: June 28, 2016 |
: Dubai laws
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Hassan Mohsen Elhais
After qualifying as a lawyer in his native Egypt within the fields of Criminal and Public Law, Mr. Mohsen Elhais has been practicing in Dubai for the past seven years.
Working exclusively with Al Rowaad Advocates, Hassan is an effective leader of the company, the spokesperson and driving force. Hassan has a strong ethical stance with regards to the place of the law firm and its work on behalf of the client, from clarity on the legal process through to the fee system.
Specialising in the drafting of all statement of claim, memos and consultation with regards to all kind of litigations, Hassan has worked his way through the ranks of Al Rowaad Advocates from joining as Legal Advisor to his current role as Managing Partner.
Federal Law No.(3) For the Year 1987 on Passing Penal Code Article No.399:
"Shall be punishable by confinement or by a fine any individual who, by using fraudulent practice, assuming a false name or quality, takes possession for himself or for others of any movable property or written instrument, or obtains any signature upon such instrument, its cancellation, destruction or amendment, whenever it is intended to deceive the victim and bring him to surrender a legal right. Shall also be liable to the same punishment he who alienates an estate or a movable property while being fully aware that it is not his own or that he has no right to dispose thereof; or he who knowingly alienates any of the above mentioned after having previously disposed thereof or having concluded any agreement thereon, whenever such an act operates to the injury of others.
If the object of crime is a property or an instrument pertaining to the State or to any of the authorities mentioned in Article (5) above, this shall be considered a circumstance of aggravation.
Attempt shall be punished with confinement for a period not exceeding two years with a fine not exceeding twenty thousand Dirhams. And where a recidivist is convicted and sentenced to confinement for a period of one year or more, the Judge may order that he be put under police surveillance for a period neither to exceed two years nor to exceed the duration of the inflicted penalty.”
Fraud is defined as taking or gaining from another property, money, vouchers or anything of value by deception or lying or trickery which is supported by verbal means or written documents, causing the victim to rely on the same to willingly hand over something of value from himself to the person committing the fraud.
The crime of fraud is considered a serious fraud if committed against government property or objects of value. This may result in a serious punishment, such as imprisonment.
If a person who is convicted of fraud and has served his sentence commits a crime again, he or she can be put under investigation and surveillance for up to two years or up to the term of his previous imprisonment.
The maximum imprisonment for attempted fraud is two years.
Difference between lying and fraud:
Merely lying does not amount to fraud. The element of support has to be present. Therefore, ordinary lies are not considered fraud, as the law does not punish mere lies.
Difference between fraud and theft:
The willingness to surrender is what differentiates fraud from theft. In a fraud, the victim willingly surrenders the object of value. In a theft, the victim is not willing to hand over his object of value and it must be forcefully taken from him.
Difference between fraud and breach of trust:
In fraud, the intent to de-fraud, and bad faith have to be present from onset. Whereas in Breach of Trust, the intent changes during the process. The presence of bad faith and intent from onset can be proven by evidentiary support.
Elements of fraud:
In order to successfully prove fraud, two elements have to be present: the method and object of value or a third party; and the intent to deceive.
The material can be any means of deception such as a false identity or character, or taking an action using property not owned by the deceiver.
Deceptive methods fulfilling the requirement of comprising a fraud include general documents, written or verbal expressions, circumstances or appearance, or use of other persons in order to deceive the victim that induce the victim to rely on such supported documents, persons or verbal expressions to handover an object of value. Lying, unsupported by any such acts, does not constitute fraud.
The general circumstance required to comprise a fraud can be by coincidence or engineered by the party him or herself. In both cases it shall satisfy the requirement for fraud.
Fraud is based on actions or circumstances that convince the victim into handing over his property. Such acts or circumstances could be made or taken advantage of by the accident himself.
The Dubai Court of Cassation said on 10/11/2001 that circumstances of fraud can include: "[A person or people] taking on the appearance of rich people and appearing like them and driving their cars to invite people to one's house and convincing them to hand over their money, after which he disappears, or claiming he has connections with people holding high rank in the government or that he does business management or opened a branch or an office of a fake company or claiming he can cure people, or double their money or do whatever they want by using black magic".
Exception to the rule:
Lying shall constitute the crime of fraud if committed by an individual employed by the government and he takes advantage of his job or his position to deceive another. In all such cases lying shall equate to fraud.
