Marwan Ahmad Lutfi v The Dubai International Financial Centre Authority [2012] DIFC CFI 003 (04 August 2013)

Claim No: CFI 003/2012



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

of Dubai




Chief Justice





Centre Authority


Hearing:12–13 February 2013
Counsel:James Wynne (Star & Partners LLP) for the Claimant

Graham Lovett (Clifford Chance LLP) for the Defendant

Judgment:4 August 2013




1. By these proceedings the Claimant, to whom I shall refer as “ML”, claims:
(a) reinstatement of his employment by the Defendant with payment of wages lost (pursuant to Article 68(2)(b) of the DIFC
Employment Law 2005;
(b) damages for breach of his contract of employment, and for defamation,
(c) punitive damages;
(d) compensation pursuant to Article 68(2)(d) of the DIFC Employment Law 2005;
(e) any payments considered due and owing under any provision of the DIFC Employment Law 2005, in particular Article 68(2)(e);
(f) any other determination that the Director of Employment Standards sees fit to order pursuant to Article 68 of the DIFC Employment Law 2005.


2. ML first commenced employment with the Defendant in 2003 and by 2006 had been appointed Director of Business Development and Head of Insurance and Reinsurance. He then left to form a regional private equity firm where he worked until 2010. He was then asked by the then Governor of the DIFC, Mr. Al Tayer, if he would be prepared to return to lead business development efforts and to restructure certain of the Defendant's operations and divisions against the background of the massive indebtedness and financial crisis then affecting the Emirate of Dubai in general and the DIFC in particular. Following extensive discussions with the CEO of the Defendant Authority, Abdulla Al Awar, to whom I shall refer as “AA”, and Nabil Ramadam, Head of Human Capital, ML entered into a contract of employment dated 9 March 2010. He was appointed Joint Deputy CEO and Head of Business Development. As such he was responsible for 12 departments and 115 employees. However, his main role was to re-structure the activities of those departments and individuals with the objective of the expansion of business development. In the course of his first six months, ML re-constructed the Defendant's business development facilities to incorporate six divisions, one of which was Insurance and Business Entities under the management of Ms Hana Al Herz, to whom I shall refer as “HAH”.


3. ML had a very high regard for the business development abilities of HAH and early in 2011 he modified the departmental structure again by, amongst other things, combining responsibility for Insurance and Business Entities with Retail and Events under HAH.


4. In the course of the first four months of 2011, ML, having considered that the re-structuring had so far been effective, began to plan overseas business visits whereby the Defendant's facilities could be marketed to those who might be willing to set up operations in the DIFC. These visits were carefully organised in advance. They were directed at such markets as Brazil, China and South Korea and were normally conducted by ML, Kevin Birkett, Head of Finance Services and Business Relations and HAH, with Birkett and HAH each attending for a week while ML attended for at least two weeks and AA for part of that total time. The latter expressed great satisfaction with the amount of work put in by these teams, including HAH. He appeared to share ML's high opinion as to her abilities.


5. In the course of the first half of 2011 ML and HAH developed an increasingly close working relationship. They were both in positions of major managerial responsibility, although HAH was immediately answerable to ML as her line manager. By mid-June that working relationship had become a romantic relationship and marriage began to be discussed. Both had been in previous marriages already dissolved. HAH considered it essential to obtain her parents' approval before committing herself. However, being at first unsure whether to get involved, she had already broached the subject with AA who expressed a high regard for ML, advised her to have further discussions with ML but asked that, if they decided to go ahead, no one in the DIFC should be informed. She appears not to have told ML of this conversation.

Having obtained her parents' consent, HAH committed herself to marriage with ML and the Melcha was arranged to take place on 27 July 2011.


6. On 25 July 2011 ML invited AA to meet him and told him for the first time that he and HAH were to marry. AA did not tell ML that HAH had already raised the subject with him. He did, however, tell ML that generally, the Defendant Authority did not permit married people to report to one another. He did not say that it would be impossible for both of them to continue to work for DIFC but he did say that ML was not to discuss this with anyone until he had discussed the matter with the DIFCA
Board. AA promised to come back to ML in a few days.


7. The Melcha took place on 27 July 2011, but this was not disclosed at the time to anyone in the Defendant Authority.


8. At this point it is necessary to refer to the Defendant's Employee Policies and Procedures which states as follows with regard to the employment of relatives.

To provide guidelines designed to avoid the possibility of favouritism or nepotism in the hiring of the DIFC Authority personnel.


Relative: Husband, wife, father, mother, children, sisters, grandchildren, grandparents, uncles, aunts, nieces, nephews, first cousins and the following in-laws: mother, father, sister, brother, son and daughter.


Employment of relatives is generally not allowed.

No personnel shall be employed in the same department and/or under the direct or indirect supervision of a relative who has or may have a direct effect on that individual's progress or performance. No relative shall make recommendations, or in any way participate in decisions pertaining to any matter which may directly affect the appointment, promotion, salary or other status or interest of a relative related to employment.


Upon recruitment, promotion, or transfer to any Department, Employees should inform the Human Capital Department of the presence of a relative in DIFC Authority, his/her job title and the department he/she is employed in.

The Human Capital Department should ensure that no employee's status conflicts with the provisions of this policy."

I refer to this passage as “the EOR Policy”.


9. According to the statement of AA, which I accept as accurate in this respect, following his meeting with ML on 25 July 2011, he considered whether ML and HAH could be re-deployed in different positions in the DIFCA. He took the view that it would not be possible to modify the management structure to accommodate two persons of their level of seniority there being no vacancies at that point in time for people at that level. He considered that the only way to avoid line management between relatives was for either ML or HAH to leave the Defendant Authority. On 9 August 2011 he conveyed these views to the DIFCA Board, adding that it had not been decided which of ML or HAH would have to step down, but that he, AA, wished to resolve the matter before the end of 2011. If it were decided that ML were to resign, AA would most probably step in to manage the division in the interim. The Board expressed its agreement with this approach.


