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Claim No. CA 005/2022

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

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

IN THE COURT OF APPEAL
BEFORE H.E. DEPUTY CHIEF JUSTICE ALI AL MADHANI,H.E JUSTICE SHAMLAN AL SAWALEHI AND JUSTICE SIR PETER GROSS

BETWEEN

THE INDUSTRIAL GROUP LIMITED

Claimant/Appellant

and

ABDELAZIM EL SHIKH EL FADIL HAMID

Defendant/Respondent

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JUDGMENT OF THE COURT OF APPEAL

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UPON the Claimant’s application for permission to appeal the findings made in the Judgment dated 6 April 2022 relating to (I) the Defendant’s claim for a penalty under Article 18 of the DIFC Employment Law 2005 and Article 19 of the DIFC Employment Law 2019 (Ground 1 of Appeal); and (ii) the Defendant’s claim for vacation pay (Ground 2 of Appeal)

AND UPON the Defendant’s written submissions in opposition to the Claimant’s appeal

AND UPON the Order of Justice Sir Richard Field dated 25 May 2022 granting permission to appeal

AND UPON reviewing the Appellant’s skeleton argument dated 19 June 2022

AND UPON reviewing the Respondent’s skeleton argument dated 14 June 2022

AND UPON reviewing the Appellant’s and Respondent’s post hearing submissions dated 7 June 2022

AND UPON hearing Counsel for the Appellant and Counsel for the Respondent at the appeal hearings on 21 June 2022

IT IS HEREBY ORDERED THAT:

1. The appeal is partially allowed in respect of the Defendant’s claim for a penalty but is dismissed in respect of holiday pay.

2. Further written submissions on costs limited to 5 pages each party, to be filed within 21 days of the date of the Judgment.

Issued by:
Ayesha Bin Kalban
Deputy Registrar
Date of issue: 20 September 2022
At: 3pm

Claim No. CA 006/2022

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF APPEAL
BEFORE H.E. DEPUTY CHIEF JUSTICE ALI AL MADHANI AND H.E JUSTICE SHAMLAN AL SAWALEHI AND JUSTICE SIR PETER GROSS

BETWEEN

THE INDUSTRIAL GROUP LIMITED

Claimant/Respondent

and

ABDELAZIM EL SHIKH EL FADIL HAMID

Defendant/Appellant

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JUDGMENT

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UPON the Defendant’s Intended Points of Appeal dated 27 April 2022, Appeal Notice dated 29 April 2022 and the Defendant’s Skeleton Argument dated 18 May 2022

AND UPON the Claimant’s written submissions in opposition to the Defendant’s appeal dated 31 May 2022

AND UPON the Order of Justice Sir Richard Field dated 3 June 2022 granting permission to appeal

AND UPON reviewing the Appellant’s skeleton argument dated 19 June 2022

AND UPON reviewing the Respondent’s skeleton argument dated 14 June 2022

AND UPON reviewing the Appellant’s and Respondent’s post hearing submissions dated 7 June 2022

AND UPON hearing Counsel for the Appellant and Counsel for the Respondent at the appeal hearings on June 2022

IT IS HEREBY ORDERED THAT:

1. The appeal is dismissed.

2. Further written submissions on costs limited to 5 pages each party, to be filed within 21 days of the date of the Judgment.

Issued by:
Ayesha Bin Kalban
Deputy Registrar
Date of issue: 20 September 2022
At: 3pm

JUDGMENT

Introduction

1. Both parties, The Industrial Group Limited (“TIG”) and Mr Abdelazim El Shikh El Fadil Hamid (“Mr Hamid”) appeal from the judgment of Justice Sir Richard Field, given in the DIFC Court of First instance, dated 6 April 2022 (the “judgment”).

2. Three principal Issues arise on these appeals. TIG’s appeal gives rise to Issues I and II:

Mr Hamid’s appeal gives rise to Issue III:

3. Issues I and III raise questions of wider importance. Issue I goes to the impact of the 2019 Law coming into force and how it affects claims for penalties over a period both before and after it was introduced. Issue III poses questions as to the sources of DIFC law and the interpretation of the Waterfall Provisions (of which more below). Important though it is to the parties, Issue II is purely fact specific.

4. The Court was grateful to Mr Montagu-Smith KC, who represented TIG and to Mr Bowden, who represented Mr Hamid, for their respective written and oral submissions.

The Judgment

5. We turn directly to a brief outline of the Judge’s comprehensive judgment, keeping in mind that the primary fact findings in the judgment were not in dispute before us.

6. TIG was incorporated in the DIFC in 2012. It controls a group of companies carrying on business in Dubai, the Kingdom of Saudi Arabia (“KSA”) and elsewhere in the Middle East, providing specialty chemicals, packaging products and food flavours. Mr Hamid is a Sudanese national, who, following various promotions, from March 2015 held the position of VP Finance and Planning for TIG and was based in the DIFC. His family joined him there.

7. Until 2012 the Group of companies of which TIG formed part had been headed by a KSA entity, called Al Banawi Industrial Group (“BIG”). Thereafter, TIG became the lead company in the Group. Mr Hamid was employed by BIG from 1 November 1999 until 27 March 2013, when he became employed by TIG (at [4] – [5]). As noted by the Judge (at [10]), at all material times, the Chairman of BIG and TIG was Mr Hussein Al Banawi (the “Chairman”), “…who dominated the management of BIG and TIG to the point that in large measure his word was law within the Group.” Mr Hamid and the Chairman formed a very close relationship based on a high degree of mutual trust and confidence. As the Judge went on to say (ibid):

8. Against this background, TIG’s subsequent conduct can only be described as disgraceful, including the wholly unfounded allegation that Mr Hamid’s recouping of such payments was irregular or dishonest and the criminal complaint made by TIG to the Dubai police that Mr Hamid had embezzled AED 2.7 million. The upshot was an investigation lasting from 13 May 2018 to 26 May 2019, when the Public Prosecutor dismissed the complaint. Nor was that all. Amidst protestations of goodwill, TIG launched an ex parte application seeking an order forbidding Mr Hamid from leaving the UAE and compelling him to deliver up his passport to the Court within 24 hours. Inevitably these proceedings, together with a further default judgment, caused Mr Hamid hardship and distress, including separation from his family.