Third party involvement:
If the lie is supported by a third party, it is considered a fraud on the condition that third party was moved by the fraudulent party to support the lie. The third party shall be considered a main wrongdoer of the crime if he had an agreement with the fraudulent party to deceive the victim prior to committing the crime or provided support to the deceptive party and vice versa. That includes any documents issued in order to support the lie in such a case written by the third party and issued to the party committing the crime. The only scenario in which the third party shall be considered a victim is if he acted in good faith and was unaware of the deceit.
A third party is considered a partner to the fraud if he supports the fraudulent party.
Purpose of the Deceit:
Under UAE law, the purpose of the deceit is not conditional. Any action taken, regardless of the purpose, if done to take another's money or property is considered fraud.
As stated in Abu Dhabi Appeal No.173/79, criminal hearing date 5/8/1979:
"The deceiving party is the one who must take the action that leads to the interference of the other party supporting him – whether that party had bad intentions or was deceived as well with the deceived party".
Doctrines for victim's protection under the law:
1. The person
The criteria are applied on a case-by-case basis and on the merits of each case. So a court will assess the IQ of the victim, among other things to assess whether the deceit was an obvious one or not. This ensures that the person committing fraud does not evade the law or the punishment. This is most often used by the court to protect victims of fraud.
2. The Standard of Average person
It is considered as fraud if the court determines that an average person of average intelligence would have succumbed to the deception. If so, then the crime is fraud. However, this is a loophole most likely to be used by those committing fraud since they intentionally target people of below average intelligence or means.
3. The intentions of the deceiver
The law shall protect the victim if the deceiver intended to deceive and the means used by him to deceive were successful in deceiving the victim. However, if the deceiver was not successful in deceiving the victim, it shall be considered attempted fraud. The disadvantage with this condition is that it merges the elements of the crime; the intent and the actions.
Using a false name or identity:
A person is said to be committing a fraud if he takes a false name, in part, or in full. It is, however, not considered fraud if a person uses his commonly known name which is different to his name, or if he shares the same name with another person. However, if he convinces the victim of his false identity of being the other person, with whom he shares his name, it shall come under fraud.
Taking on a false quality:
The above is defined as an image an individual acquires due to his position or reputation in a society or due to his affinity with another person of importance. Such quality could be due to the individual's profession, job, status etc. It is considered fraud to assume the personalities of another person in order to deceive someone out of their property.
The requirements for the above are timing, and exaggeration. Hence claiming a characteristic like being a court judge if you were one in the past, is still a fraud. Additionally, if a person exaggerates his position in order to deceive, it is a fraud. So any elevation of a person's profile to a higher one in order to lure the victim is enough for fraud.
If the fraud is successful due to using a false name or characteristic, it does not need documentation or a third party or any other form of proof.
Three conditions have to be met to prove fraud by assuming another's name or characteristic:
Firstly, the name or characteristic assumed should lead the victim into handing over his property. What shall be considered to have 'lead' the victim is at the judge's discretion.
Secondly, there must be a positive action from the deceiver to convince the victim of the false characteristic in order to be considered fraud. Hence staying silent shall not be considered fraud even if it misleads the victim into assuming the other's identity.
Thirdly, the characteristic undertaken by the one committing fraud should not be evidently inconsistent. It should be such that an ordinary person does not immediately suspect a wrongful act.
If the above three conditions are met, it shall be considered fraud under Article 399. If any of the above is in writing, it shall be an additional crime of falsification which carries a higher punishment as a more serious crime. In such cases, Article 88 shall apply which states if a person is guilty of two crimes, he shall be punished for the more serious crime. As a result the person shall be guilty and punished for falsification.
Immovable and moveable property
Under Article 399, any action taken on an immovable property such as land, which does not belong to a person, is also considered fraud. This is to protect all immovable property. This kind of fraud has two conditions:
Firstly, an action must be taken on the immovable property and this action must be that of rights in rem or 'real rights', and not rights in personam i.e. personal rights. An example of such an action would be selling a property fraudulently that does not belong to the person. Renting the property that does not belong to a person shall not be fraud since it's not a right in rem. Such an action can be oral or written. Evidence Law requires that any contact or action, whose values exceeds more than AED 5000 shall be in writing. However, that does not apply here and hence this could be considered as an exception to the Law of Evidence.
