The Evidentiary Value of Electronic Evidence and Proving Loans Between Partners in Commercial Companies.

Practice Area:
Commercial Law – Evidence Law – Corporate/Partnership Disputes – Electronic Evidence – Commercial Transactions – Civil & Commercial Procedures

Outcome: Electronic communications and digital financial records were deemed valid written proof, and the lower court’s failure to assess this essential electronic evidence rendered its judgment legally defective and required its annulment.

Introduction
This study examines a legal dispute between a limited liability company and one of its partners concerning a financial claim totaling AED 1,855,000. The company alleges that the amount was provided to the respondent as a loan, whereas the respondent denies the existence of any loan agreement and contends that the sums resulted from account settlements and profit distributions.

The significance of this case lies in its presentation of several contemporary legal issues, most notably:
• The evidentiary weight of electronic evidence (WhatsApp messages, electronic bank statements, electronic accounting records)
• The distinction between civil and commercial transactions and the impact of such classification on methods of proof
• The extent to which expert reports filed in other cases may be relied upon
• The obligation of courts to examine and scrutinize all evidence presented

Facts
According to the appealed judgment and the case documents, the appellant company filed a civil claim seeking to compel the respondent to pay AED 1,855,000. The company asserted that the respondent was a partner and, due to his personal relationship with another partner holding the majority share, as well as the financial and commercial ties between them, the company at the majority partner’s request loaned the respondent the disputed amounts between 28/05/2022 and 17/05/2023. These amounts were transferred by cheques, bank transfers, and receipts. Despite repeated demands, the respondent failed to repay the sums, which the company maintained constituted part of its capital used in its commercial operations.

Owing to the respondent’s refusal, the other partner initiated a separate dispute before the court, requesting the appointment of an expert. The appointed expert confirmed in his report that the respondent was liable for the loan amount. Based on this report, the company filed the present lawsuit. On 17/03/2025, the first-instance court dismissed the case in its current form. The company appealed, but the appellate court upheld the original judgment. Consequently, the company filed a cassation appeal.

Grounds of Appeal
In its cassation appeal, the company argued that the challenged judgment violated the law, misapplied it, and lacked proper reasoning, thereby infringing the company’s right to defense. The company asserted that the court had based its decision on the inadmissibility of non-written proof for claims exceeding the statutory threshold for testimonial evidence. As a result, the court rejected the company’s request to hear witnesses without adequately considering the electronic evidence submitted, which clearly demonstrated that the respondent had received the amounts as loans.

The company submitted WhatsApp messages from the respondent acknowledging receipt of the sums as loans, as well as bank statements and electronic transfer notices generated from the bank’s system, labeling the transfers as “loans.” It also provided an electronic account statement generated from the company’s accounting system showing the sums recorded as loans granted to the respondent. Collectively, these documents constitute electronic evidence with full evidentiary value under the Law of Evidence.

The company further criticized the judgment for disregarding the expert report filed in the earlier dispute, despite its inclusion in the case file and its clear confirmation of the respondent’s indebtedness. The company also argued that the court wrongly characterized the dispute as civil without justification, even though the company is a limited liability company engaged in commercial activity, thereby necessitating the application of commercial evidentiary rules, which allow proof by testimony. The court’s failure to consider these principles and the essential evidence prevented it from forming an accurate understanding of the case, rendering its judgment defective and subject to cassation.

 

Legal Grounds, Supreme Court Reasoning, and Outcome
The Supreme Court held that a judgment must be sufficiently reasoned to assure the reader that the trial court has examined and weighed the evidence presented in accordance with the law. The Court emphasized that electronic evidence including WhatsApp messages, banking records, and accounting records generated through electronic systems constitutes “writing” and carries the evidentiary weight of private documents, provided the legal requirements are met. Information contained in electronic communications possesses full probative value. Additionally, a court may rely on an expert report filed in another case as long as it is included in the case file and its evidentiary value is contested by the parties.

The Court reaffirmed the general principle that commercial transactions may be proven by non-written evidence.

Applying these principles, the Court found that the respondent did not deny receiving the amounts claimed, and the expert report in the prior dispute confirmed that the sums were loans rather than profit distributions. The company had submitted electronic messages, transfer notices, and accounting records all clearly recording the amounts as loans documents that carry full evidentiary value. The appealed judgment failed to consider this essential evidence and did not examine the commercial nature of the transaction, improperly characterizing the dispute as civil without explanation. This constituted a deficiency in reasoning and an error in the application of the law.

Accordingly, the Supreme Court quashed the appealed judgment and remanded the case to the Court of Appeal for reconsideration, ordering the respondent to pay costs and AED 2,000 in attorney’s fees.

Legal Principle
Electronic evidence including digital communications and electronic banking and accounting records constitutes writing and carries the evidentiary force of private documents once legal conditions are satisfied. The trial court is required to examine and evaluate such evidence and may rely on expert reports filed in other cases, provided they are included in the case file, contested by the parties, and relevant to the dispute. Failure to consider such essential evidence constitutes a deficiency that invalidates the judgment.