Fiduciary breach is one of the most serious and disruptive issues that can arise within joint venture structures, particularly within the broader framework of Shareholder & Joint Venture Control. In a JV, partners rely on each other not only for capital and operational contribution but also for trust, loyalty, and alignment of purpose. When a partner acts in a way that undermines the interests of the venture, diverts opportunities, misuses confidential information, or prioritises personal gain over joint objectives, the resulting fiduciary breach can trigger disputes, deadlocks, and legal action. Understanding how fiduciary duties operate, what constitutes breach, and how these violations are handled under UAE law is essential for preventing damage to commercial relationships and protecting JV value.
Fiduciary duties arise because JV partners must act in collective interest, maintain good faith, and avoid actions that cause harm to the shared enterprise. These duties often extend beyond the strict wording of the JV agreement and reflect broader legal principles governing trust, loyalty, and fair dealing.
Breaches occur when a partner knowingly or negligently violates these obligations, undermining the operational or strategic objectives of the venture.
Fiduciary misconduct can take many forms depending on the structure of the JV, the industry, and the role of each partner.
One partner may secretly pursue contracts, clients, or investments belonging to the JV, redirecting value for personal or competing business gain.
A partner may use trade secrets, financial data, or strategic information to advance their own interests or a competing venture.
Self dealing occurs when a partner engages in transactions that benefit themselves at the JV’s expense, such as improper related party contracts or inflated transfer pricing.
Non performance or deliberate withholding of agreed contributions can constitute breach when it harms the JV’s ability to operate or meet obligations.
This includes obstructing board resolutions, refusing necessary approvals, or taking unilateral actions outside agreed governance structures.
False reporting, inaccurate disclosures, and concealment of material information fall squarely within fiduciary breach categories.
Under UAE law, fiduciary concepts arise from commercial companies legislation, contract law principles, and broader civil law obligations. Directors, managers, and shareholders with decision making power are expected to act with loyalty, diligence, and integrity.
These frameworks collectively hold partners accountable when their conduct harms the joint venture.
A fiduciary breach can have severe legal, commercial, and financial implications for both the JV and the breaching partner.
Courts and arbitral tribunals in the UAE take fiduciary breaches seriously, especially where harm is deliberate or concealed.
Successful claims often depend on documentation, clear evidence, and understanding of the JV’s legal framework.
Because fiduciary breaches often involve concealed actions, internal investigations and forensic audits may be necessary.
The best way to avoid fiduciary disputes is by implementing robust governance measures at the formation stage.
Well drafted JV agreements significantly reduce ambiguity and minimise risk of breach.
Disputes are typically resolved through structured negotiation, mediation, arbitration, or litigation depending on the dispute resolution clause in the JV agreement.
Fiduciary breach in JV conflicts can undermine trust, destabilise operations, and cause significant financial damage if not properly managed. By establishing strong governance structures, clearly defined obligations, and effective dispute resolution mechanisms, companies can prevent breaches, respond decisively when they arise, and protect both commercial value and long term partnership stability.
