courts

Mining firm ordered to pay Dh37.4m compensation

Dubai court says drilling exploratory firm deserves payout after suffering huge losses

By Bassam Zaza, Legal and Court Correspondent
13:42 December 3, 2017

Dubai: A court here has ordered a mining company to pay Dh37.4 million as compensation for a drilling exploratory company after dodging an agreement to mine diamonds over alleged Ebola outbreak and political unrest in Guinea.

In November 2011, the Dubai-based drilling exploratory company signed an agreement with the mining company to dig for diamonds, precious stones and gold in Guinea. After the deal signed, the former exported the heavy machines required to start their work.

The mining company started excavation works for nearly three months before it halted them after alleging that political unrest and an outbreak of Ebola had hindered its works in the African country, Guinea.

  The mining company started excavation works for nearly three months before it halted them after alleging that political unrest and an outbreak of Ebola had hindered its works in the African country.


The machines became dysfunctional after they remained unattended and unused for a long period of time, according to the drilling exploratory company’s lawyer Awatif Mohammad, of Al Rowaad Advocates and Legal Consultants.

The lawyer lodged a commercial lawsuit against the mining company before the Dubai Commercial Court.

“The claimant exported four heavy drilling and mining machines and dispatched its team of experts to the location for the purpose of carrying out the agreement," the lawyer argued.

"However, the defendant [mining company] breached the agreement and dodged the excavation works over unfounded and uncorroborated reasons after claiming that Ebola outbreak and political turbulences had hindered it from carrying out the job it had been hired to do.

"Doing so, caused major damages to my client’s machines and inflicted substantial financial losses worth millions of dirhams,” lawyer Mohammad told the primary court.

According to court records, the plaintiff offered to resolve the dispute amicably before an arbitrator in Guinea but the matter remained unresolved.

On the other hand, the mining company rejected a settlement offer, upon which the defendant suggested to pay Dh3.67 million to the plaintiff on condition that the latter removes the drilling platforms on its own account.

The defendant amended its settlement offer twice within few months and when the litigants failed to reach an amicable settlement, lawyer Mohammad lodged her commercial lawsuit against the mining company before the Dubai court.

“The claimant provided different services including accessibility to the drilling plots, topography, water supply, mining machines and other required conditions. My client also paid for exporting the drilling machines to the agreed on plots in Guinea. It also dispatched its employees, experts and technicians to go ahead with the drilling works at the location. However, the defendant halted the excavation works after three months and that had incurred massive losses to my client,” the lawyer told the court.

Moreover, the defendant’s lawyer countered the plaintiff’s claims and asked the court to dismiss the lawsuit citing jurisdictional purposes and that the lawsuit had been filed before the inappropriate legal channels.

A court-appointed expert visited the excavation site, carried out several investigations and provided the bench of judges with a technical report, the findings of which confirmed that the defendant had breached the agreement and failed to honour its commitments.

The court, thereafter, decided that the claimant deserved to be compensated because the defendant failed to corroborate its claims that it had halted the mining works due to political unrest and the Ebola outbreak had happened two years after the works were stopped.

According to the primary judgement sheet, the defendant was ordered to pay the drilling exploratory company Dh37.4 million in compensation plus nine per cent legal interest starting when the ruling becomes final.

The defendant has appealed the primary judgement before the Appeal Court that started handling the case this month.