In a landmark judgment issued on 12 February 2026 in Dubai Court of Cassation Case No. 33 of 2026, the Dubai Court of Cassation has delivered a decisive ruling that significantly clarifies the scope of contractor liability, the strict threshold for invoking force majeure, and the heightened duty of care required when handling high-value assets.

This decision is particularly relevant for service providers, automotive dealers, logistics operators, and custodians of valuable property, as it reinforces a fundamental principle under UAE law: liability cannot be avoided merely by invoking external events unless strict legal conditions are satisfied.

Background: When a Luxury Asset Is Lost in Custody

The dispute arose from the destruction of a rare luxury vehicle (Bugatti Chiron, valued at AED 20 million) while under the custody of an authorized service provider for routine maintenance.

The vehicle, entrusted to the defendant’s workshop, was severely damaged due to flooding following heavy rainfall. The owner initiated legal proceedings seeking full compensation for the loss, asserting that the vehicle had been delivered in good condition and was destroyed while under the exclusive control of the service provider.

The defendant, however, argued that the damage resulted from exceptional and unprecedented weather conditions, constituting a foreign cause (force majeure) that should exempt it from liability.

While the lower courts initially accepted this defense and dismissed the claim, the Dubai Court of Cassation took a fundamentally different view—one that reshapes the legal landscape.

Recharacterizing the Relationship: A Contract for Work, Not Mere Custody

A pivotal aspect of the Court’s reasoning was its legal characterization of the relationship between the parties.

Rather than treating the arrangement as simple custody or deposit, the Court classified it as a contract for work under the UAE Civil Transactions Law. This distinction is critical, as it imposes stricter obligations on the service provider.

Under such contracts, the contractor is not merely required to exercise reasonable care. Instead, the contractor is bound by an obligation to achieve a specific result—namely, to complete the agreed work and return the subject matter in proper condition.

The Court emphasized that:

• The obligation to return the vehicle after servicing is a result-oriented obligation, and
• Failure to return the asset in the agreed condition constitutes a breach in itself, without the need for the claimant to prove fault.

This principle significantly elevates the standard of liability for contractors operating in the UAE.

Force Majeure Under UAE Law: A Strict and Objective Test

The Court undertook a detailed analysis of the concept of foreign cause (force majeure) under Articles 287 and 386 of the UAE Civil Transactions Law.

It reaffirmed that, for a party to rely on force majeure, two cumulative conditions must be met:

1. The event must be unforeseeable, even by a highly diligent and prudent party; and
2. The event must be unavoidable, meaning that its consequences could not have been prevented through reasonable measures.

Importantly, the Court clarified that:

• The test is objective, not subjective.
• It is not sufficient for the defendant to claim that the event was unusual; rather, it must demonstrate that no reasonable entity in its position could have anticipated or mitigated the risk.

Rainfall Is Not Always Force Majeure

A central issue in this case was whether the heavy rainfall could qualify as force majeure.

The Court decisively rejected this argument.

It found that:

• Weather warnings had been issued prior to the incident, indicating the likelihood of heavy rainfall.
• Such conditions were therefore foreseeable, even if severe.

The Court noted that:

The mere fact that an event is intense or uncommon does not render it unforeseeable if circumstances indicate its potential occurrence.

This finding has wide implications in the UAE context, where weather advisories and regulatory alerts are routinely issued.

Failure to Take Preventive Measures: The Turning Point

The Court’s most critical finding concerned the defendant’s failure to take adequate preventive measures.

Although the service provider had implemented certain steps—such as placing sand barriers—these were deemed:

• Insufficient, and
• Reactive rather than preventive.

The Court emphasized that:

• Preventive measures must be taken before the occurrence of the risk, not after the damage has begun.
• The precautions adopted must be proportionate to the nature and value of the asset.

Notably, the Court highlighted that:

• The workshop’s design (being below ground level) increased flood risk.
• Effective measures, such as raising vehicles on elevated platforms, were only implemented after the incident.

This demonstrated clear operational negligence and lack of preparedness, which directly contributed to the loss.

Heightened Duty of Care for High-Value Assets

The Court introduced an important and practical principle:

The higher the value and sensitivity of the asset, the greater the level of care and precaution required.

In this case, the vehicle was:

• Rare,
• Highly valuable, and
• Technically sensitive.

Accordingly, the service provider was expected to adopt enhanced protective measures, beyond ordinary operational standards.

This principle has direct implications for industries dealing with:

• Luxury goods
• Specialized equipment
• High-value inventory

Burden of Proof: A Critical Clarification

The Court reaffirmed the allocation of the burden of proof:

• The claimant must establish:
  • The existence of the contractual relationship, and
  • The failure to perform (i.e., non-return of the vehicle in proper condition).
• The defendant bears the burden of proving:
  • That the damage was caused solely by a foreign cause, and
  • That no fault or negligence contributed to the loss.

Where negligence is established, even partially, the defense of force majeure fails entirely.

Final Outcome: Substantial Compensation Awarded

Having established liability, the Court of Cassation:

• Set aside the previous judgments
• Held the service provider fully liable
• Ordered payment of:
  • AED 19,000,000 (market value of the vehicle)
  • 5% legal interest from the date of judgment until full payment
  • Legal costs and attorney’s fees

This outcome reflects the Court’s firm stance on protecting contractual rights and enforcing accountability.

Key Takeaways for Businesses in the UAE

This judgment delivers several critical lessons:

1. Contractor Liability Is Strict
   Businesses engaged in service contracts must recognize that their obligations are result-oriented, not merely based on reasonable care.

2. Force Majeure Is Narrowly Interpreted
   External events will not excuse liability unless they are:

• Truly unforeseeable, and
• Impossible to mitigate.

3. Proactive Risk Management Is Essential
   Companies must:

• Monitor official warnings,
• Implement preventive measures in advance, and
• Continuously assess operational risks.

4. High-Value Assets Require Enhanced Protection
   Standard procedures are insufficient when dealing with exceptional assets.

5. Documentation and Preparedness Are Key
   Failure to demonstrate proactive measures can result in full financial exposure.

Conclusion

This judgment represents a significant development in UAE jurisprudence, reinforcing a clear message:

Contractual responsibility cannot be avoided through broad claims of force majeure where preventive action was possible.

For businesses operating in the UAE, particularly those entrusted with client assets, this decision underscores the importance of:

• Robust operational controls,
• Legal compliance, and
• Strategic risk management.

If you require further clarification or legal assistance concerning the matters discussed in this article, please do not hesitate to contact Khairallah Advocates & Legal Consultants LLC. Our lawyers would be happy to assist you.

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