Stalled UAE recovery of $45M resurfaces in Parliament amid diplomatic tensions

CITY OF LONDON—With Iranian drones and missiles targeting the skyscrapers of Dubai and Abu Dhabi, the United Arab Emirates has been pushing for closer ties with the United Kingdom. But there is growing unease that the UK is giving more than it gets.

City insiders point to an Emirati judge’s refusal to recognise a $40 million British High Court judgement as symptomatic of this imbalance. 

The civil case, relating to loans for investment in the recycling of ships, concluded in 2024 that a UAE-based businessman and British national is liable for the misappropriation of some $40 million due to dishonesty in his disclosures to creditors. It remains an unusual case today given the bluntness with which the civil court judge characterised the fact pattern, concluding that the defendant had intentionally misled the plaintiffs into lending him money.

The liable businessman had “sought to use the lenders’ money, and could not get it without lying to the lenders,” wrote the judge. This amounted to “sufficient use of the unlawful means of deceit,” as to constitute a conspiracy against the lenders, the judge said. Legal blogs at the time picked up the case as an example of how even highly experienced capital markets players could drop the ball. The case followed another successful civil claim along similar lines in 2020, against the same businessman. The businessman was not criminally investigated.

The aggrieved party filed a parallel case in the UAE – specifically, due to the location of some of the underlying companies, in the emirate of Ras Al Khaimah. However, despite what the claimant’s lawyers say was a bulletproof argument, the case was not brought to trial. It was rejected in 2023 on grounds of lack of jurisdiction, according to documents seen by reporter.london.

Neither party to the case wished to comment on the record.

As the UAE is now seeking closer ties to the US and UK amid a military conflict with Iran, an initiative has been launched in London to reopen the case, with potential implications for the overall investment climate of the Emirates.

The UAE has achieved an important status in global capital markets by focusing on attracting investment industry talent to rival other key hubs such as London and New York.

Yet some critics are arguing the country is not doing enough to deliver justice to capital markets funds who have been shortchanged by former partners domiciled in the UAE, and amid the uncertainty created by the Iran conflict there are hopes the UAE will become more accommodating to international civil litigation.

“There was sufficient evidence for the case to have been transferred to the Court and for an explanation to be given,” Osama Daneshyar, the lawyer who brought the case in the UAE, told reporter.london. “The judgment of the UK High Court leaves little doubt as to the strength of the evidence, finding on the balance of probabilities that the scheme was based on fabricated documents and fraudulent misrepresentations used to deceive investors into transferring funds.”

The RAK government has not replied to a request to comment.

Parliamentary questions

British MP Jim Shannon asked official questions of ministers about the matter on three separate occasions, including this February. Shannon stood up in the House of Commons “to ask the Chancellor of the Exchequer, what steps she is taking to protect businesses and investors from fraud where individuals found liable by UK courts are resident overseas.”

In March, Shannon asked if the RAK case would have “potential impact on the UK-UAE Illicit Finance Partnership Agreement.” The UK and UAE signed a deal to tackle illicit finance in 2025.

Separately, in April, Alastair Carmichael MP also brought up the case in parliament in three questions to the Home Office and Treasury.

Carmichael queried if the blockage in the ship recycling case could impact “investor confidence in cross-border enforcement” arising from the British legal system.

It hasn’t helped that the UAE was also revealed by the Sunday Times and Bellingcat recently to continue being the home of choice for the Kinahans, a trio of father and two sons wanted for arrest internationally for leading a powerful cocaine empire, as well as, ironically given the current context, working with Iranian regime interests in laundering money. British diplomats had long been dismayed by the ongoing presence of the Kinahans, and other international fugitives, in the UAE.

Only after it emerged that Daniel Kinahan was collaborating with the Iranians even as the IRGC bombed Dubai, did the Emirati authorities deport him to Ireland, where he was sought, according to media reports. Kinahan is also under US sanctions.

The suggestion that the UAE took action due to Kinahan’s ties to Tehran was also confirmed for reporter.london by a Foreign Office official, requesting anonymity due to not being authorised to speak to the media.

Diplomatic relations

Politically-connected UAE online influencers have been publicly slamming the UK for not taking a harder stance in the Iran conflict. But the interstate relations between the UK and UAE are said to be under strain, despite the numerous Brits that have taken on official roles in the UAE, and the large amounts of long-term investment made by leading UAE royals in Britain.

“My honest assessment is that the UK is not going to be able to fully recover its special relationship with the UAE as the interests of London and Abu Dhabi are simply not aligned closely enough when it comes to approaching the Iranian threat going forward,” former special advisor to Foreign Secretary David Lammy, Ben Judah, recently wrote on X.com.

Britain saw “deals and diplomacy” as better serving its interests with Iran, contrasting with the UAE’s preferred “bellicose, threat-elimination approach,” Judah wrote. “And this divergence has a geoeconomic basis, the UAE can’t tolerate its cities at risk and the UK can’t tolerate Hormuz blocked, so it is here to stay,” he added.

The anonymous foreign office insider confirmed Judah’s assessment to reporter.london, noting: “There are many other reasons the relationship is so poor,” including the UAE continuing to be seen as a soft touch on financial crime and sanctions evasion. The official did not wish to comment on the High Court case cited by the MPs.

The UK and the Gulf countries, including the UAE, signed a trade deal on May 20.

(Special thanks to B.M. and J.D. who have graciously helped edit this story.)