Landmark Ruling in Favour of Corporate Victim of Cyber Fraud

In a rare and very significant judicial development, the judicial review panel of the Commercial Chamber of the Abu Dhabi Court of Cassation overturned a final judgment in a major cyberfraud dispute involving cross-bank liability and ordered a retrial before a newly constituted chamber.

The case, handled by our firm, Salloum & Partners LLC, on behalf of a corporate client, concerned unauthorized diversion of over 6 million dirhams through a sophisticated business email compromise scheme.

The panel’s ruling marks a pivotal moment in the court’s approach to financial institution accountability.

Despite clear evidence of lapses by two major financial institutions—including violation of internal banking protocols and authorization procedures and failure to verify transfer authorizations—earlier rulings had limited liability to a small fraction of the losses and excluded one of the banks entirely.

The panel found material legal error and inconsistency with settled principles on the duty of care owed by banks. It emphasized that both contractual and tortious liability may arise where there is negligence in protecting client funds.

The panel’s ruling was quickly followed by the judgment of the newly constituted chamber. The court found both banks jointly liable for the entirety of our client’s loss, plus costs and interest, due to the banks’ failure to meet their contractual and professional duties.

Key Implications: This ruling signals a strong message, reinforcing that:

• Banks are held to a stringent duty of care, reflecting their fiduciary responsibilities and regulatory obligations;
• Customers are entitled to full compensation, including in cases of cyber fraud, where banks commit legal or procedural failings – even if some contributory fault may lie with the customer; and
• Such liability, even where onerous, is an inherent professional risk for banks – one which is justified by the benefits and privileges banks derive from maintaining public trust.

The ruling not only reinforces the integrity of the UAE financial system, but also confirms the courts’ readiness to correct errors – even in final judgments – when justice demands it.

This also stands as a validation of the legal position we maintained from the outset – despite significant opposition. We are especially grateful to our client for their trust, and for continuing even when seemingly all hope was lost.