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Question: I have a comprehensive insurance for my car. A month ago, I gave my car to a friend who had a driver’s licence and was 18 years old. This friend met with a major accident that resulted in serious damages to my car and some other cars as well. Currently, the insurance company has refused to pay any compensation on the ground that the driver who caused the accident was too young and the insurance company’s protection plan did not cover such accidents. My question is: Am I legally entitled to file a civil lawsuit against the insurance company to force it to pay compensation? Please advise.

Answer: You are legally entitled to file a civil case against the insurance company to force it to pay compensation because since the driver had a valid driving licence under UAE law, it means that his age was within accepted limits. Consequently, there can be no excuse for the insurance company not to pay the compensation.

Article 13 of the UAE Federal Traffic law No 21 of 1995 with its amendments states: ‘No person may drive any motor vehicle on the road unless he or she holds a valid licence issued by the licensing authority that entitles him or her to drive the same type of vehicle that he or she is driving. This licence is referred to in this law as the driving licence. Also, no person in charge of a motor vehicle may allow it to be driven by someone who does not hold a licence authorising him or her to drive it.’

In this case, since the driver complied with the above-mentioned conditions, the insurance company has to pay the compensation.

The insurance company, according to the ‘Unified Motor Vehicle Insurance Policy against Loss and Damage’, has the right not to pay any compensation in case the damage to the vehicle from an accident occurred during while the vehicle was being driven or operated by a driver who was not licensed to drive according to UAE Traffic Laws or who had not obtained a driving licence for the specific kind/category of vehicle according to UAE Traffic Laws and Regulations and the provisions of this policy. Or if the accident occurred while the vehicle was being driven by a person whose driver’s licence had expired and had not been renewed within 30 days from the date when the accident occurred. Or the licence granted to the driver had been suspended by the court or competent authorities or under UAE Traffic Regulations.

Except for these specific circumstances, as mentioned above, the insurance company is bound to pay compensation.

Quitting a partnership agreement

Question: I am a partner in a limited liability company. The company operates and makes profits according to the statements of the company’s employees, but for the last two years, I have not received any profit from the company. According to the manager, the company has not been earning a profit, rather, it has been suffering huge losses. What is the appropriate legal action that I can take against the company manager to claim my share of the profits. Or, can I sell my stake in the company and come out of the partnership agreement?

Answer: As a general rule, the manager in a limited liability company should, in case of losses, inform the general assembly of the partners, in order for them to take a decision about the future of the company. Article 308 of Federal Decree-Law No (32) of 2021 on Commercial Companies states:

1) If the losses of a Limited Liability Company touch half of its capital, the managers shall refer the dissolution of the company to the general assembly of partners. The dissolution decision shall be passed by a majority prescribed for amending the Memorandum of Association of the Company.

2) If the losses reach three quarters of the capital, the partners holding one quarter of the capital may request to dissolve the Company.

Also, according to Article 84 of the Federal Decree Law No (32) of 2021 on Commercial Companies, every manager in a Limited Liability Company shall be liable to the company, the partners, and third parties for any fraudulent acts committed by the manager and shall also be liable for any losses or expenses it incurs due to abuse of power or violation of the provisions of any applicable law, the Memorandum of Association of the Company or the contract of his or her appointment or for any gross error made by the manager.

The appropriate action to be taken in this case is to file a lawsuit against the company and to request the court to assign an expert whose task will be to review the company’s financial statements and budgets for the last two years and to file a report on whether the company had made profits or incurred losses. In case of losses, the company must indicate whether the manager was responsible for such losses.

Based on the aforementioned report, you must decide whether to continue in the company or quit the partnership or dissolve the company.

If it turns out that the company had made profits, then you can claim your share of those profits and continue with the partnership. However, if you find out that the company had incurred losses and that the manager was the one who was responsible for that, then you can file a case against the manager, seeking compensation, and request for dissolution of the company under Article 308, or you can sell your shares in the company.

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