9. It may be, though it matters not, that the source of the souring of the relationship between Mr Hamid and the Chairman was Mr Hamid’s dissatisfaction with the way the business was run, with the Chairman “putting his own lavish lifestyle” (at [15]) ahead of the interests of the company – and payments to the Chairman taking precedence over payments to suppliers. Mr Hamid indicated that he wished to resign which, as the Judge observed, “predictably, the Chairman did not take…at all well.”

10. At all events, at the request of the Chairman (at [22]), Mr Hamid was absent in KSA from 8 – 22 April 2018, a period to which we return when dealing with Issue II. As the Judge concluded (at [132]):

11. On 8 May 2018, TIG terminated Mr Hamid’s employment with immediate effect.

12. Finally, in about May 2019, TIG’s unfounded allegations crumbled and in July 2019, Mr Hamid’s passport was restored to him.

13. As the Judge held (at [80]):

14. Inevitably, given these conclusions, the Judge (at [162]) dismissed the TIG claim that it had dismissed Mr Hamid for cause under Art. 59A of the 2005 Law. In the course of coming to this decision, the Judge remarked (at [156]):

Issue I: Penalty

15. As to Issue I, the Judge dealt with Mr Hamid’s penalty claim at [184] and following of the judgment. It was common ground that Mr Hamid first made this claim before the 2019 Law was enacted on 30 May 2019 and came into force on 28 August 2019.

16. The statutory penalty claim was advanced under Art. 18 of the 2005 Law, which provides as follows:

17. The relevant provisions of the 2019 Law are more fully set out below. It is, however, at once to be noted that the essence of the complexity on this Issue in the present appeal arises because Art. 19(4)(a) of the 2019 Law provides that a penalty pursuant to Art. 19(2) “will be waived” by the court in respect of any period during which “a dispute is pending in the Court regarding any amount due to the Employee under Article 19(1)”. No such “waiver” was contained in the 2005 Law.

18. Subject to one contention on behalf of Mr Hamid (see below), it was not in dispute before us that a relevant dispute was pending from 13 or 23 May 2018 – namely, CFI-029-2018 and CFI-034-2018; these two sets of proceedings were subsequently consolidated and have proceeded under the claim reference CFI-029-2018 (in which the judgment was given).

19. The Judge’s essential reasoning on Issue I was contained at [189] – [191] of the judgment. He held (at [189]) that the right to a penalty under the 2005 Law: “…accrues as soon as the employer has failed within 14 days following the termination of the employment to pay all wages and any other amount owing to the employee, regardless of the fact that the quantum of the sum recoverable will accumulate until payment.” Were this interpretation not correct, the Judge (at [190]) foresaw difficult questions as to “…whether a fresh claim would have to be added by way of amendment to the original claim each day that passes and when a claim for a penalty brought under the 2005 Act becomes statute barred”. Accordingly, time ran from the expiry of the 14 days’ period, that being when the right to a penalty accrued. Mr Hamid’s employment terminated on 8 May 2018 when he was dismissed. It followed (at [191]) that, by way of statutory penalty, Mr Hamid was entitled to recover AED 5,280 x the number of days from 22 May 2018 until payment, a calculation which at 6 April 2022 (the date of the judgment) produced AED 7,550,400.00. This was a very large sum but (ibid) “…TIG knew that they could be liable to a penalty that increased on a daily basis if it did not pay all sums due to Mr Hamid within 14 days of 8 May 2018 and it decided to run the risk of a penalty liability by not paying these sums in a timely fashion. TIG must now face the consequences of this calculated decision.”

Issue II: Holiday pay

20. TIG’s second ground of appeal went to Issue II, holiday pay, dealt with by the Judge at [176] and following of the judgment.

21. Mr Hamid’s claim for vacation pay succeeded in the amount of AED 470,747.29 (at [183]), arrived at as follows:

22. For the purposes of this Appeal, the key finding of the Judge (though, as will be seen, not the only matter in dispute under this Issue) related to Mr Hamid’s entitlement to the 96 days of holiday pay accumulated while employed at BIG. The Judge accepted Mr Hamid’s evidence, putting the matter this way (at [182]):

Issue III: DIFC law and the torts of (i) malicious prosecution and (ii) abuse of process

23. Mr Hamid’s appeal gives rise to Issue III. As explained by the Judge (at [1]), Mr Hamid claimed damages for the tort of abuse of process in respect of the two sets of proceedings brought against him by TIG and malicious prosecution in respect of the criminal complaint made by TIG to the Dubai police that he had embezzled AED in the amount of AED 2.7 million (as referred to above). The Judge dealt with and dismissed these claims at [192] and following of the judgment.

24. The Judge proceeded on the assumption (at [197]) that the law applicable to these claims was DIFC law. The Judge went on to record (at [199]) that by the time of closing submissions it was common ground that the torts had to be provided for in the Dubai Law of Obligations 2005, applicable in the jurisdiction of the DIFC (“the Law of Obligations”) for Mr Hamid to have a cause of action with regard to them. On the true construction of the Law of Obligations, especially Art. 8 thereof (see further below), the Judge held that the torts were not provided for in that statute. Accordingly, Mr Hamid did not have a cause of action (at [204]) so that his claim for damages in respect of the torts was dismissed.

25. We come next to the substance of each of Issues I – III.

Issue I: Penalty

(A) The relevant statutory provisions:

26. As to the 2005 Law, Art. 18 has already been set out; it is unnecessary to refer to any other provisions of the 2005 Law.

27. More detailed reference must, however, be made here as to the 2019 Law. Art. 1(1) provided that it repealed and replaced the 2005 Law. By Art. 1(2), except where otherwise provided by the 2019 Law, anything done or omitted to be done pursuant to or for the purposes of the 2005 Law was deemed to be done pursuant to or for the purposes of the 2019 Law.