10. AA had already indicated to ML in the course of a further meeting on 4 August 2011 that either he or HAH would definitely have to step down from the Defendant Authority before the end of the year but that they would have to decide which should do so. On 11 August 2011 ML, having discussed his position with Hani Hirzella of Human Capital, formally notified the Defendant that he and HAH had married. The formal notification having been copied to AA, the latter responded to ML that there had been a misunderstanding and that what AA had told him on 4 August was that they would have to decide who was to stand down by the end of the year but that the decision should be taken before the end of August. Although ML sought to persuade AA that both he and HAH were essential to the future business development of the Defendant, AA made it clear that the EOR Policy should be adhered to, which would require that one of them must stand down.


11. On 25 August 2011 ML unequivocally informed AA that it had been decided that he would stand down and that HAH would remain with the Defendant Authority. Against the background of the email ML had sent on 11 August 2011 that could only have meant that ML would stand down by the end of the year. AA thereafter decided that he would henceforth act in ML's place, HAH remaining in her current role. On 6 September 2011 AA then sent a message to all Defendant Authority staff informing them of the marriage and that AA would be overseeing the Business Development Services Division “…while Marwan will assist me in corporate level projects to maintain the Centre's growth”. In the event ML ceased to be the Deputy CEO and Head of Business Development and Services Division and as from 6 September 2011 ML was given the position of Advisor to the CEO. That was a title that had never previously existed. Indeed, it was not a position with any specific responsibilities and AA took ML off all his management functions in the Authority and all contact with previous overseas clients. It was, however, ML's hope that this position could be a continuing appointment. AA's evidence was that the position was created against the background that, as between ML and HAH, it had been agreed that ML would step down by the end of the year and that the appointment as Advisor to the CEO was a temporary expedient to give ML an opportunity to use the time remaining at the DIFCA for finding alternative employment. I accept the evidence of AA on this matter. ML might have hoped that the Defendant would ultimately change its mind and continue to employ him after the end of the year at his new post. It was, however, made plain to him that the decision to create the non-existent position of Advisor could not replace, and was indeed to help him give effect to, the underlying understanding to which he had agreed, that he would step down by the end of the year. In this connection I also accept AA's account in his statement of the conversation that he had with ML on about 29 November 2011 during which they discussed ML's hitherto unsuccessful search for alternative employment. In the course of that conversation AA openly referred to concerns that ML had unduly favoured HAH by approving remuneration increases but ML reminded AA that all those recommended increases had been approved by AA. In the course of that conversation ML both told AA that he would resign if that was what AA wanted but that he would not resign if the Governor did not want him to resign. AA indicated that in effect it was not a matter for the decision of the Governor and that when he resigned he would be paid his salary for three further months instead of serving his notice period under the contract of employment.


12. In the meantime the Defendant's Audit and Risk Department had conducted an enquiry into the conduct of both ML and HAH during the period from July 2010 for the purpose of ascertaining whether the relationship between ML and HAH had created a conflict of interest situation prejudicial to the Defendants. The Departmental enquiry proceeded on the basis of Section 6-11.3 of the DIFCA Human Capital Policies. This provides:
“Employees have an obligation to conduct business within guidelines that prohibit actual or potential conflicts of interest. An actual or potential conflict of interest occurs when an employee is in a position to influence a decision or an action that may result in a personal gain for that employee or for a relative as a result of the Company's business dealings. For the purposes of this policy, a relative is any person who is related by blood or marriage, or whose relationship with the employee is similar to that of persons who are related by blood or marriage”.


13. The Departmental report dated 4 September 2011 concluded that there was a very high indication that both parties had a close private understanding for marriage prior to July 2011 which may have affected the business environment and independent decision making and may independently have affected business results indirectly.


14. This report — about which ML and HAH knew nothing — recommended the setting up of a high level committee of DIFCA Executives to look further into the issues and that there should be a review of the main discussions taken by ML over the previous 6 to 12 months within the potential area of conflict of interest and of HAH's eligibility for salary adjustments and an 80% increase in her compensation in less than 6 months.


15. I infer that after some delay that report gave rise to the decision of the Defendant's Audit Committee on 11 October 2011 to suspend both ML and HAH. That decision was to the affect that, having been suspended, they should both “resign peacefully” or be subjected to special investigation “to look into the matter and face the consequences up to termination”.


16. That decision was clearly taken having regard to the risk identified in the 4 September 2011 report that thepre-maritalrelationship between ML and HAH might, by reason of conflict of interest, have caused the taking of decisions detrimental to the Defendant Authority.


17. AA, as I accept, was doubtful as to whether it made sense to suspend ML or HAH in view of the fact that ML had already expressed his intention to step down and resign. For that reason AA suggested to Badr Buhannad, the Chief Audit and Risk Officer, that instead of suspension, the matter be investigated in depth by a high level committee “that would look into various aspects of the case, including reviewing the report, and identifying and determining any breach against the organisation's policies and procedures, and the code of ethics /conduct, and provide a recommendation to (AA) accordingly”.


18. AA's suggestion was not taken up and, possibly because Hussain Al Qemzi, (“HAQ”) Chairman of the Audit Committee, had been overseas, nothing happened until 29 November 2011 when he sent a message to AA recommending that the Committee's decision of 11 October 2011 should be effected.


19. Later on the same day ML emailed AA complaining about what had passed at their recent meeting and particularly about AA's “false accusations” about ML's approvals of remuneration increases for HAH when AA was aware of every such decision. The message concluded: “As you have asked me to resign as soon as possible, or if you wish to terminate my employment, please reply to me so that I can have this recorded as an official request”.


20. On the following day HAQ spoke by telephone to AA, followed by an email at 16.44, whereby HAQ requested AA “effective today” to suspend both ML and HAH, including their emails and accesses and to confiscate all company assets from them. The email ended “Please revert to me today with your confirmation on the above”.


21. There can be no doubt on the evidence that AA, who was answerable to the DIFCA Board and therefore to HAQ as its representative, was obliged to treat this as a peremptory instruction.


22. I find that AA wished to avoid the procedural route prescribed by HAQ. He preferred to persuade ML to tender his resignation rather than to threaten him and HAH with suspension. This is probably to be explained by the fact that he wished to avoid a situation in which he personally, having taken over the management of those divisions for which ML had previously been responsible and having installed ML in a virtually functionless post, would have to suspend HAH and thereby disrupt the management structure of her divisions for which he would be answerable. He was clearly attempting to avoid that situation when he made the following gentle but firm last effort to persuade ML on the morning of 30 November 2011.
"Dear Marwan,

Thanks for your email.

