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Rasmala Investments Limited v various Defendants [2009] DIFC CFI 001-006/2009

Rasmala Investments Limited v various Defendants [2009] DIFC CFI 001-006/2009

April 6, 2009


 CFI 001/2009, CFI 002/2009, CFI 003/2009,

CFI 004/2009, CFI 005/2009, CFI 006/2009


In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai

Claim Nos: CFI 001-006/2009

Before Justice Tan Sri Siti Norma Yaakob







Hearing Date: 17 February 2009

Mr Graham Lovett, Clifford Chance, 3rd Floor, The Exchange Building, DIFC, PO Box 9380, Dubai for Appellant/Respondent.

Rana Banat, Hatem El Baz, Saurabh Dhall, Hussam Zhou Al Gena, Hind Mneimneh and Ahmed Abdel Baset (Respondents/Claimants in person).

Claims numbered CFI 001-006/2009 have been filed separately by six individuals, former employees of the Defendant in the Small Claims Court. They plead the same cause of action in that they had been unfairly dismissed by the Defendant and they claim various liquidated sums as damages for such unfair dismissals.

The Claimants succeeded in their suits and judgments for the various amounts claimed were entered against the Defendant.

In appeal proceedings commenced before me, the Appellant Defendant raised one common ground in all the six appeals and with the consent of all parties, this common ground was agreed to be argued as a test case to bind all the parties in the six appeals.

That common ground relates to the issue of the appropriate governing law to be applied in determining the dispute between the parties. The dispute is easily identifiable i.e. whether the Claimants Respondents have been unfairly dismissed and if so, which law should govern the Appellant Defendant’s conduct acting as it did.

Except for the Claimant in CFI 003/2009, the individual contract of employment executed by the other five Claimants with the Defendant contain similar provisions on the governing law to be applied and reads as follows:

“Governing Law

Any dispute or claim arising out of this Agreement shall be governed by the DIFC laws and regulations, and you hereby submit to the exclusive jurisdiction of the DIFC Courts. In the event that the DIFC laws and regulations do not cover the area of dispute between you and the Company, then this Agreement shall be governed by the UAE laws and regulations.”

As for the Respondent Claimant in CFI 003/2009, the governing law has been identified in his employment contract to be “the laws of the United Arab Emirates.”

In the Small Claims Court, the learned Judge ruled that UAE Labour Law (Federal Law No.8 of 1980) govern the rights and liabilities of the parties and under Article 122 of the same enactment found the dismissals to be arbitrary.

Before me, the only issue is whether that finding of law is correct.

It is not disputed that the Appellant Defendant has a place of business within the DIFC and as employees of the Appellant Defendant, their employer and employee relationship is very much governed by DIFC Law No. 4 of 2005, the Employment Law of 2005. This is reinforced by Article 4 (a) and acknowledged in the first sentence of five of the employment contracts where it specifically states that any dispute arising from the employment “shall be governed by the DIFC laws and regulations any you hereby submit to the exclusive jurisdiction of the DIFC Courts.”

The Employment Law of 2005 is a very comprehensive piece of legislation. Whilst it covers every aspect of employment law, it however makes no provision for an employee to claim for unfair dismissal, although it recognises an employee’s right to claim for discrimination on the grounds of sex, marital status, race, nationality, religion, mental or physical disability under Article 56. At most, the Employment Law gives power to the Director of Employment Standards to administer the Law by proposing Regulations to be made to include matters not dealt with by the Law. This is clearly seen from a reading of Article 63 (1) (g) which makes the following provisions:

“63 (1) The Director may propose Regulations to the Board of Directors of the DIFC Authority in respect of any matter that facilitates the administration of the Law or further the purpose of the Law, including but not limited to:

(g) the maximum compensation for discrimination or unfair dismissal.”