28. Arts. 1(3) – 1(5) are in these terms:

As will be seen, Art. 1(5) calls for individual consideration.

29. Art. 10 deals with limitation and provides (so far as material) that a court shall not consider a claim under the 2019 Law unless it is brought within 6 months of the relevant employee’s Termination Date.

30. Art. 19(1) provides, so far as here relevant, that an employer is to pay an employee all remuneration within 14 days of the Termination Date. Art. 19(2) provides that:

Art. 19(3) is not relevant. The terms of Art. 19(4)(a) have already been set out.

(B) The rival cases:

31. (1) The TIG case: For TIG, Mr Montagu-Smith contended that the Judge erred in his construction of the provisions of the 2019 Law. On a true construction of those provisions, (1) the penalty should have been calculated on the basis that there was a mandatory waiver of any penalty for the period of these proceedings, so reducing the penalty to zero; alternatively (2) any penalty accruing after the introduction of the 2019 Law should have been waived, reducing the penalty to AED 2,444,640.

32. Art. 1(3)(a) of the 2019 Law preserved only a right which had accrued. Art. 1(3)(b) was to the same effect. The question was what rights had accrued to Mr Hamid as at 28 August 2019.

33. Mr Montagu-Smith’s first submission was that, on the Judge’s reasoning, all that accrued was a bare, unquantified right to a penalty; the quantification of the penalty was not part of what had accrued. It was not logically possible to conclude that, by 28 August 2019, a right had accrued to a penalty of AED 7,550,400.00 (the amount awarded by the Judge). It followed that the logic of the Judge’s approach led to the conclusion “…that a bare right to a penalty accrued on 22 May 2018 and was preserved by Article 1(3)(a) of the 2019 Law, but fell to be quantified under the 2019 Law at zero”. The Judge’s error lay in finding that “…the unquantified right arose on 22 May 2018, but that right nevertheless fell to be quantified by reference to article 18 of the 2005 Law, when that had been replaced.” Mr Montagu-Smith accepted that this was a new argument, so that he needed permission to raise it. Such permission should be granted, inter alia, because it was a point of law, no new evidence could be required, and the point flowed directly from the Judge’s own analysis (which had not been raised with the parties).

34. Mr Montagu-Smith’s alternative submission was that if quantification was part of what had accrued, then, by 28 August 2019, a penalty had accrued in respect of 463 days, amounting to AED 2,444,640. That would be the right preserved by Art. 1(3)(a) of the 2019 Law – but only up to 28 August 2019. This approach was consistent with the language of Art. 1(3)(a); where an entitlement consisted of daily increments, it was the right to each increment which accrued. This approach was additionally consistent with the purpose of introducing Art. 19 of the 2019 Law, namely to avoid the imposition of penalties which were clearly unreasonable and conferred a windfall on the employee. One of the policy objectives of the 2019 Law was to prevent liability for a penalty being incurred while a dispute was proceeding through the courts. There was no justification for an exception in respect of proceedings which happened to have started before the 2019 Law was introduced. Nor was there anything retrospective about this construction; it did not alter established rights but instead simply altered the consequences of past events.

35. So far as concerned a submission advanced on behalf of Mr Hamid that there was no relevant or genuine dispute within Art. 19(4)(a) because the claim was fraudulent, Mr Montagu-Smith maintained that the Judge’s findings (however critical of TIG he had been) did not go that far. Whatever individuals at TIG had known, the Judge had not found that the TIG claim was fraudulent.

36. The Judge’s reasons for the construction he adopted did not provide support for his conclusion. Limitation gave rise to no difficulties. Nor was there any particular difficulty in having a cause of action or liability which arose on a daily basis over a period of time.

37. Pulling the threads together, Mr Montagu-Smith summarised the two strands of his argument as follows:

38. (2) The case for Mr Hamid: For Mr Hamid, Mr Bowden’s submissions on Issue I fell under the following broad headings. First, that the TIG case comprised a new point for which permission ought not to be given. Secondly, TIG’s case on Issue I depended on a retrospective interpretation of the 2019 Law but such a construction could not be justified. Thirdly, statutory interpretation did not support TIG’s case.

39. New Point: At one stage at least, it appeared that Mr Bowden was seeking to categorise the whole of the TIG submission on this Issue as comprising a new point. That is unsustainable so far as concerned Mr Montagu-Smith’s second way of putting his case, so we say no more of that. However, as was common ground, the first way in which the TIG case on this Issue was argued was a new point. Mr Bowden submitted that this Court should refuse permission for it to be raised.

40. TIG’s case hinged on the existence of a dispute said to come within Art. 19(4)(a) of the 2019 Law, giving rise to the statutory “waiver”. Mr Bowden submitted that there had not been any such dispute, both because, as we understood it, the proceedings in question (CFI-029-2018) did not concern any amount due to Mr Hamid under Art. 19(1) and because TIG’s claim was fraudulent. Accordingly, an issue arose as to the genuineness of any dispute “…and whether a party can take advantage of…Art 19(4)(a) by abusing the process of the Court.”

41. In Mr Bowden’s submission:

42. Retrospectivity: Mr Bowden submitted that TIG’s case introduced unjustifiable retrospectivity into the interpretation of the 2019 Law – namely the redetermination of the compensation already recognised to zero. The Issue was substantive rather than procedural and such an approach could not be supported. So far as it was a matter of degree, fairness told against the TIG contention, the effect of which was to extinguish a vested right. All the more so, as TIG’s conduct was “as reprehensible as it is possible to get”, involving a deliberately cynical attempt to convict an innocent man. In circumstances where it had acted dishonestly from the very beginning, TIG must be taken to have known that if its claims were not borne out, it would be held liable to pay a penalty; it was not unfair to enforce that penalty. TIG’s submission stood fairness on its head.

43. Statutory interpretation: Art. 1(3) of the 2019 Law, read as a whole, very much including Art. 1(3)(b), did not support TIG’s construction. What had accrued prior to the commencement of the 2019 Law was Mr Hamid’s untrammelled right to the penalty until payment was made.