I would like to reiterate that our discussion yesterday was in line with the meeting we had in Coffee Bean in Jumeirah at the end of August, in which you communicated to me your decision to be the one who would be Ieaving the organization and requested some time to figure out the next steps and indicated that you would be submitting your resignation towards year end.

I want to conclude this discussion as I believe you have had enough time for you to sort out the next step and I believe providing you with a further 3 months' notice in addition to the previous 3 months is more than generous in the circumstances since you have also been given the flexibility throughout the past three months not to regularly attend to office and to use the time to pursue other opportunities.

Best Regards,"


23. That afternoon he replied as follows:
"Dear Abdulla,

The only thing we have agreed end of August was that I will come back to you by year end with my plans and hence your decision to change my role from Deputy CEO & Managing Director to Advisor to the CEO in order to overcome any reporting line conflicts.

Even though I have witnessed a freeze of my responsibilities and authority, strict instructions not to meet any clients or handle business matters and no guidance for my new role, I continued to attend to office and support the DIFC in whatever way possible.

As I have repeatedly remarked, I remain committed to the Government of Dubai and the development of the centre

The Centre
and, therefore, will not be submitting my resignation."


24. I find that the first paragraph did not accurately represent what had been the agreed position at the end of August. The effect of the messages on 11 and 25 August 2011 was that ML would definitely resign by the end of the year. ML was now in effect seeking to re-open the whole issue of whether he should resign at all. This placed AA in the position which he had been trying to avoid. He was obliged to comply with HAQ's instructions. He accordingly instructed Hani Hirzallah, Head of Human Capital, to inform ML and HAH that they were suspended with immediate effect. Mr Hirzallah then telephoned both HAH and ML and informed each that they must either submit their resignation immediately or be suspended. ML refused to resign, so also did HAH. A short time later Mr Hirzallah sent a message to each in these words:
"Dear Marwan,

You are hereby advised that you are suspended from office with immediate effect until further notice as instructed by the Audit Committee of the DIFC Authority Board. Please note that your access to the premises and company emails will be suspended shortly. Please return all company assets in your possession on Sunday morning.

Someone from HC will be in touch with you to co-ordinate the above."


25. On the next working day — 4 December 2011 — ML had a chance meeting with HAQ in the lobby of the Jumeirah Emirates Towers Hotel, in which he confronted HAQ with what had happened and asked to see a copy of the Audit Committee report, which he had first been told of on 3 December by Essa Kasim, a DIFCA Board Member. HAQ told ML that the DIFCA Board would take a decision in the matter that afternoon.


26. Later on 4 December 2011 AA sent the following letter to ML.
"Dear Marwan,

Following your suspension, we regret to inform you that your employment with the DIFC Authority is hereby terminated. This decision has been taken on the grounds that employment of relatives as per the DIFCA Employee Policies and Procedures is generally not allowed and there was no other suitable position for you in this organisation.

You will receive all your entitlements as per your Employment Contract and you are not required to serve your notice which will be paid in full together with any other applicable benefits.

Please find attached your end of service benefits calculation which you must sign and return to the DIFC Authority in full and final settlement.

We would like to thank you for your contribution to the DIFC and remind you to adhere to confidentiality commitments under your Employment Contract and the DIFC Code of Values and Ethics.

Abdulla Mohammed Al Awar

Chief Executive Office

Dubai International Financial Centre"


The DIFCA Employment Agreement

27. ML commenced working as Deputy CEO at Head of Business Development on 1 April 2010. The Employment Agreement included the following terms.
“1. Job Description/Grade

The Employee will be employed in the position of Deputy CEO and Head of Business Development. The Employee's grade shall be 8, and shall be subject to the terms of the DIFCA's Employee Policies and Procedures in effect from time to time, and which are hereby incorporated by reference as an integral part of this Agreement (“Policies and Procedures”), related to Grading, including without limitation any changes to such grade during the term of this Agreement.

2. Joining Date

The Employee shall begin rendering services under this Agreement as of April 1, 2010.

3. Compensation

The Employee will receive as compensation for her /his services a salary and allowances in United Arab Emirates Dirhams (“AED”) as per the following:

Basic Salary: (60% of total):AED72,000/-
Allowance: (40% of total):AED48,000/-
Total Monthly Compensation:AED120,000/-
Allowances include, inter alia, compensation for transportation, etc., all to be obtained by the Employee as the Employee may deem fit.
4. Annual Leave Ticket

The Employee shall be entitled to receive one return Business Class air ticket, Dubai /London /Dubai, for each year of employment.

Such entitlement will also apply to the Employee's dependents (spouse and up to three children under the age of 18 years old) residing with the Employee in the UAE


The tickets must be utilized by the Employee within one (1) year after it has accrued. The equivalent cash value of tickets may also be taken by the Employee.

6. Annual Leave

The Employee shall be entitled to thirty (30) working days of leave per year.

7. Probationary Period

The first six (6) months of any employment shall be a probationary period. Depending on the employee's performance as assessed by the immediate supervisor(s) during the first 3 months of employment, the probationary period may be deemed to be satisfactorily completed and the employment will then continue on a “confirmed” basis in accordance the Policies and Procedures.

Should the Employee under Probation Period wish to terminate this contract during the probation period, the Employee shall do so upon provision of a written notice addressed to the Human Capital Department, 7 calendar days prior to the date of the effective date of termination.

Emergency leave granted to an employee under the probation shall be treated as unpaid as per this policy and granted only upon receipt of confirmation from the employee's line manager.

8. Performance Bonus

DIFCA may at its sole discretion award employees bonuses from time to time, based on their performance in the carrying out of their employment.

Where such bonuses are paid, if any, these do not form part of the total annual compensation, whether for calculation of end of service gratuity or otherwise.

9. Term and Termination

The Employee's employment shall be for an unlimited period and will remain in force until one Party delivers to the other Party three (3) month's written notice of termination.

13. End of Service
(EOS) Gratuity

If the Employee's term of service hereunder should expire or terminate prior to the implementation of any such scheme, the Employee will receive the Employee's entitlements set forth in the DIFC Employment Law No.4 of 2005, as amended from time to time.

