Legal Case Summary
Dubai Aluminium Co Ltd v Salaam [2002] 3 WLR 1913
A solicitor firm’s vicarious liability for a partner’s dishonest assistance to a client.
Facts
The senior partner of a firm drafted a consultancy agreement and other requisite documentation for a client’s fraudulent enterprise. A company was induced to pay an amount of USD 50 Million over time under this fraudulent consultancy agreement. The company sued the firm claiming that it was vicariously liable for their senior partner’s dishonest assistance to a client.
Issues
The question arose as to whether the firm could be held vicariously liable for the dishonest assistance of the partner in breach of fiduciary duty for “wrongful act or omission during the ordinary course of business of the firm” under Section 10 of the Partnership Act 1980 Act.
Decision / Outcome
For the firm to be vicariously liable for the partner’s actions, the wrongful conduct must have occurred in the ordinary course of the firm’s business. The House of Lords held that, as a point of law, whether the conduct of an employee occurs during the “ordinary course of employment” is to be given an “extended scope” (para. 22) as the underlying legal policy of vicarious liability recognises the risks borne by business enterprises to third parties, and that when “those risks ripen into loss, it is just that the business should be responsible for compensating the person who has been wronged.” (para. 21). Accordingly, the Court held that the fact that the partner’s conduct was not authorised by his co-partners and the personal innocence of the co-partners thereto is not relevant to their vicarious liability The partner was acting in his capacity as an employee of the firm when he aided in drafting the consultancy agreement and other documentation. Thus, the firm was held vicariously liable for the damages borne by the partner’s dishonest assistance.
Updated 19 March 2026
This case summary is broadly accurate in its account of the House of Lords’ decision in Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48. However, one factual error should be noted: the relevant statute is the Partnership Act 1890 (not the 1980 Act as stated in the article), and the applicable provision is section 10 of that Act. This is a straightforward transcription error but readers should be aware of it.
The broader legal principles on vicarious liability discussed in this case — particularly the ‘close connection’ test derived from Lister v Hesley Hall Ltd [2002] 1 AC 215 and applied here — remain good law. The Supreme Court has since revisited and refined the test for vicarious liability in cases such as Various Claimants v Catholic Child Welfare Society [2012] UKSC 56, Cox v Ministry of Justice [2016] UKSC 10, and Barclays Bank plc v Various Claimants [2020] UKSC 13. These later decisions refined the two-stage test for vicarious liability, particularly in non-employment relationships, but they do not disturb the outcome or core reasoning of Dubai Aluminium in the context of partnerships and the close connection test. The Partnership Act 1890 remains in force and section 10 has not been materially amended in this respect. Readers should be aware of the Supreme Court’s subsequent refinements to vicarious liability doctrine when using this case as part of broader research.