44. (3) The significance of Art. 1(5): In the course of the hearing, the possible significance of Art. 1(5) of the 2019 Law became the subject of increased attention. It is convenient to defer consideration of this point and we deal with it below.

(C) Discussion and conclusions:

45. (1) Introduction: As already underlined, this Issue is of some general importance, concerning as it does the impact of the 2019 Law coming into force on penalty claims commenced before its introduction but relating to a period both before and after it was introduced. While that importance will necessarily diminish over time, the Court appreciates that its decision may have consequences going beyond the instant appeal.

46. As a matter of general policy, it is plain that Art. 18 of the 2005 Law was contentious, giving rise to concern that the imposition of a penalty might be clearly unreasonable: see, paras. 39-40 of Consultation Paper No. 1, February 2018, Proposed Employment Law DIFC Law No. 6 of 2018 (the consultation paper preceding the introduction of the 2019 Law). It can safely be concluded that a policy objective of the 2019 Law was to address this mischief by curtailing, at least to a degree, the award of the statutory penalty for which provision is (now) made by Arts. 19(1) and (2) of the 2019 Law. Art. 19(4)(a) is to be read in this context.

47. That said, protestations of unfairness on the part of employers ring somewhat hollow in circumstances where they have knowingly taken the risk of the award of the statutory penalty by delaying payment of sums due to employees. Considerations of this nature loom large in the present case, given TIG’s unfortunate conduct, already described and which need not be belaboured.

48. On the other hand, a mere feeling of sympathy for Mr Hamid cannot be sufficient for him to succeed on this Issue. The question for us is one of statutory construction – not a generalised view of the overall merits. To have a prospect of success, arguments focused on the merits must be related to the provisions of the 2019 Law.

49. (2) The first way in which TIG put its case: Purporting to base himself on the Judge’s reasoning, Mr Montagu-Smith submitted that all that had accrued by 28 August 2019 was a bare, unquantified right to a penalty, so resulting in a nil entitlement.

50. As was common ground, this was a new point and Mr Bowden strenuously resisted its introduction. In our judgment, with respect to Mr Bowden’s submissions, this TIG submission ought to be considered and assessed on its merits, de bene esse.

51. Having done so and notwithstanding Mr Montagu-Smith’s elegant presentation, we are not at all persuaded by it. Nor do we think it follows from the Judge’s reasoning. We can see nothing in the 2019 Law which requires us to deny an otherwise well-founded penalty claim in respect of the period prior to that statute coming into force. Were it otherwise, Mr Hamid would indeed be entitled to advance cogent retrospectivity objections to any such construction in respect of the period prior to 28 August 2019.

52. Moreover, we are unable to accept that the judgment leads to any such conclusion. We think instead that the Judge had in mind an untrammelled right to a penalty, which accrued 14 days after termination, with quantification to be later assessed once the full period was ascertained. We consider below a construction of this nature – but, however the judgment is assessed, we do not think it serves to make good this way of putting the TIG case, still less a nil award.

53. (3) The statutory scheme: Art. 1(1) of the 2019 Law repeals and replaces the 2005 Law. However, and crucial to the present debate, Art. 1(3) stipulates that the repeal and replacement of the 2005 Law shall not affect any “right, remedy, debt or obligation accrued to or incurred” (Art. 1(3)(a)) or any “legal proceeding commenced, or to be commenced, in respect of any such right, remedy, debt or obligation” (Art. 1(3)(b)) under the 2005 Law and “any such legal proceeding must be instituted, continued or enforced, including any penalty…under this Law [i.e., the 2019 Law] without prejudice to any right, remedy, debt or obligation which has accrued or incurred prior to the commencement of this Law.” As helpfully described in Abdelsalam v Expresso Telecom Group [2021] CA 011, Art. 1(3) is an example of the well-known species of “savings” provisions found in common law jurisdictions.

54. Although, in a part of his argument, Mr Bowden suggested that Art. 1(3)(b) added significantly to Art. 1(3)(a), we do not read it that way. Both Arts. 1(3)(a) and 1(3)(b) make the same point: in shorthand, rights accrued prior to the commencement of the 2019 Law are not affected by its coming into force. Art. 1(3)(b) does no more than work through the concept in the context of legal proceedings, using “accrual” as the touchstone rather than the date of the commencement of the proceedings.

55. On any view, in our judgment, Mr Hamid is entitled to a quantified penalty, accumulating by way of daily increments from 22 May 2018 until 28 August 2019. Art. 19(4) of the 2019 Law was not in force over that period, so the fact that a dispute was pending in the court is neither here nor there.

56. Thereafter, on the face of it, the position changed, with the 2019 Law now in force. As a result, on the natural reading of the language, Art. 19(4)(a) applied, so that the penalty ceased to accumulate (in the terms of the statute, was “waived”) because of the dispute pending in the court. It is, though, necessary to consider whether there is any escape from this provisional conclusion by way of one or more of a number of routes as follow: (i) An untrammelled right to a penalty until payment; (ii) no relevant “dispute” within Art. 19(4)(a); (iii) the impact of Art. 1(5).

57. (i) An untrammelled right to a penalty until payment: If the correct analysis, having regard to both the 2005 Law and the 2019 Law is that what had accrued was an untrammelled right to a penalty until payment, then it could be said that the right was preserved by Art. 1(3) of the 2019 Law, so that the Art. 19(4)(a) waiver did not affect it. Alternatively, it could be argued that a construction which altered an established (accrued) right was indefensibly retrospective.

58. Although the argument does not lack attraction, we are unable to read the right to a penalty, conferred under Art. 18 of the 2005 Law and continued under Arts. 19(1) and (2) of the 2019 Law as constituting an untrammelled right to a penalty until payment.