The EOW gratuity is applicable only to UAE Nationals/Expats who do not hold a UAE ID (Khulasat Al Qaid — KAQ)

14. Conflict of Interest /Non-Competition

The Employee shall at all times comply with the provisions of DIFCA's constitutive documents on conflicts of interest.

16. Rules and Regulations

In addition to the terms and conditions set forth in this Agreement, by entering into this Agreement the Employee expressly and irrevocably agrees that the Employee shall follow and abide by any applicable rules and regulations issued from time to time by DIFCA, the Government of Dubai or the Government of the United Arab Emirates.

18. Applicability of DIFC Employment Law

The Employee's employment shall be governed by the DIFC Employment Law No.4 of 2005, as may be amended from time to time (the “Employment Law”).”

The Parties' Submissions

28. It is common ground that the Employment Agreement is governed by DIFC Law.


29. On behalf of the Claimant it is submitted that the primary basis of the claim for wrongful termination of the contract of employment is discrimination under Article 56(1) and (2) of the unamended form of DIFC Law No. 4 of 2005 by which it is provided as follows:
"56. Discrimination

(1) Discrimination for the purposes of this Article means a distinction based on personal characteristics relating to sex, marital status, race, nationality or religion, mental or physical disability that has the effect of imposing burdens, obligations or disadvantages on a person not imposed upon other persons or that withholds or limits access to opportunities, benefits and advantages available to other persons under this Law. In the case of mental or physical disability, such condition shall not constitute a basis for a discrimination claim unless it is of a long-term nature, generally no less than twelve (12) consecutive months in duration.

(2) An employer shall not:

(a) refuse to employ or refuse to continue to employ a person; or
(b) discriminate against a person regarding employment or any term or condition of employment,
because of that person's sex, marital status, race, nationality, religion, mental or physical disability, unless there is a bona fide occupational requirement."
Mr James Wynne, on behalf of the Claimant, submits that the meaning of discrimination under Article 56 is in substance the same as the definition in Article 58(2)(a) of DIFC Law No. 3 of 2012 by which DIFC Law No. 4 of 2005 was amended, namely:
“Discrimination for the purposes of Article 58(1) means where: (a) an employee is treated less favourably than others would be treated in the same circumstances on one of the prohibited grounds in Article 58(1)”


30. It is provided by Article 56(5) that the Director (of Employment Standards) “may determine what constitutes a bona fide occupational requirement in this Article”. However, the Director not having done so, it is submitted that a requirement will be “bona fide” for the purpose of Article 56(2) only if it is reasonable, proportionate and pursues a legitimate aim and is necessary for the achievement of that aim. The burden for bringing the employer within the bona fide occupational requirement exception rests with the employer.

Mr James Wynne argues on behalf of the Claimant that the words “because of … marital status” are to be construed as they would be in the English Courts.

In this connection Mr Wynne relies on the general principles set out by the Court

of Appeal inKing v The Great Britain China Centre[1991] IRLR 513 in which, at paragraph 38, Neill LJ observed:

(2) It is important to bear in mind that it is unusual to find direct evidence of racial discrimination. Few employers will be prepared to admit such discrimination even to themselves. In some cases the discrimination will not be ill-intentioned but merely based on an assumption 'he or she would not have fitted in:

(3) The outcome of the case will therefore usually depend on what inferences it is proper to draw from the primary facts found by the Tribunal

. These inferences can include, in appropriate cases, any inferences that it is just and equitable to draw in accordance with s.65(2)(b) of the 1976 Act from an evasive or equivocal reply to a questionnaire.

(4) Though there will be some cases where, for example, the non-selection of the applicant for a post or for promotion is clearly not on racial grounds, a finding of discrimination and a finding of a difference in race will often point to the possibility of racial discrimination. In such circumstances the Tribunal will look to the employer for an explanation. If no explanation is then put forward or if the Tribunal considers the explanation to be inadequate or unsatisfactory it will be legitimate for the Tribunal to infer that the discrimination was on racial grounds. This is not a matter of law but, as May LJ put it in Noone [1988] IRLR 195, 'almost common sense'.

(5) It is unnecessary and unhelpful to introduce the concept of a shifting evidential burden of proof. At the conclusion of all the evidence the Tribunal should make findings as to the primary facts and draw such inferences as they consider proper from those facts. They should then reach a conclusion on the balance of probabilities, bearing in mind both the difficulties which face a person who complains of unlawful discrimination and the fact that it is for the complainant to prove his or her case."

Reference is also made to the judgment of Lord Nicholls in the House of Lords inNagarajan v London Regional Transport[1999] 572 at paragraph 19:
"Decisions are frequently reached for more than one reason. Discrimination may be on racial grounds even though it is not the sole ground for the decision. A variety of phrases, with different shades of meaning, have been used to explain how the legislation applies in such cases: discrimination requires that racial grounds were a cause, the activating cause, a substantial and effective cause, a substantial reason, an important factor. No one phrase is obviously preferable to all others, although in the application of this legislation legalistic phrases, as well as subtle distinctions, are better avoided so far as possible. If racial grounds or protected acts had a significant influence on the outcome, discrimination is made out. Read in context, that was the industrial tribunal's finding in the present case. The tribunal found that the interviewers were 'consciously or subconsciously influenced by the fact that the applicant had previously brought tribunal proceedings against the respondent."


31. With regard to the claim based on the Defendant's breaches of express contractual terms, the Claimant relies on provisions of the Defendant's Employee Policies and Procedures incorporated into the contract of employment by Clause 1. These are as follows:
“13.1. “Disciplinary process must be initiated for transgressions which have been observed or brought to the attention of the management within the 30 calendar days period”. (Progressive Discipline para 4.0)

13.2. “Human Capital Representative will be involved at all stages of the Disciplinary Process”. (Progressive Discipline para 4.0)

13.3. “Any allegation or complaint about an employee's conduct must be investigated as soon as reasonably possible before disciplinary action is taken”. (Progressive Discipline para 4.0)

13.4. An employee may be suspended for a maximum of one month so that facts and evidence may be obtained (Progressive Discipline para 4.0). It is implicit within this that the allegations already exist.

13.5. “Employees may be placed on an investigative leave (for a maximum period of one month) pending the determination of further disciplinary action, if any.”

