A letter or ancillary agreement is an agreement that is not part of the primary contract or agreement, but is an agreement ancillary to the primary contract. An ancillary agreement is used by the parties to confirm additional details that were not known at the time of the primary contract. An ancillary agreement is mainly used for, in another judgment, the Dubai Court of Cassation upheld the judgments of the trial courts and the Court of Appeal. The court here recognized the secondary agreement. In its judgment, the Tribunal found that, in accordance with Chapter 4 of the Commercial Contracts Act, period 18 of 1993, the documentary credit includes the rights of third parties to the contracts of another. Section 428 of the Act provides that this agreement is a contract under which, at the request of its client (the person who orders the opening of the loan), a bank opens a credit within a certain amount and for a fixed term for the benefit of another person (the beneficiary). This agreement impairs the security of documents that constitute goods transported or destined for transport. In this chapter, it is also stated that a documentary credit contract is considered independent of the contract that caused the opening of the credit and that the bank remains foreign to such a contract. A legal debate is under way on the validity and applicability of these rules. In the event of a dispute between a foreign investor and the UAE partner, the crucial question is which agreement the court recognises. Will the Court recognize the MOAs, which are officially notarized and registered in the trade register, or will the court maintain the subsidiary agreement? A recent Federal Court of Justice decision has shown a unique position on the issue of ancillary agreements. A shareholder of the United Arab Emirates (who owns 51% of the shares under the law) has filed a lawsuit and asked the court to confirm his right to 51% of the profits in accordance with the shareholder`s agreement.
Subsequently, the Omani shareholder (which held 24% of the shares according to MOA) claimed that the company`s shareholders signed an ancillary agreement and entered into an agreement whereby VaE`s partner held 37.5% of the shares, the Omani partner 37.5% and the US company 25% against 24% of the previous shares. The Bundesgerichtshof decided that there was sufficient documented evidence to prove the existence of the subsidiary agreement, as the Omani partner argued. After reviewing all the documents provided by the Omani partner, the court concluded that there was sufficient evidence to demonstrate the existence of the ancillary agreement between the parties (and that the shares were distributed on the basis of 37.5% to the partners of the United Arab Emirates and grannies and 25% to the American company).