The DIFC Court of First Instance dismissed a claim for AED 1,365,000 following the destruction of a yacht, ruling that the insurer was entitled to avoid the policy due to material misrepresentations and the Claimant’s failure to establish consumer status.
What was the specific nature of the insurance dispute between Ahmed Mohamed Eid Al Yahad Al Zaabi and Al Buhaira National Insurance Company regarding the yacht Dazaz?
The dispute arose from a total loss claim following a fire and explosion on the vessel Dazaz on 26 June 2023. The Claimant, Ahmed Mohamed Eid Al Yahad Al Zaabi, sought indemnity under a marine insurance policy dated 9 June 2023. The Defendant, Al Buhaira National Insurance Company, denied liability, alleging that the Claimant had provided false information regarding the vessel's purchase price, its condition, and its intended use.
In this case the Claimant seeks the sum of AED 1,365,000 plus interest from the Defendant insurance company pursuant to a policy of insurance dated 9 June 2023 following a fire and explosion on the yacht Dazaz on 26 June 2023.
The litigation centered on the validity of the underlying contract, specifically whether the Claimant had made a fair presentation of the risk. The Defendant argued that the Claimant’s failure to disclose accurate information regarding the vessel's history and intended commercial use entitled them to avoid the policy entirely.
Which judge presided over the Technology and Construction Division proceedings in Al Zaabi v Al Buhaira National Insurance Company?
The matter was heard and determined by H.E. Justice Roger Stewart KC within the Technology and Construction Division of the DIFC Courts. The proceedings included a Pre-Trial Review on 14 July 2025 and a two-day trial held on 28 and 29 July 2025, culminating in the final judgment issued on 28 August 2025.
What were the primary legal arguments advanced by the Claimant and the Defendant in the TCD 002/2024 enforcement hearing?
The Claimant, appearing as a litigant in person, argued that he was entitled to the full insured sum, asserting that the Defendant possessed all necessary information to assess the risk at the time of underwriting. He relied on documentation, including a statement from Blue Sea Marine Equipment Service, to substantiate the purchase price of the vessel.
Conversely, the Defendant, represented by Ishfaq Ahmed of Fichte & Co, argued that the Claimant had breached his duty of fair disclosure. The insurer contended that the Claimant misrepresented the vessel's intended use—initially claiming it was for commercial purposes—and failed to provide a genuine survey report. The Defendant maintained that had they been provided with accurate information, they would not have entered into the contract on the same terms, or at all.
What was the central doctrinal question regarding the Claimant’s status under the Insurance Act 2015 and CIDRA 2012?
The Court was required to determine whether the Claimant qualified as a "consumer" under the relevant English insurance statutes, which governed the policy by agreement. This classification was critical because the protections afforded to consumers under the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA 2012) differ significantly from the obligations imposed on commercial insureds under the Insurance Act 2015 (IA 2015). The Court had to assess whether the vessel was intended for personal use or, as the evidence suggested, for business purposes, thereby stripping the Claimant of consumer-status protections.
How did Justice Roger Stewart KC apply the test for commercial intent to the Claimant’s use of the yacht Dazaz?
Justice Stewart KC evaluated the Claimant’s testimony against the documentary evidence and his own prior statements. Despite the Claimant’s attempt to pivot during oral evidence to suggest that commercial use was merely a "possibility," the Court found the evidence of intended business use overwhelming. The judge applied a factual assessment of the Claimant's stated intentions at the time of contracting.
I consider that the Clamant intended to use the vessel at least mainly for business purposes.
The Court further noted that the Claimant’s evidence regarding the purchase price was unreliable. The judge specifically rejected the Claimant's assertion that he had paid AED 950,000 for the hull, noting that the documentation provided was insufficient to prove the transaction's legitimacy.
Which specific statutes and rules were applied by the DIFC Court in determining the validity of the insurance contract?
The Court applied English law as the governing law of the contract, specifically the Marine Insurance Act 1906, the Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA 2012), and the Insurance Act 2015 (IA 2015). Additionally, the Court relied on the Rules of the DIFC Courts (RDC) to manage the procedural aspects of the trial, including the assessment of evidence and the Claimant’s failure to comply with document production requirements.
How did the Court utilize the precedent of The Milasan [2000] 2 Lloyds 458 in the context of this marine insurance dispute?
The Court referenced The Milasan [2000] 2 Lloyds 458 to address the principles of marine insurance and the obligations of the insured. While the judgment focused heavily on the specific facts of the Claimant’s misrepresentations, the citation served to reinforce the standard of disclosure required in marine insurance contracts and the consequences of failing to provide a fair presentation of the risk to the underwriter.
What was the final disposition of the claim and the specific orders made regarding costs?
The Court dismissed the claim in its entirety and granted a declaration that the Defendant was entitled to avoid and repudiate the insurance contract. The Claimant was ordered to pay the Defendant’s costs.
The Defendant is to produce a schedule of its costs by no later than 7 days from the date of this Order.
The Court further held that the Defendant had validly cancelled the policy, effectively extinguishing any liability for the loss of the yacht.
What are the wider implications of this judgment for litigants in the DIFC Technology and Construction Division?
This case serves as a stern warning to litigants regarding the necessity of accurate disclosure and the risks of appearing as a litigant in person without proper preparation. It reinforces that the DIFC Courts will strictly enforce the distinction between consumer and commercial insurance contracts. Practitioners must ensure that clients clearly define the intended use of insured assets, as mischaracterizing a commercial venture as a consumer activity will result in the loss of statutory protections and the potential avoidance of the entire policy.
Where can I read the full judgment in Ahmed Mohamed Eid Al Yahad Al Zaabi v Al Buhaira National Insurance Company [2024] DIFC TCD 002?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/technology-and-construction-division/ahmed-mohamed-eid-al-yahad-al-zaabi-v-al-buhaira-national-insurance-company-2024-difc-tcd-002
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| The Milasan | [2000] 2 Lloyds 458 | Principles of marine insurance and disclosure |
Legislation referenced:
- Marine Insurance Act 1906
- Consumer Insurance (Disclosure and Representations) Act 2012 (CIDRA 2012)
- Insurance Act 2015 (IA 2015)
- Rules of the DIFC Courts (RDC)