13.6. “Employee will be informed of the disciplinary hearing at least five working days before it is to take place, Disciplinary hearing will be held within 10 working days of having notified the employee of the pending disciplinary procedure.”

13.7. “The employee has the right to call on his/her witnesses and to examine adverse witnesses at the hearing.”

13.8. “The Disciplinary enquiry will be conducted and chaired by the Chief of Human Capital and the Head of the Department of the employee.”

13.9. “An employee can appeal the decision from the Disciplinary Enquiry to the Grievance Committee within three working days.””

With regard to the claim based on breach of terms implied into the contract of employment. Mr Wynne argued that the following terms ought to be implied:
(a) that the DIFCA would not without reasonable or proper cause conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of trust and confidence between employer and employee;
(b) good faith;
(c) reasonableness.


32. The Claimant's Submissions as to the Defendant's contractual duties then follow closely those advanced on behalf of HAH in Claim CFI/011/2012. I reproduce here paragraphs 57 to 60 inclusive of my judgment of 1 July 2013 in that case:
57. In this connection the Claimant relies on a decision of Michael Hwang DCJ on a strike-out application in the Court of First Instance inKleily Ghassan Elias v Julius Baer (Middle East) Ltd.(CFI 014/2009) 22 Nov. 2009. In the course of his judgment the Deputy Chief Justice
Chief Justice
recognised that the implied term of mutual trust and confidence was an overarching common law doctrine of the law
the Law
of employment — in substance to the effect that the employer will not, without reasonable and proper cause, conduct himself in a manner likely to destroy or seriously damage the relationship of confidence and trust between employer and employee. He went on to consider the effect of two important English decisions on the applicability of that implied term to the exercise of the employer's power to dismiss. Those authorities areEastwood v Magnox Electric plc[2004] 3 All ER 991 and the earlier House of Lords decision inJohnson v Uniyis Ltd[2001] 2 All ER 801. He analysed in some detail the reasoning of Lord Hoffmann in the latter case, identifying in particular his reluctance to imply such a term in relation to dismissal itself because that implied obligation was directed topreservingthe working relationship between employer and employee as distinct from restricting the exercise of the power of dismissal and secondly his rejection of that term in respect of dismissal because under English Law there was the Industrial Relations Act 1971 and subsequently the Employment Rights Act 1998. Accordingly, there was no justification for the implication of a term covering substantially the same ground as the legislation.

58. This reasoning was in substance reluctantly followed by the House of Lords in Eastwood which in the leading judgment delivered by Lord Nicholls upheld the concept of an exclusion area over which the implied term would not be applicable because that was the area of the statutory regime. Outside that area were included breaches of the implied term whichprecededthe actual dismissal. The judgment of Hwang DCJ was concerned only with whether the applicability of the implied term to dismissal was unarguable. He held, rightly in my view, that it was not. The process of reasoning which provided a basis for the argument was that in a jurisdiction in which there was no statutory regime applicable to dismissal, as there was in England, the main reason or at least one of the two reasons for the rejection of the argument in Johnson did not apply. Accordingly, it was arguable that once that had gone, as in the DIFC, the common law duty of trust and confidence should prevail and apply to the employer's exercise of his contracted right to terminate the employment on notice.

59. The Claimant relies on that reasoning in the present case, as well as on the dissenting judgment of Lady Hale inEdwards v Chesterfield Royal Hospital NHS Foundation Trust[2012] 2 All ER 278 and on Articles 56 to 58 of the DIFC Contract Law under which terms are implied into contracts from the nature and purpose of the contracts, good faith, fair dealing and reasonableness and there is an overriding duty of co-operation when such co-operation may reasonably be expected for the performance of the contract.

60. It is further argued that to permit an unfettered right to dismiss on notice could make contractual performance substantially different from that which was reasonably expected by the employee. In support of this argument Mr Wynne relies on Articles 36(1(f), 38, 40(1) and Schedule 2 to the Implied Terms in Contracts and Unfair Terms Law, No.6 of 2005, as well as on Article 3 of the Employment Law which states amongst the purposes of the law the following: -

(a) ensure that employees in the DIFC receive the minimum international standards and conditions of employment and

(b) promote the fair treatment of employees and employers.””


33. The Claimant further submits that his character was defamed by the manner in which he was treated by the Defendant Authority and by AA on its behalf from September 2011 to the time of the termination of his employment on 4 December 2011, specifically by the Defendant's breaches of the implied terms of mutual trust and confidence. Mr Wynne, however, conceded, perfectly properly, that there was no evidence that any of the Defendant's conduct or statements were damaging to ML's reputation.


34. The Claimant also claims that he was entitled to be paid an end of service gratuity under Article 60 of the Employment Law.


35. As to the Defendant's conduct from July to December 2010, it is submitted as follows:
(a) The reason for ML's dismissal was not compliance with the Employment of Relatives Policy but his marital status.
(b) Nor, if discrimination on the grounds of or because of his marital status were established, did the evidence show a bona fide occupational requirement within Article 56(2).
(c) The evidence was strongly against the decisions to increase HAH's remuneration in 2011 being unduly favourable to her and, further, all such increases were offered by AA.
(d) The 2011 bonus award to HAH had been made by a committee of others in the DIFCA and not with the participation of ML.
(e) There was no basis for AA to believe that ML and HAH had a secret agreement to marry before mid-June 2011 which could have given rise to a continuing conflict of interest at any time before the Melcha (27 July 2011).
(f) AA's expressed concern about the reporting line between HAH and ML was misplaced and the requirement that at least one of them must resign in order to comply with the Employment of Relatives Policy was wholly unnecessary once HAH had ceased to report to ML upon his appointment as Advisor to the CEO and AA had taken over the top management. There were numerous permutations of position to which ML and /or HAH could have been appointed in order to avoid HAH reporting to ML.
(g) The reliance by AA on the need to comply with the Employment of Relatives Policy was artificial and at bottom an excuse to get rid of ML. That Policy did not require dismissal in circumstances where two existing employees married. AA should have turned over the administration of that EOR Policy to Human Capital, but failed to do so thus enabling him to retain control over the procedures needed to dispose of ML. AA eventually sought to rely on the ground of conflict of interest prior to the marriage in order to support his purpose in achieving the dismissal of ML, whereas in reality there was no substance in the allegations of inappropriate conduct by ML to the prejudice of the Defendant. In reality AA did not believe in the possibility of such conduct raised in the 4 September 2011 report but simply used it as a means of taking away ML's management responsibilities.
(h) The fact that ML and HAH were spoken to by Mr Hirzallah consecutively on 4 December 2011 demonstrated that they were being treated as they were because of their marriage.
(i) The subsequent setting up of the investigation of HAH's and ML's conduct by Ernst & Young described in my judgment in CFI/011/2011 showed that the Defendant's Audit Committee had recognised that the allegations in the 4 September 2011 report might not have substance.
(j) The real and dominant reason for the termination of ML's employment was therefore ML's marital status and it followed that such termination was discriminatory. Because it was open to the Defendant to deploy ML in a new position in which he ceased to be the line manager of HAH, as was done when he was appointed Advisor to the CEO it could not be established that the termination was made necessary by any bona fide operational requirement.


