How to Avoid Legal Disputes with Partners in LLC Companies?

Legal Disputes with Business Partners in Dubai

Based on our experience, most partnership disputes have arisen because the partners of the companies tend to refrain from concluding the partnership agreement while establishing companies in the UAE. Later, when the company is in growth or losses, the partners may argue on resolving issues. Everything between partners was verbal; people tend to forget the agreement’s details and might have misunderstood the conditions from the beginning.

The partnership agreement is the primary document that indicates all company partners’ responsibilities and rights. Some people may assume that a memorandum of association is a partnership agreement, but it is not.

‍A civil case 2785-2022 (Dubai-Courts)

There were three partners in the LLC company. Two partners were managers, and the third one was an investor. The investor is supposed to invest 2,500,000 million AED in capital of the company. The first payment he made was 700,000 AED, then 450,000 AED. Then, the investor stopped paying any money. Both managers tried negotiating with the investor to pay the rest of the investment but failed. Both managers initiated a civil case to remove the third partner (the investor), but it was highly complicated.

‍‍Why?

There was no written agreement between the partners with the terms of conditions, and everything was verbal. Of course, it would be difficult for a judge to resolve this case.

Note: Don’t forget to read about Five Typical Mistakes You Want to Avoid While Investing in the UAE

Conclusion

In order to resolve any case, a judge shall understand who did not follow the terms of conditions stipulated in the agreement and everything was in verbal how to prove it. In this case, when the partners have a strong written partnership agreement, resolving issues will be much easier, even without going to court and time waste.