A legal firm in Dubai is being sued for $3.65m after being
accused by a former client of professional negligence, in a lawsuit thought to
be the first of its kind to be brought before the Dubai International Financial
Denton Wilde Sapte & Co (DWS), a London law firm with
offices in DIFC, is being sued by Dubai-based Injazat Technology Fund, a unit
of private equity firm Injazat Capital Limited, over its counsel relating to a
2006 investment in Broadlink Research.
Injazat invested $3m in the venture, which planned to
develop a Disney-themed mobile phone.
When the company ran into financial difficulties in 2007,
DWS advised Injazat to go to arbitration in order to retrieve the funds in had
invested, according to court filings.
While ITF won the case, it alleges that DWS failed to advise
it of a clause in its initial contract with Broadlink that would have prevented
it needing to pursue arbitration and secured the return of its funds.
The central allegation from ITF is that the law firm, which
has since been renamed SNR Denton following a merger, led it into three-year
arbitration proceedings because it failed to identify the clause ahead of its
expiry at the end of 2007.
Had DWS given proper advice on the clause, ITF alleges, the
US assets held by Broadlink’s directors would have offered substantial value
and the funds could have been returned sooner.
UAE law does not
recognise negligent misrepresentation, unless there
is an intention to defraud. DIFC Courts, however, which has jurisdiction
over civil and commercial disputes relating to the tax-free business park,
operates under international laws.
The case is believed to be the first of its kind to be filed
with the DIFC Courts and is ongoing.
SNR Denton & Co declined to comment when contacted by
“We are aware of the proceedings. However, I am sure you
will appreciate that we cannot comment on ongoing litigation,” Michael Kerr, a
partner at the firm, said in an emailed response.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.