Convrgnt v Kennedys Dubai: £3m liability cap survives as UCTA held inapplicable to Dubai retainer

A £3m cap on a law firm's liability has been upheld after the High Court found that the Unfair Contract Terms Act 1977 did not apply to a retainer whose substance was overwhelmingly connected to Dubai rather than England.

In Convrgnt Value Engineering LLC v Kennedys Dubai LLP [2026] EWHC 1754 (Ch), Caroline Shea KC, sitting as a Deputy High Court Judge, determined four preliminary issues in a professional negligence claim. The claimant, a Dubai construction company, alleged that the firm had failed to recover more than £15.8m it should have obtained in a claim against Emaar Properties, and sought damages and restitution of fees. The firm relied on the liability cap in clause 14 of its terms of business, which the claimant contended was unreasonable under UCTA. The firm's answer turned on section 27, which disapplies the relevant provisions of UCTA where English law governs only by the parties' choice and the law of a country outside the United Kingdom would otherwise apply.

The first issue was whether that gateway was open. Under Rome I, a services contract is governed by the law of the provider's habitual residence, defined as its place of central administration, which both sides agreed was the United Kingdom. The firm sought to displace that through Article 19(2), arguing that its Dubai office was a branch through which the retainer was concluded and performed. The judge rejected that analysis. Reviewing the European authorities on the phrase "branch, agency or other establishment", from de Bloos and Somafer through to Gefion, she held that the concept is predicated on the existence of two bodies, a parent and a discernible extension of it. Kennedys Dubai controlled itself under its own LLP deed and was not subject to the direction of any parent, and while it might arguably be seen as an extension of its own parent company, what Article 19(2) required was an extension of Kennedys Dubai, of which there was none. The references to "the branch" in the deed did not alter that.

The firm nonetheless succeeded through the escape clause in Article 4(3), which applies where a contract is manifestly more closely connected with another country. Acknowledging the high hurdle set by authorities such as Molton Street and Enka v Chubb, the judgement held that the substance of the retainer pointed decisively to Dubai. The Emaar claim concerned a UAE contract, a UAE development and a UAE forum, required local advocates, and was paid for in local currency into a Dubai account, while the English regulatory and statutory references in the terms of business were peripheral. Section 27 was therefore triggered and UCTA did not apply.

Had it applied, the judge would have found the cap unreasonable. The firm bore the burden, its parent had ample resources, its professional indemnity cover stood at some £30m, ten times the cap, the sum the claimant could reasonably have expected to recover comfortably exceeded £3m, and the partner with conduct could offer no explanation for the figure and admitted he had been unaware of its terms.

On the third issue, the cap was held to extend to the restitutionary claims. Read as a whole, its opening words were emphatically broad, and the distinction between gains-based and loss-based recovery did not remove such claims from a cap expressed to apply "in any circumstances whatsoever". The misrepresentation and estoppel claims failed on the fourth issue: the statement that disagreement over the terms was unlikely could not reasonably be read as an invitation not to read them, was in any event opinion, and the client had accepted in evidence that he understood he was expected to read the letter, defeating reliance.