59. We do not think that Art. 18 of the 2005 Law future-proofed the right to a penalty against the prospect of subsequent prospective legislative change, nor is there anything in Arts. 1 or 19 of the 2019 Law to suggest that such a way round the language of that statute might be permissible. Arts. 1 and 19 of the 2019 Law need to be read as a whole and, to the contrary and tellingly, Art. 1(4) points strongly against any such construction. It was common ground that Art. 19 was an “equivalent provision” to a provision in the “Previous Law” within the meaning of Art. 1(4) of the 2019 Law. The final sentence of Art. 1(4) contemplates, in terms, that an equivalent provision may reduce or extinguish rights under the 2005 Law:

The upshot is that the first sentence of Art. 1(4) which provides for the survival of a provision in the 2005 Law when there is no equivalent provision in the 2019 Law, does not apply. Accordingly, after 28 August 2019, the matter is governed by the provisions of the 2019 Law, including Art. 19(4), rather than by Art. 18 of the 2005 Law. In our judgment, the final sentence of Art. 19(4)(a) points decisively towards the conclusion that the right accrued under Art. 1(3) is narrower in concept than an untrammelled right until payment. This view is reinforced when we remind ourselves that the express language of Art. 1(3) plainly applies to existing contracts of employment at the time of the coming into force of the 2019 Law.

60. With respect, we are not deterred from this conclusion by the Judge’s concerns as to causes of action or limitation. The cause of action simply arises on a daily basis over a period of time. So far as concerns, limitation, the limitation period runs for each breach from the date payment was due. We do not therefore have difficulty in accepting, as Mr Montagu-Smith submitted, that a quantified penalty accrues each day of non-payment.

61. For completeness, Mr Montagu-Smith submitted that the notion of an untrammelled right accruing was simply too wide and would have the curious result of generating what might be termed an open-ended run-off period for the application of the 2005 Law. It is unnecessary to reach a final conclusion on this argument, but we should not be taken as accepting it. Given the relatively short limitation period provided by Art. 10 of the 2019 Law, the opportunity for reliance on untrammelled rights accruing pursuant to Art. 18 of the 2005 Law must, by now, have disappeared or will affect very few cases.

62. We have not, in all this, overlooked the submissions, strenuously pressed by Mr Bowden, based on the principle against retrospectivity. We were referred to a number of authorities but, on the view we take of this appeal, the topic of retrospectivity can be briefly dealt with.

63. (ii) No relevant dispute within Art. 19(4)(a): As will be recalled, the argument for Mr Hamid here was that TIG had made a fraudulent claim, so that there was no dispute pending before the court; the statutory waiver did not apply to a dispute which was not genuine. We have anxiously considered this submission. If well-founded, it has the attraction of enabling us to uphold the judgment on this Issue on a basis likely to be inapplicable to the vast majority of cases – so leaving untouched the more restrictive scheme of the 2019 Law in the generality of cases. It would also permit this Court to give practical expression to its displeasure at TIG’s conduct.

64. We are prepared to assume, in Mr Hamid’s favour, as a matter of statutory construction (without finally deciding) that a fraudulent claim would not give rise to a dispute within the meaning of Art. 19(4)(a) of the 2019 Law and so would not trigger the statutory waiver. What remains, however, is whether the Judge found as a matter of fact that the claim was fraudulent so that the dispute before him was not genuine.

65. In this regard, the Judge’s findings, highly critical of TIG and its senior management though they were, stopped short of a finding that there was no genuine, relevant dispute before him. Instead, it is clear that the proceedings below proceeded on the footing that there was a relevant dispute within Art. 19(4)(a). Even were it able to do so, it would not be appropriate for this Court to make good the absence of any such fact finding. Accordingly, we are driven to conclude that this submission must fail.

66. (iii) The impact of Art. 1(5): In the course of the Appeal hearing, the chequered history of Art. 1(5) received more attention than hitherto, and, in the event, we called for brief post-hearing submissions. We were grateful for this assistance from counsel, though, ultimately, Art. 1(5) does not cause us to revise the views so far expressed.

67. The terms of Art. 1(5) have already been set out. In a nutshell, as originally enacted, the 2019 Law contained Art. 1(5). However, by the Employment Law Amendment Law DIFC Law No. 4 of 2021 (“the Amendment Law”), Art. 1(5) was deleted. The Amendment Law came into force on 21 September 2021. The trial below took place between 30 August 2021 and 2 September 2021. The trial was followed by written closing submissions. As already recorded, the judgment was dated 6 April 2022. It follows that the Amendment Law, deleting Art. 1(5), came into force between the conclusion of the trial and the delivery of the judgment.

68. Two questions arise. First, what is the true interpretation of Art. 1(5)? Secondly, if Art. 1(5) represents a departure from Art. 1(3), what is the effect of repeal of the provision after trial, but before judgment? If Art. 1(5) is no more than clarificatory, then the second question becomes academic.

69. What is the true interpretation of Art. 1(5)? The opening words (“For the purposes of Article 1(3)…”) create an express linkage with Art. 1(3). The subject of the provision is a claim in respect of “any part of a penalty” due pursuant to Art. 19(2) which would “otherwise be excluded” by Art. 19(4). Such a claim may be brought “prior to the commencement of this Law”.

70. The meaning of Art. 1(5) is not altogether easy to follow, and no construction is free from difficulty. Thus, the express terms of Art. 1(5) deal with the time when the claim is brought – rather than the period in respect of which it is brought. That said, a claim brought prior to the commencement of the 2019 Law is, ex hypothesi, bound at least in part to relate to the period before the new statute came into force. But is a penalty accumulating during that period otherwise excluded by Art. 19(4)? If yes, then Art. 1(5), difficult though it is to follow, is no more than clarificatory of Art. 1(3) (on the construction we have favoured). If no, then the part of the penalty “saved” by Art. 1(5) can only be that part of the penalty accumulating after the coming into force of the 2019 Law. If, however, that is right, then this would be a sweeping statutory endorsement for the saving of “untrammelled” rights until payment – and the 2019 Law would impact only on claims brought after 28 August 2019.

71. None of this is satisfactory. On balance, we favour the narrower construction of Art. 1(5), as saving that part of the penalty accumulating prior to 28 August 2019. We are not persuaded that a provision linked as Art. 1(5) is to Art. 1(3), was intended to make a sweeping change so as to “save” what can only be contingent rights as at the date the 2019 Law came into force. Accordingly, Art. 1(5) is no more than clarificatory (however obtuse its language) and does not require revision of the views already set out as to the construction of the 2019 Law.

