In today’s world, one of the most common criminal activities that a large number of people would have been victims of is fraudulent actions. People end up involving in deceitful activities for the purpose of obtaining unlawful gains, whereas on the other end, people are falling prey to such fraudulent acts. For instance, people are involved in activities like forgery or misrepresentation of facts, to get away with monetary gains, or to acquire illegal or unlawful personal interests. In the United Arab Emirates (UAE), any person who is guilty of fraudulent actions can be made liable to be punished with imprisonment or be imposed with a fine, by the virtue of article 399 of the Federal Law Number 3 of 1987 Concerning the Penal Code (the Penal Code).
Article 399 of the Penal Code expressly lays down what amounts to fraud and the penalties which can be attracted to a person who is convicted of involving in fraudulent activities.
Any person who has been successful in procuring a movable property, or a signature, or a deed or has been able to succeed in cancellation, destruction, or modification of such things, by using deceptive methods, or by providing falsified information or misrepresenting one’s capacity, name or details. Further, it extends the inclusion of fraudulent disposal of immovable or movable property. Any person who disposes of another person’s property, or disposes such property without a valid legal capacity to do so, or disposes of a property which has been sold already, in a manner causing damage to the persons involved, shall be deemed to have committed fraudulent disposal of property. Where the property or deed is owned by the state or government employees, military members, employees of security bodies, or any other such persons as specified in article 5 of the Penal Code, it shall result in an even more grave offense of fraud.
Let us look into the interpretations laid down by the UAE’s courts and its legal system on what elements must be present to constitute a crime of fraud.
In this following case, the accused has acquired an amount of UAE Dirhams one million (AED 1,000,000) from the victim by selling his house. However, it transpires that the accused has already sold the house to another person, before disposing of the property to the victim from whom he obtained UAE Dirhams one million (AED 1,000,000). Initially, the Court of First Instance passed its ruling after being convinced of the substantial evidence submitted to it and held that the accused shall be liable to imprisonment of three (3) months and also shall be subject to pay the fees. However, the accused was not satisfied with such judgment and subsequently appeared at the Court of Appeal, where the Court of Appeal has upheld the ruling of the Trial Court. Thereafter, the accused further appealed to the Court of Cassation. The Trial Court in its ruling stated that a person can be held liable for committing an offense of fraud, only if the following legal elements are established:
Therefore, the objection raised by the accused with regards to the validity of the incident of which the Trial Court has been convinced has been dismissed in the light of the substantial evidence and facts proving the elements required to constitute an act of fraud. The Trial Court has been bestowed with the authority to determine the merits of the case and analyze the evidence presented before it, without having to further review it with the Supreme Court, as long as it provides valid reasons and relevant facts on which such conviction has been reached.
In this case, the defendant was accused of fraudulently disposing of a movable property which is a scrap iron, by convincing the victim of the ownership of such property, by using deceptive methods and statements, even when the defendant is not the owner of such property. The Court of First Instance ruled in absentia that the accused shall be imprisoned for a period of two (2) years. However, the accused raised an objection to this judgment with the Court of Appeal.
The Court of Appeal considered the objection and modified the punishment from a period of two (2) years to eight (8) months, along with an imposition to pay the victim the amount of compensation claimed. The accused further appeals and raises an objection to the modified judgment, on the basis that the court has missed out on acknowledging the evidence proving that the victim is aware of the seizure imposed on such property as specified in clause number ten (10) of the sale contract.
Further, the objection is deemed valid as it can be established from the notes of the judgment issued by the Court of First Instance, which clearly states the fact that the accused has conveyed the information to the victims pertaining to the dispute over the ownership of the scrap iron and that the accused has also attained a court ruling conferring the ownership of the property in dispute. Therefore, the court ruled that an offense of fraud shall be valid only when the elements of deceit and fraud are present in the actions and intentions of the accused and held that the judgment shall be reversed. Thus, where any action which lacks an intention of deceiving or defrauding a person, then it shall not amount to an offence of fraud, unless, otherwise proven.
In this case, the court has laid down that article 399 of the Penal Code, governing the crime of fraud shall be applied to cases where the elements of such fraudulent activities are in consonance with the requirements to constitute an offense of fraud as specified in the article 399. It further ruled that to fall under the purview of article 399 of the Penal Code, it is necessary that the fraudulent methods used to deceive the victim shall be the methods acknowledged in article 399 of the Penal Code.
In simple terms, if any person uses any fraudulent methods which are not specified or recognized by this article, then, even if such fraudulent method resulted in deceiving the victim and convincing the victim to pass on anything of value to the perpetrator, article 399 shall not be applicable as all the elements specified are not present.
The court held that a crime of fraud shall be established only if the elements of deceit and fraudulent methods are present and have caused in successfully obtaining the monetary benefits or properties from the victim, and thus a mere act of lying in the absence of the actual occurrence of the above-stated elements shall not amount to the offence of fraud. One of the key requirements of constituting an offence of fraud is the existence of the external elements which has been used to earn the trust of the victim.
For instance, as stated in one of the judgements by the Court of Cassation: appearing to be rich, convincing the people of having connections with people of high profile, opening up fake company websites or headquarters, or providing forged documents establishing the ownership of any property shall be considered as the external mediums used to commit fraudulent acts.
The court will further determination as to what amounts to deceit based on the fact that any reasonable and prudent man would have been deceived by such fraudulent acts. In the light of the above-stated judgements, it can be concluded that the offence of fraud can be materialized only when such offence contains all the elements specified in article 399 of the Penal Code. The general term of imprisonment for an offence of fraud can be between a period of one (1) month to three (3) years, and where the crime is grievous in nature the term of imprisonment can be for a period of six (6) years. Further, an attempt to commit the crime of fraud can attract imprisonment for a period of two (2) years and shall be imposed with a fine of UAE Dirhams twenty thousand (AED 20,000).