

Some disorders and defects in the coolers were noticed during the warranty period itself. The defects in the condenser tubes, which were replaced, were attributed to the bad handling of the equipment by the KTC. The AIC suspected that the defects were due to the improper handling of the coolers by the KTC.

In consonance with the terms of the insurance contract, the AIC paid Dh1,312,565 to the AAAC against the damages in the coolers. However, the insurance company claimed that the KTC was responsible for the damages, and asked it to pay back the money it had paid to the AAAC.

On refusal by the KTC to pay the money, the insurer approached the Dubai Court of First Instance. Relying on the report of the expert it assigned, the court dismissed the plea. The AIC contested this verdict before the Dubai Court of Appeal, which upheld the verdict of the lower court.

Not satisfied with the appeal court’s ruling, the AIC contested the judgment at the Dubai Court of Cassation, which also dismissed the petition and upheld the verdicts of the lower courts. All the courts based their verdicts on the expert’s report, which absolved the defendant of any responsibility and said that it had fulfilled all the contractual obligations.