72. The effect of repeal: In the circumstances, the effect of the repeal of Art. 1(5) between the trial and judgment, is academic and we express no view on it. Suffice to say that we have some sympathy with Mr Montagu-Smith’s speculation as to the reason for the repeal of Art. 1(5): “A provision which was intended to clarify was instead difficult to follow and so was removed.”

73. (4) Pulling the threads together: For the reasons given, we think that the statutory scheme preserved Mr Hamid’s accrued right to a penalty up to 28 August 2019, when the 2019 Law came into force. Thereafter, we are driven to the conclusion that the Art. 19(4)(a) waiver precluded the further accrual of the penalty. It follows that, with respect, we part company with the Judge and reduce the penalty payment due to Mr Hamid from AED 7,550,400.00 to AED 2,444,640.

Issue II: Holiday Pay

(A) Introduction:

74. The Judge’s central reasoning (judgment, at [182]) has already been set out. Can it be sustained?

75. In terms of legislative context, Art. 27(2) of the 2005 Law provides that an employee is entitled to carry forward accrued but untaken vacation leave up to a maximum of 20 working days into the next calendar year “…for a maximum period of twelve (12) months after which the unused leave shall expire”.

76. It is also necessary to have regard to Mr Hamid’s Contract of Employment dated 27 March 2013 (the “contract”). Cl. 5.5 provided, inter alia, that Mr Hamid would forfeit any unused vacation leave not “…used within a year after the year it is accrued”. The contract further included a no oral variation provision at cl. 13.1.

(B) The rival cases:

77. Mr Montagu-Smith submitted that the Judge’s reasoning was unsustainable and that he erred in law in awarding Mr Hamid 96 days holiday pay rolled over from his employment at BIG. First, the Judge’s conclusion entailed that the parties had agreed to vary the contract; any such agreement would, however, have been ineffective because of cl. 13.1 of the contract. Secondly, any holiday entitlement rolled over from Mr Hamid’s employment with BIG would have expired by 27 March 2014 (one year after Mr Hamid’s employment by BIG ceased and he transferred to TIG), because of cl. 5.5 of the contract.

78. Mr Montagu-Smith advanced a third argument, namely, that the Judge ought to have made a deduction in respect of Mr Hamid taking 10 days’ holiday from 8-22 April 2018, shortly before his dismissal.

79. If right on all these points, the upshot was that TIG was not liable to make any payment to Mr Hamid under this heading. Instead and having regard to the AED 153,876.71 already paid by TIG to Mr Hamid in respect of holiday pay, Mr Hamid was liable to repay TIG AED 88,931.71.

80. Mr Bowden contended that the Judge’s conclusion was to be upheld. Contrary to the TIG submission there was no difference between TIG’s case and the Judge’s conclusion. TIG’s policy was to transfer employees’ accrued entitlement to vacation leave from their time at BIG to their employment at TIG, upon their transfer. That policy was evidenced by TIG’s treatment of another employee, Mr Pasha, as recorded at [182] of the judgment. If and insofar as a variation of the contract was relied upon, it was not simply oral. Thus, Mr Bowden referred to a Leave Request, signed by Mr Hamid and co-signed by the Chairman, dated 8 January 2014, evidencing that Mr Hamid had 96 days of leave owing to him; such leave could not have been accumulated in the course of less than one year when he had been in Dubai, in TIG’s employment. Furthermore, TIG’s vacation balances form, dated 6 March 2018 (referred to expressly at [182] of the judgment), showed that Mr Hamid had a balance of 164 days’ vacation leave from 1 November 1999 to December 2017. Mr Hamid was one of a number of employees with high vacation balances. This was evidence from TIG’s own records, and no evidence had been adduced by TIG to gainsay these documents. Accordingly, the Judge’s decision was one he was well entitled to make on the evidence before him.

81. There was or ought to be no question of deducting the 10 days of leave in April 2018 - which had been engineered by the Chairman and other members of TIG’s senior management to get Mr Hamid out of the way, as already outlined.

(C) Discussion and conclusions:

82. Our starting point is that this Court is an Appellate Court, hearing an Appeal from the Judge’s decision. For TIG to succeed, it needs to persuade us that the Judge fell into error. We do not suggest that the test is the familiar judicial review test (was the decision one to which the Judge could reasonably have come?); but, nonetheless and without going so far as to say that the matter turns on the burden of proof, TIG must persuade us that the Judge was wrong. We emphasise these considerations because the materials before us are not as clear as might have been desirable.

83. On the one hand, the very experienced Judge, who had the advantage of seeing and hearing the witnesses, was plainly of the view (at [182]) that TIG had agreed to the rolling over of 96 days of leave which had accrued to Mr Hamid while employed by BIG. On the other hand, Mr Montagu-Smith, maintains that neither the Judge nor Mr Bowden have grappled with either the no oral modification clause (cl. 13.1 of the contract) or the “use it or lose it" provision, contained in both the 2005 Employment Law at Art. 27(2) and cl. 5.5 of the contract. If Mr Montagu-Smith is right, then any agreement by TIG notwithstanding, there has been no effective modification of the clause. Furthermore, if Mr Montagu-Smith is right in law, considerations of the “merits” are neither here nor there.

84. Our minds have fluctuated on this Issue. Ultimately, however, we conclude that TIG has not made good its case that the Judge fell into error on this Issue. Our reasons follow.

85. First, we proceed on the working assumption in TIG’s favour that the UK Supreme Court decision in Rock Advertising v MWB [2018] UKSC 24; [2019] AC 119 is good law in the DIFC Courts. Despite forceful conceptual criticism (see, Tying your own hands: The Supreme Court’s decision in Rock Advertising, Thomas Raphael QC, [2022] 138 LQR 299), there is no doubt that Rock Advertising is now well-established in English law. Further and notwithstanding submissions in the TIG skeleton in Mr Hamid’s appeal (at para. 20) that the DIFC Contract Law is based on the UNIDROIT Principles of International Contracts not the English common law, no submissions were advanced to us that Rock Advertising should not be followed on that ground.