36. The Defendant's submissions were as follows:

The contract of employment had been terminated because there was an on-going failure to comply with the Defendant's EOR Policy and by reason of an actual conflict of interest arising out of his marriage to HAH. The Claimant's refusal to resign from the Defendant's employment notwithstanding his undertaking to do so and notwithstanding HAH's continued employment by the Defendant amounted to a refusal to comply with the EOR Policy.


37. Further, the termination of the employment contract by the Defendant was not discriminatory on the basis of ML's marital status because on the evidence, which I accept, the EOR Policy reflected a general practice in governmental or quasi-governmental entities in the UAE. Thus ML had not been required to resign “because of” his marital status but because he was in a conflict of interest situation on account of non-compliance with the EOR Policy.


38. Accordingly, the contract termination was not discriminatory within the meaning of Article 56(1) of the DIFC Law No. 4 of 2005. It was provided by the EOR Policy which itself was an extension of the Conflicts of Interests Policy. The EOR Policy existed for the purpose amongst other things of avoiding conflicts of interest between relatives of all kinds and not merely those having marital status with each other, there was a risk that conduct infringing the Conflicts of Interest Policy might arise if relatives remained in the same reporting line.


39. Although the Defendant had discontinued the reporting line by the appointment of ML to the position of Advisor to the CEO as from the end of August 2011, this was a temporary expedient adopted by the Defendant to keep ML on the payroll while he sought alternative employment. That course was adopted because AA was unable to find an alternative real, as distinct from artificial, position to which ML or HAH could be appointed in the DIFCA which maintained separation of the reporting line. Both were too senior to be moved to other positions and there were no vacancies at an appropriate level in the Authority to which either could be moved. Because AA was unable to relocate either ML or HAH, there was no alternative to one of them leaving if, as the DIFCA Board insisted, no exception was to be made to the EOR Policy. It was left to ML and HAH to decide between themselves which would resign.


40. The EOR Policy was not discriminatory by reason of its express reference to marital status because it was aimed at all family relationships which might lead as between employees to biased conduct detrimental to the Defendant.


41. Alternatively, there was a bona fide occupational requirement that either ML or HAH should leave the Authority because there was no working position which either could occupy which did not involve a breach of EOR Policy.


42. Apart from the issue of discrimination, there was no implied term in the contract of employment whereby unfair dismissal was prohibited. The submission advanced on behalf of the Claimant involved introducing into the law of employment in the DIFC an undesirable element of uncertainty. Further, the DIFC Employment Law was a comprehensive code for the regulation of the terms of contracts of employment within the DIFC. Under Article 63 of DIFC Employment Law in its original form (before the 2012 amendments) it was provided that the Director of Employment Standards was given power to make proposals to the Board of Directors of the DIFCA in respect of “(g) the maximum compensation for discrimination or unfair dismissal”, no such proposals with regard to unfair dismissal had been made. InRasmala Investments Ltd v Rana Banal and Others(8 April 2009) CFI1-006/2009 Justice Tan Sri Siti Norma had held that, apart from their isolated reference to unfair dismissal, the 2005 Employment Law which contained a comprehensive code of principles applicable as a matter of law to contracts of employment in the DIFC, contained no other reference to unfair dismissal and that accordingly unfair dismissal was not a principle of DIFC employment law. That reasoning having been followed inAhmed Mohamed Abdul Aziz Saleh v Chartis Memsa Insurance Company(5 July 2012) CFI 021/2011, when it came to amending the Employment Law in 2012, the legislature did not introduce any reference to unfair dismissal but deleted the previous reference in Article 63 together with all references to the Director of Employment Standards. Therefore unfair dismissal was not part of DIFC employment law.


43. The submission that it should be introduced by implication by application of the Implied Terms in Contracts and Unfair Terms Law No. 6 of 2005 should be rejected. That Law did not provide expressly for any implied term regulating termination of employment contracts or applicable to employment relationships.


44. It was not for the Courts to introduce implied terms into contracts of employment which were inconsistent with express terms as to termination. If the law was to be changed in that way, it was for the legislature to provide for such a change.


45. As for the claim for defamation, there was no evidence that the Defendant's conduct in its treatment of ML had damaged his reputation. The claim should therefore be dismissed.


46. With regard to the claim for an end of service gratuity, there was no entitlement.



47. I find, having heard both ML and AA give evidence under cross-examination, that the circumstances relating to the termination of ML's employment which are material to his claim in these proceedings are as follows.


48. Immediately after ML had on 25 July 2011 informed AA that he and HAH were to marry, the Melcha having been fixed for 27 July 2011, AA addressed his attention as to how to reconcile their marriage with the Defendant's EOR Policy.


49. Although the purpose of that Policy is expressed in a somewhat limited manner — “to provide guidelines designed to avoid the possibility of favouritism or nepotism in the hiring of the DIFC Authority personnel — succeeding provisions strongly suggest that the purpose of the Policy is to prevent biased decision-taking as between relatives which may be detrimental to the Authority. Thus paragraph 1-05.3 provides that “Employment of relatives is generally not allowed”. The policy is then expressed by reference to employment in the same department and/or under direct or indirect supervision of a relative “who has or may have a direct effect on that individual's progress or performance”. Paragraph 1-06.04, “Procedure”, envisages “recruitment, promotion or transfer to any Department”. The general effect is therefore that the Policy was intended and would be understood to cover internal changes in position within the Authority as well as changes in relationships. Thus, for example, marriage might cause an individual employee to become the son or daughter-in-law of another employee, just as it might cause an existing employee to become the wife or husband of an existing employee.


