A High Court ruling on a Dubai law firm's small print carries an awkward lesson for law firms and their insurers. Setting a liability cap at the bare regulatory minimum can look weak in court, even when the firm behind it is carrying tens of millions of pounds in cover.
The case is Convrgnt Value Engineering LLC v Kennedys Dubai LLP ([2026] EWHC 1754 (Ch)). It centres on a £3 million cap in the terms of business of Kennedys Dubai LLP, the Dubai office of City law firm Kennedys Law LLP. Ruling on a set of preliminary questions, Caroline Shea KC, sitting as a deputy High Court judge, found that the £3 million cap would not have held up under UK protection law for unfair contract terms, had that law applied. The full judgment is on BAILII.
Kennedys Dubai was hired by Convrgnt Value Engineering (CVE), a UAE construction firm, to pursue a claim through the Dubai courts against Emaar Properties PJSC, a major Emirati developer. That case brought in around £4.5 million (roughly AED 22.7 million, plus interest and a returned performance bond).
CVE now argues a better-run case would have won considerably more. Its follow-up claim against Kennedys Dubai puts the shortfall at over £15.8 million.
Kennedys Dubai denies it did anything wrong. If it is found liable, though, it wants to rely on clause 14 of its terms of business, which caps what it has to pay out at £3 million per matter. CVE says that cap is unfair and shouldn't apply.
The law CVE relied on is the Unfair Contract Terms Act 1977 (UCTA). When a business wants to cap what it owes a client, UCTA says the cap has to be "reasonable," and one of the things a court weighs is how much money and insurance the business actually had behind it.
On the evidence, the judge found Kennedys Dubai could count on backing from the wider Kennedys Law business, and was carrying professional indemnity insurance of at least £30 million. Set against that, a £3 million cap that nobody had negotiated, explained to the client, or costed at any higher level was, in her words, simply "unreasonable."
That £3 million figure is also worth flagging for insurers directly: it's the exact minimum level of cover the Solicitors Regulation Authority requires firms like this to carry, under its Minimum Terms and Conditions. A contractual cap set to match the regulatory floor and nothing more is a common shortcut in terms of business. This case shows how easily that shortcut can be picked apart.
None of that reasoning actually decided the case. The judge first had to work out whether UCTA applied to the contract at all, and she found that it didn't.
UCTA includes a get-out clause: if a contract only uses English law because the parties chose it, and would otherwise have been governed by a different country's law, then UCTA's fairness rules switch off. Kennedys Dubai argued that, without the parties' choice of English law, the contract would have been governed by UAE law instead. The work was done by its Dubai office, for a UAE dispute, between two UAE-based parties.
The judge rejected Kennedys Dubai's first attempt to prove this, that its Dubai office counted as a "branch" of the wider firm. She agreed with its back-up argument, though: taken as a whole, the deal was overwhelmingly a Dubai one. England, she said, "had nothing to do with" the underlying dispute. That was enough to switch off UCTA and let the £3 million cap stand, regardless of whether it would otherwise have counted as fair.
For anyone placing professional indemnity cover for law firms with overseas offices, this case draws a line between a cap that is technically compliant and one that would actually stand up to scrutiny.
The £3 million cap survived, but only because of a technicality over which country's law applied. Take that away, a purely domestic English retainer, say, and the same cap, unexplained and unnegotiated, would likely have failed. Firms and their insurers shouldn't assume the same result next time.
There is a pricing point in this too. A firm carrying £30 million of cover but capping what clients can actually claim at a tenth of that will struggle to explain the gap if it's ever challenged. Brokers reviewing renewals with law firm clients, particularly those with overseas branches or subsidiary practices, may want to raise this case as a reason to revisit the wording of terms of business, not just the size of the policy.
The 2025/26 renewal season has brought record insurer capacity and softer terms for many firms. Fixing a liability clause now costs far less than fighting over one in court later.
The underlying negligence claim between CVE and Kennedys Dubai has not been decided. This ruling dealt only with preliminary questions, and the full trial on whether Kennedys Dubai got it wrong is still to come. The reasonableness findings, though not binding in this case, are likely to be cited whenever a law firm's liability cap next comes under scrutiny.