86. Secondly, giving effect to cl. 13.1 of the contract in accordance with the decision in Rock Advertising, it precludes amendments or modifications to the contract, save with the “written consent of both parties”. It says nothing about the form such written consent must take. It is here that the TIG case founders.

87. We put to one side the evidential support for Mr Hamid’s contention, based on TIG’s dealings with another employee, Mr Pasha; of itself that cannot surmount the cl. 13.1 hurdle.

88. The same objections do not, however, apply to the Leave Request signed by Mr Hamid and co-signed by the Chairman dated 8 January 2014. It is impossible not to read that document as containing the written consent of both parties to Mr Hamid then having 96 days of accrued leave. Furthermore, it would be fanciful to suggest that those 96 days could have been accrued in the less than a year in which Mr Hamid had then been employed by TIG. The inescapable conclusion is that both parties – at least then – consented, in writing, to the carrying over of 96 days of leave from Mr Hamid’s employment by BIG.

89. Matters do not end there. On 6 March 2018, TIG compiled a document recording vacation balances up to December 2017 (the “vacation balances document”). This document shows Mr Hamid having a vacation balance of 164 days from 1 November 1999 up until December 2017. Plainly that encompasses Mr Hamid’s time with BIG and entails or comprises TIG’s continuing agreement to carrying over the 96 days of leave to which he claimed he was entitled. Given the absence of any evidence of objections on the part of Mr Hamid to that document, we are satisfied that the vacation balances document sufficiently evidences his written consent to the transfer of the 96 days of leave said to be due to him. The duty to follow Rock Advertising loyally, does not require an artificial search for additional written consent.

90. Thirdly, the vacation balances document means that the “use it or lose it” provisions (Art. 27(2) of the 2005 Law and cl. 5.5 of the contract) do not bite; the document was dated 6 March 2018 and reflected the position as at December 2017. Mr Hamid does not need to contend for the modification of cl. 5.5 of the contract in order to prevail.

91. Fourthly, we do not see any unfairness to TIG in upholding the Judge’s decision on the basis we have outlined, and we were not persuaded by Mr Montagu-Smith’s attempt in argument to drive a wedge between Mr Hamid’s case and the Judge’s reasoning. Mr Hamid’s case, reiterated by Mr Bowden before us, was that it was TIG’s policy to transfer employees’ accrued vacation leave entitlement from BIG to TIG upon their (the employees’) transfer. The Judge, in terms (at [182]) accepted Mr Hamid’s evidence that this had been agreed. That, earlier in the same paragraph of the judgment, the Judge had discounted the evidence of Mr Beckley (a witness called by TIG) to the effect that TIG’s policy was to the opposite effect, was neither here nor there. Mr Beckley’s evidence of a contrary policy was undermined by the example of the treatment of Mr Pasha. The Judge then returned to the theme with which he had begun that paragraph in the judgment, namely, TIG’s agreement to the transfer of the 96 days of accrued leave.

92. Fifthly, in all this, we are not persuaded that the Judge did fall into error, or that either cl. 13.1 or Art. 27(2) and cl. 5.5 require us to allow TIG’s appeal on this point. Equally, although Mr Montagu-Smith alluded to it in his oral Reply, we are not persuaded that a different outcome is called for by reason of the figure of 30 days found in the Vacation Balances document in the column headed “Final Balance”. The significance of that figure, such as it may be, was not apparent or made clear to us.

93. Sixthly, we have no hesitation in rejecting the TIG submission that a deduction of 10 days must be made in respect of the holiday taken over the period 8 – 22 April 2018. On the facts as found by the Judge, Mr Hamid was only absent at the instigation of the Chairman and others in TIG’s senior management, for their own partisan purposes. The Judge was not required to make a finding of fraud for this conclusion to be upheld.

94. (D) Outcome on Issue II: For all these reasons, we decline to interfere with the Judge’s decision on Issue II. We uphold the Judge’s conclusion that Mr Hamid’s claim for vacation pay succeeds in the amount of AED 470,747.29.

Issue III: DIFC Law and the torts of (i) Malicious Prosecution and (ii) Abuse Of Process

(A) Introduction:

95. Mr Hamid’s appeal gave rise to Issue III and was dealt with by the Judge at [192] – [204] of the judgment.

96. As there set out (at [192] – [195]), Mr Hamid claimed that by lodging and pursuing its criminal complaint in the way it did with the Dubai Police, TIG was liable in damages in a tort equivalent to the English tort of malicious prosecution. Malice in this context exists where the predominant purpose of the accuser is something other than the vindication of the law. As now established in English law, the tort of malicious prosecution extends to civil proceedings: see, Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2013] UKPC 17; [2014] AC 366; Willers v Joyce [2016] UKSC 43; [2018] AC 779. Additionally, Mr Hamid claimed that in bringing its claims in CFI-024-2018 and CFI-029-2018, TIG was liable in damages in a tort equivalent to the English tort of abuse of process. This tort requires the use of the process for an improper, collateral purpose. The abuse of process claim was itself founded on the law as stated in Crawford Adjusters and Willers.

97. In order to determine which law governed these claims for the torts, the Judge (at [196] – [197]) had regard to Art. 8(2) of the Law on the Application of Civil and Commercial Laws (the “Waterfall Provisions”), para. (c). He then proceeded on the assumption that the governing law was DIFC Law.

98. In the event, the Judge accepted (at [198] – [204]) TIG’s submission that the DIFC Law of Obligations (the “Law of Obligations”) was a complete code for DIFC torts. As the torts were not provided for in the Law of Obligations, Mr Hamid had failed to establish that he had a cause of action in respect of them, so that his claim, in this regard, failed and was dismissed. From this conclusion Mr Hamid appeals.