50. The restriction on the employment of relatives generally is, according to the evidence a widespread practice in the UAE.


51. The final paragraph prescribes that it is the responsibility of the Human Capital Department to ensure that no employee's status conflicts with the provisions of that Policy. This envisages a pro-active role whereby employment contrary to the provisions of the Policy will be prevented. In this context, although the main substantive paragraph under “Policy” prohibits employment of relatives in the same department or under each other's supervision and thereby envisages that effect may be given to the Policy by re-deployment within the Authority, there is a general prohibition on the employment of relatives, on the basis of which employment might be wholly terminated if re-deployment within the Authority could not give effect to the Policy.


52. For present purposes the important feature of the Policy is that it is aimed atrelationshipsbetween employees likely to give rise to the risk of biased decision-taking and not per se at the personal status of any given employee. Its target is the relationship between individuals employed or who may be employed by the Authority and not at the intrinsic status of an individual. Thus the Authority may decide not to employ a potential employee or to promote an existing employee because of the relationship (including the advent of marriage) to an existing employee.


53. This is an important feature of the Policy because it differentiates the purpose of the Policy from the purpose of Article 56(1) of the Employment Law – DIFC Law No. 4 of 2005. The target at which the latter aims is an intrinsic characteristic or status of a given person, for example refusing to employ a woman in favour of a man where the decision is significantly influenced by the fact of the woman's sex. By contrast, refusing to employ a woman solely because she is married or becomes married to another employee does not infringe Article 56(2): but for the other employee she would have been employed, whether she were married or not.


54. The course adopted by AA in his dealings with ML and HAH was, I have no doubt, exclusively motivated by a desire to implement the EOR Policy and not by animosity against ML. Indeed, in my judgment, AA strove to deal with what was for the Defendant Authority a unique problem in a way which was as painless as possible for ML and HAH. Once it had become clear to him that there was no suitable alternative position to which either ML or HAH could be re-deployed in order to avoid a situation where HAH reported to ML because there were no vacant posts in the relatively small areas of top management, it was inevitable that either ML or HAH would have to stand down or have their employment terminated. AA created the position of Advisor to the CEO because ML had specifically informed him that HAH would stay on and because he wanted to provide ML with a salary until ML was able to find alternative employment. I am equally sure that ML had indeed undertaken to stand down by the end of 2011 at the latest. However, the position of Advisor to the CEO was largely without function. In no sense, therefore, was the deployment of ML to that position a solution to the EOR Policy problem created by the marriage. It was no more than a temporary expedient designed by AA personally and without the authority of the Board to assist ML. In essence, AA had come to an arrangement with ML limited in time to the end of 2011 and which did not involve ML having any continuing employment with the Defendant beyond that time.


55. It is at this point that it is necessary to disentangle from the temporary expedient of the appointment of ML to the post of Advisor to the CEO the developing issue as to whether ML and HAH had by reason of their pre-marital relationship been in breach of the Defendant's Conflict of Interest Policy. The report of the Audit and Risk Department dated 4 September 2011 led directly to the decision of the Audit Committee on 11 October 2011 that ML and HAH should be suspended and subsequently to the telephone calls of Mr Hirzallah to HAH and ML on 30 November 2011 informing them that they had been suspended and that they had the option of resigning or facing an investigation.


56. There can be little doubt, in my judgment, that the decision of the Audit Committee to take this course was driven primarily by its concerns as to whether ML and HAH had been in breach of the Conflict of Interest Policy. However, what brought about the termination of ML's employment on 4 December 2011 was not his response to the telephone call of 30 November in refusing to resign but his earlier attempt on 30 November in his message to AA, quoted above, to go back on what had been agreed between him and AA in September, namely that he would be appointed Advisor to the CEO but would stand down by the end of 2011. This led the Defendant to insist on the implementation of the EOR Policy and to terminate ML's contract forthwith. In so doing, it was not taking disciplinary action on the basis of the Conflict of Interest Policy but simply giving effect to the EOR Policy. Since ML was now re-opening the issue of his continued employment by the Defendant, it was pointless to institute an investigation into the conflict of interest issue or to keep him in employment for a further four weeks until the end of the year when he would have been obliged to stand down in any event.


57. I conclude that it was open to the Defendant to give notice of termination on 4 December 2011 without accusing ML of any breach of contract, but merely as a means of implementing the EOR Policy. It is true that he was entitled to three months notice, but that did not mean that that he was entitled to be permitted to turn up and work for three months: the notice period was for the purpose of identifying the point of time at which he would cease to be on the payroll, whether or not he was required to work being a matter entirely for the decision of his employer.


58. In availing itself of the express provisions of clause 9 of the contract of employment the Defendant was, in my judgment, therefore using that termination facility for the purpose of implementing the EOR Policy and was not refusing to continue to employ ML or discriminating against him “because of his marital status” within the meaning of Article 56(2) of the Employment Law No. 4 of 2005. Nor was this a dismissal for cause on the grounds of any breach of contract by ML so as to engage the employee's entitlement to any investigative hearings or grievance procedures.


59. Nor could the notice of termination be objectively described as unreasonable, disproportionate, or contrary to good faith or any duty of confidentiality. It was the Defendant's operation of the express contractual term available to it.


60. As I have already indicated, the Defendant has argued that, if the termination of the contract were discriminatory, it had made good the exception of “bona fide occupational requirement” in Article 56(2) of the Employment Law. Having regard to my decision that the termination was not discriminatory, this point does not arise. However, if my decision on discrimination is wrong, I have no doubt that the Defendant discharged the burden of proving that dismissal was the result of a bona fide occupational requirement. Such requirement arose because it was impermissible under the EOR Policy and because of the Conflict of Interest Policy to retain ML and HAH in a direct reporting line and because, due to their seniority, there was no alternative vacant post to which either could be re-deployed. Were both to be kept on but outside the reporting line, one of them would inevitably have to be employed in a down-graded job, as was the case with ML. The Defendant was not obliged to keep on the payroll employees who were unsuited to the only available jobs.