Secondly, the action taken on the property must not come from the owner of the property. An owner in such instances could be the owner himself, or authorised by contract e.g. a Power of Attorney, or established through judgment of the court e.g. in the case of minors. If the rightful owner has taken any action on his rightfully owned property, it cannot be a fraud. If a minor takes any action, it's not a fraud, however, it is categorised as another crime. The same will apply if a son, for example, took an action on his father's property. This shall be deemed fraud.
In cases of immovable property, if the owner of the property has entered into an agreement with Party 'A' but has yet to transfer ownership, and sells to Party 'B' instead, this shall be considered fraud. Following the same path, if 'A' sells to 'B' without transferring ownership and then sells the same property to 'C', this too shall be a fraud. These rules shall apply regardless of the knowledge of the victim or the court of the true owner of the property.
The result of the crime of fraud:
The conditions on the property or money: it is conditional that the property must be movable. So it could be money, vouchers or a contact etc. In case the property is real estate and the agreement is fraudulent it will be enough to qualify as a fraud since an agreement is a movable property. Another condition is that the property must have a material value, and not just an emotional value to the owner. This condition differentiates it from theft. In fraud a person must 'take' something of value, for if a person deceivingly identifies himself to be a policeman to avoid paying the metro ticket, it shall not be fraud. However, if he does the same in order to 'take' discounted or free tickets it shall be fraud. Hence it is important for the person to 'take' something to satisfy this condition.
Taking of the property: This crime of fraud must result in the taking of the property of the victim. The deception has to have happened before taking the property to be liable for fraud. The action leading to the handover of the property must be performed by the victim. It is immaterial whether the person committing the fraud has benefitted from the property or the crime or not. Even if he donated the taken property, it shall still be a fraud. Additionally, if the victim handed over the money under a fraudulent pretext for an illegal purpose, that shall not absolve the fraudulent party of liability.
In order to establish fraud, the deception must drive the victim to hand over the property which the deceiver intended to take. Therefore the deception must take place before handing over the property.
Article 399 says that there must be damage to the victim in order to successfully prove fraud. Even if the victim was compensated that the deceit did not result in the specific damage, fraud cannot be established. Two conditions for causation should be resent:
Firstly that deceit should transpire before the property is wrongfully attained by the deceiver. And secondly, the handing over of the property by the victim under the deceit should be the result of the deception. A situation where the victim becomes aware of the deceit and continues handing over the property, for whatever reason which might include the victim trying to complete the crime in order to attain evidence of the fraud, shall not be considered fraud. It can only be a crime of fraud if the victim is truly deceived into handing over his property.
It is the judge's discretion whether causation has occurred or not or whether the link between the deceit and the damage is established.
Moral requirement: Intention
Two conditions must exist together to fulfil the 'intention' requirement for the crime of fraud. Firstly, there must be a general intention for a party to deceive another party. Secondly, there must be an intention to gain the other's property by this deception. The motive of intention is immaterial in this matter. The evidence and proof of intent and what qualifies as evidence is also a discretion available to the judge.
The punishment of fraud is imprisonment or a fine. A person convicted of fraud could face anywhere from 1 month to up to 3 years’ imprisonment. If the fraud is a more serious one, for example if committed against a government entity, the prison sentence could be up to 6 years. The fine for such a crime can range from between AED 30,000 to AED 60,000.
For cases where attempted fraud has been successfully proven against someone, the maximum imprisonment is 2 years and the maximum fine is AED 20,000.
If both parties decide to settle the matter, this shall not discharge the case against the accused. However, it can reduce the sentence of the imprisonment or the amount of the fine.
In the case where the parties to a fraud are siblings, a case can only be filed against the deceiver by the victim. In such cases the prosecution shall not act independently to charge the person of the crime.
After the final judgment, in cases where the two parties are siblings, if they reach a settlement the prosecution can suspend the prison sentence or the fine. In case they reach settlement before the judgment, the court issues a verdict to drop the charges and close the case.
Author: Mr. Hassan Elhais, along with his team of legal consultants and prominent local lawyers across the UAE, has made a name for himself as a renowned specialist in the fields of civil law, construction law, banking law, criminal law, family law, inheritance law and arbitration.
Insolvency and Bankruptcy Code, 2016 are those bankruptcy law which came into existence India should unite those existing skeleton to make a solitary legitimate statute for bankruptcy.
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