It is this absence of specific provisions in the DIFC Law that had prompted the Court below to rely on the second limb of governing law identified in the Respondents Claimants’ employment contracts which is worded as follows:

“In the event that the DIFC laws and regulations do not cover the area of dispute between you and the company, then this Agreement shall be governed by the UAE laws and regulations.”

Can the decision to adopt the UAE Labour Law to determine the dispute between the parties be upheld?

To answer this, I am guided by DIFC Law No.3 of 2004, the Law on the Application of Civil and Commercial Laws in the DIFC 2004. By Article 7, the objectives of the Law are to:

“(a) provide certainty as to the rights, liabilities and obligations of persons in relation to civil and commercial matters arising in the DIFC; and


(b) allow persons to adopt the laws of another jurisdiction in relation to civil and commercial matters arising within the DIFC.”

Then again Articles 8 (1) and (2) (a), insofar as they are applicable to the present dispute before me, contain the following provisions:

“(1) Since by virtue of Article 3 of Federal Law No. 8 of 2004, DIFC Law is able to apply in the DIFC notwithstanding any Federal Law on civil or commercial matter, the rights and liabilities between persons in any civil or commercial matter are to be determined according to the laws for the time being in force in the Jurisdiction chosen in accordance with paragraph (2).


(2) The relevant jurisdiction is to be the one first ascertained under the following paragraphs:

(a) so far as there is a regulatory content, the DIFC Law or any other law in force in the DIFC.”

As I have indicated earlier in this Judgment, the employer employee relationship enjoyed by the Appellant Defendant with the Respondents Claimants is regulated by the Employment Law 2005, which is a DIFC Law. It sets out at Article 3, all the statutory rights and protection of the employee and at Article 8 the minimum standard and requirements of employment for which the parties cannot contract out. In substance then the Employment Law has a regulatory content and is the only law that governs the employee who works for an establishment having a place of business in the DIFC. All the six Respondents Claimants are such employees and the Appellant Defendant is such an establishment. As such disputes arising from an employer and employee relationship must be governed by the Employment Law and there is, therefore, no basis to adopt any other law to determine the rights of the Respondents Claimants. It is for this very reason that although the Respondent Claimant in CFI 003/2009 had opted for UAE Law to apply as the governing law, he cannot run away from the fact that he was an employee who had worked for a company with a place of business within the DIFC. His contractual relationship with the Appellant Defendant is very much regulated by the Employment Law.

The unfortunate reality of these appeals is that although the Employment Law covers the employer and employee relationship which the Appellant Defendant had with the Respondent Claimants, it however fails, as at the present time, to provide a right to compensation for unfair dismissal.

A somewhat similar situation presented itself in the case of Forsyth Partners Global Distributors Limited, Forsyth Partners Group Holdings Limited and Forsyth Partners (Middle East) Limited, (CFI 5-7/2007) where Justice Michael Hwang had to decide as to the applicable law relating to preferential debts. The DIFC Insolvency Law provides for Regulations to be issued providing for the order of preferential debts, but no such Regulations were issued. The Liquidators invited the Court instead to apply either UAE Law or English Law. The learned Judge declined to do so on the grounds that failure on the part of the DIFCA to establish which debts are preferential does not mean that UAE Law or English applies in default. Accordingly he concluded that since the legislative intended to establish a regime for preferential debts under local law, he was not supportive to the idea of applying another system of Law relating to preferential debts.

Likewise since the Employment Law makes provision for Regulations to be issued to provide rights for claims of unfair dismissal, and in the absence of such a Regulation, I consider that the Respondents Claimants cannot contract out of the DIFC Law by virtue of Article 8 (1) and resort to relying on a right that is present under the UAE Labour Law.

For the reasons appearing in this Judgment I had allowed all the appeals and after hearing arguments on costs, I had concluded that costs of the appeals be granted to the Appellant Defendant as the successful party in these proceedings. Such costs are to be assessed by the Registrar on a date to be fixed.

Dated: 6 April 2009
At: 3pm


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