Dubai Court Orders Law Firm to Return Dh1.1 Million Withheld From Client

The Dubai Court of First Instance has ordered a law firm to refund Dh1,118,871.51 collected on behalf of a client and withheld for more than a year, Gulf News reported. The court ruled that lawyers cannot retain clients' funds to recover unpaid fees without adhering to proper statutory procedures.

According to case details reported by Gulf News, the dispute arose after a corporate client hired the firm to conduct cheque execution proceedings regarding a Dh5.49 million claim. The debtor paid Dh1.118 million into the court's execution account, which the law firm transferred to its own bank account in August 2025. Despite repeated demands, the firm failed to remit the money to the client.

In June 2026, the company revoked the law firm's power of attorney and demanded repayment before petitioning the execution judge. In July 2026, the execution judge ordered the firm to return the full amount to the court or directly to the client. The firm sought permission to deposit only Dh803,702.24, but the request was rejected, and the Dubai Court of Appeal dismissed the firm's challenge in September 2026. While a court assessed the firm's legal fees at Dh30,000 in October 2026, it refused the firm's request to freeze the execution proceeds as security.

In its final judgment, the court ordered the firm to pay Dh50,000 in damages—out of a Dh100,000 compensation claim—and 5 per cent annual interest from October 1, 2026, until full settlement, alongside court costs. Citing the UAE Civil Transactions Law, the court established that funds collected by an agent constitute a deposit that must be returned upon request, noting that a lawyer's right to fees does not permit automatic deduction or transfer of ownership over client money.