61. I would therefore have concluded that on these grounds also there was no breach of Article 56.


62. Mr Wynne, on behalf of the Claimant, put much emphasis in his argument on the submission that the termination of ML's employment had been unfair, as being contrary to an implied term of the contract of employment that the employer would, in operating the power to terminate act in accordance with its implied duties of mutual trust and confidence, fair dealing, good faith and reasonableness. In other words, the express term empowering the employer to terminate provided only a power qualified by adherence to those other implied duties under the contract.


63. I have considered in my recent judgment inHana Al Herz v Dubai International Financial Centre Authority
Centre Authority
, Claim CFI 011/2012, 1 July 2013, whether there is in DIFC Law any principle of unfair dismissal. In that judgment I held that no such principle existed in DIFC Law. I refer to paragraphs 78 to 85 of that judgment:
“78. It is accepted by the Claimant that the only conceptual route to the application of a principle of unfair dismissal is by means of an implied term that the Defendant will only be permitted to avail itself of the express power to terminate the contract of employment on notice if that is done in accordance with the duty of good faith, confidentiality, fair dealing and reasonableness and is exercised reasonably and in a proportionate manner. It will at once be observed that the introduction of such a term introduces a multi-facetted qualification to the operation of the express term. As to this, there are conceptual and practical problems.
79. The primary conceptual problem is that there is a fundamental principle of contractual construction in Common Law jurisdictions that in order to imply a term either on the grounds of business efficacy or on the basis of trade usage there must be no necessary inconsistency between that which is sought to be introduced by implication and that which on its proper construction the parties have expressly agreed. This long-standing principle is founded on the maintenance of contractual certainty but, although of pragmatic purpose, it is a principle of law. It can, however, be displaced by the introduction by legislation of terms into particular types of contract or the qualification or prohibition of certain contractual terms. A typical example of implication by operation of law is obviously Article 58 of the DIFC Employment Law which restricts the freedom which an employer would otherwise have to deploy labour without the restrictions on discrimination imposed by that section. Another example is Law No.6 of 2005, The Implied Terms in Contracts and Unfair Terms Law, Articles 37, 38 and 39. In general, an express term cannot be displaced or superseded by implication unless legislation is the means of implication
80. It will at once be seen that were an employer's right to terminate a contract of employment on notice to be restricted by implication on the grounds that the employer had exercised that contractual right in an unfair manner by having acted contrary to his general implied duty of good faith and confidence, the principle of the primacy of express terms over implied terms would be infringed.
81. In the DIFC there is a comprehensive legislative code applicable to contracts of employment, namely the Employment Law. If there were to be a free-standing principle that certain principles of unfairness or lack of good faith or breach of confidence restricted the employer's power to terminate an employment contract on notice in accordance with its express terms, it is inconceivable that it would not be included in that Law. Yet there is no mention of any such principle, notwithstanding that Article 58 sets out an explicit code regarding non-discrimination which by paragraph (1) expressly restricts the employer's right to exercise powers which he would otherwise have had "regarding employment or any term or condition of employment".
82. The obvious practical problem with the Claimant's submission as to implication of a term is that any such term would be difficult to define and of uncertain application. Whereas the concept of discrimination lends itself to a relatively precise definition as in Article 58(1 ), (2) and (3) of the Employment Law, the same cannot be said in relation to unfairness in respect of dismissal. Further, it would introduce an area of uncertainty with regard to the right of employers to terminate employment and lead to a significant increase in wrongful dismissal claims.
83. Much reliance was placed by Mr Wynne on the proposition that the implication of such an implied term could be founded on the English Common Law, having regard to the decisions inJohnson v Unisys Ltd; supra andEdwards v Chesterfield Royal Hospital NHS Foundation Trust, supra and to the observations of Hwang DCJ inKteily Ghassan Elias v Julius Baer (Middle East)Ltd, supra, in concluding that the proposition as to implication was not unarguable on a strike out
Strike out
application. As recognised by Hwang DCJ, the two English decisions left open what would have been the position in English Law were it not for there being a pre-existing legislative framework directed to unfair dismissal and were thus reluctantly constrained to confine the applicability of the implied term of good faith, confidence and fair dealing to the period of employment prior to the employer's exercise of his powers of termination.
84. In my judgment, these authorities do not justify the introduction into DIFC Law of any general principle of unfair dismissal. The introduction of any such principle otherwise than by legislation would be wrong in this jurisdiction. It would be inconsistent with the fundamental principle of the primacy of the express terms of a contract, subject only to the introduction of inconsistent implied terms by legislation, and it would introduce into employment a serious element of uncertainty which would probably lead to innumerable disputes about wrongful termination.
85. If any such principle of unfair dismissal is to be introduced, it should therefore be by legislation and not by judicial innovation.”


64. This conclusion applies equally in the case of ML. The Defendant's express power to terminate was not for these reasons fettered by any such implied terms. I therefore reject the argument based on unfair dismissal.


65. For the reasons given in paragraphs 101 to 105 of the judgment inHana Al Herz v DIFCA, supra, the submission that an express unfettered right to dismiss on notice would be contrary to Article 38 of the Implied Terms in Contracts and Unfair Terms Law cannot be correct. I do not see how it can be seriously maintained that the contractual performance which was rendered by the Defendant in terminating ML's employment was substantially different from that which was reasonably to be expected of it. The contractual performance which was reasonably to be expected by ML under the terms of his contract was one by which he or the Defendant would be entitled to terminate upon giving notice under clause 9, subject only to the provisions of the Employment Law. Moreover, there was nothing unreasonable about a mutual entitlement to terminate so expressed.


66. The claim for defamation is untenable for there is no evidence of any damage to ML's reputation by reason of the manner in which he was dismissed.


67. The claim for end of service gratuity also fails. The Defendant had enrolled ML in the UAE Pension Scheme in accordance with Federal Law No.7 of 1999 and Article 61 of the Employment Law. He was therefore not eligible to receive a gratuity.



68. I therefore conclude that the claim for damages for unfair dismissal is dismissed.

The claim for defamation is dismissed.

The claim for failure to pay an end of service gratuity is dismissed.


Issued by:

Natasha Bakirci

Assistant Registrar


Date of Issue: 4 August 2013

At: 12pm