(B) The rival cases:

99. In broad outline, Mr Bowden submitted that despite there being no express reference to the torts in the Law of Obligations, they were to be found in DIFC Law through one of three routes: first, as part of the inherent jurisdiction of a common law court, giving effect to the maxim, ubi jus ibi remedium; the Law of Obligations was not an exclusive code; secondly, by operation of Arts. 8(1) and 8(2) of the Law of Obligations; thirdly, by operation of the Waterfall Provisions.

100. In similarly brief outline, Mr Montagu-Smith maintained that each of these arguments was to be rejected. First, DIFC law was essentially statutory; while the statutes were capable of interpretation by reference to case law from other jurisdictions, there was no room for judge-made law to import, wholesale, legal doctrines not implemented into law by legislation. Secondly, Art. 8 of the Law of Obligations did not create any cause of action. Thirdly, the Waterfall Provisions contained conflicts of laws rules; they did not inform the content of DIFC law.

101. By the conclusion of the hearing before us it was clear that if Mr Hamid’s appeal succeeded with regard to the torts forming part of DIFC law, both liability and quantum would need to be remitted to the Judge who (perfectly understandably) had not gone on to consider whether those claims had been made out.

102. We deal with Mr Hamid’s appeal under the following broad headings:

• DIFC law and the common law;
• The Law of Obligations;
• The Waterfall Provisions.

103. This topic raises important questions as to the sources of DIFC law and the permissible routes for developing it. There is, with respect, something in Mr Bowden’s submission (that the torts are to be found in DIFC law as part of the inherent jurisdiction of a common law court) but, in our judgment, not nearly enough to persuade us of the conclusion for which he contends.

104. Thus, it can be and has been said by a former Chief Justice of this Court that the DIFC Courts comprise a “common law island in a civil law ocean”: Michael Hwang SC, in Commercial Courts and International Arbitration – Competitors or Partners? at para. 20, in Selected Essays on Dispute Resolution (2018). Moreover, it is plain that the DIFC comprises a free zone with its own legal system, an “enclave” within the Emirate of Dubai; the selection of a common law foundation for the DIFC legal system facilitated international investment and buy-in by placing the DIFC courts within the same legal family as the major financial hubs internationally: see, Damien P. Horigan, Consensual Jurisdiction of the DIFC Courts (Proceedings of 20th International Business, Research Conference, 2013), at pp. 2-3. Still further, as observed in Abdelsalam v Expresso Telecom Group (supra), at [74], the approach of the DIFC Courts has been described as “developing DIFC Law and shaping principles taken from various common law jurisdictions”. We underline that nothing said here should be taken as casting doubt on any of this.

105. It does not, however, follow that DIFC Courts’ Judges are free to incorporate into DIFC law any common law development from any common law jurisdiction, simply because there has been such a development elsewhere and because the outcome might prove attractive to the Judges sitting on the individual case. It is to be kept in mind that, from time to time, different approaches are adopted in different common law jurisdictions; internationally, the common law is by no means necessarily uniform. The DIFC Courts do not and could not sensibly import all foreign causes of action. Properly analysed, though the DIFC Courts are common law courts and DIFC law is to be interpreted and developed incrementally, in accordance with the methodology of the common law, the basis of the DIFC Courts’ jurisdiction is statutory: Justice Sir Jeremy Cooke, in Pearl Petroleum v The Kurdistan Regional Government of Iraq [2017] DIFC ARB 003, at [12] and [18]. We accept Mr Montagu-Smith’s submission that a statutory basis for the Courts’ jurisdiction is inevitable, given that the DIFC is a financial free zone with its own law, comprising a carve-out from or enclave within the UAE and Dubai legal systems. Reference must therefore be made to that statutory framework to ascertain the scope for proper judicial interpretation and development of DIFC law and to avoid straying into impermissible judicial legislation. Where DIFC (statutory) law identifies principles which come from other jurisdictions, it is legitimate to look to those jurisdictions to determine the content of the principles in question and their appropriate, incremental, development. Beyond that and in general, as observed in DIFC Courts Practice (2020), at p. 87, the DIFC Courts have shown “…real determination in properly resisting invitations to make judicial legislation”.

106. In our judgment, having regard to the statutory framework, incorporating the torts into DIFC law by way of judicial decision would amount to impermissible judicial legislation.

107. First, there is no room for doubt as to the statutory framework. Art. 3(2) of Federal Law 8 of 2004, disapplied the civil and commercial laws of the UAE in the designated free zones. Art. 7(3) of the same law then permitted the introduction of legislation to fill the gap thus created. See, further, IGPL v Standard Chartered Bank [2015] CA 004, at [83] – [99]. As set out in paras. 2 and 3 of the Interpretation Schedule to the DIFC Court Law 2004, DIFC law is “…made by the Ruler”, defined as the Ruler of the Emirate of Dubai. So far as relevant, paras. 2 and 3 of Schedule 1 to the Law of Damages and Remedies, DIFC Law No. 7 of 2004 (the “Law of Damages and Remedies”) are in identical terms.

108. Secondly, the relationship between the Law of Damages and Remedies and the Law of Obligations is telling. Thus, Art. 23 of the Law of Damages and Remedies confers a right to damages in the event of a “…breach of an obligation under the Law of Obligations”. Arts. 24 and 25 of the Law of Damages and Remedies, dealing with “Full Compensation” and “Measure of Damages” are similarly tied to losses caused by breaches of the Law of Obligations. Notably, though Art. 35 of the Law of Damages and Remedies, which provides a more general right to remedies, including orders for damages, is not limited to breaches of the Law of Obligations, it is nonetheless predicated on a breach of DIFC law – i.e., statutory law, as defined above. Art. 35 is in these terms:

109. Thirdly, we were told by Mr Montagu-Smith in oral argument and accept, that the Law of Obligations deals, inter alia, with negligence, occupiers’ liability, deceit, economic torts, nuisance, insurance, and bailment. Other statutes deal with the law of contract and employment law (as seen above). The Law of Obligations does not, however, contain any provisions dealing with defamation. Nor does it deal with malicious prosecution. In our judgment, it follows that the torts do not form part of DIFC law, so that Mr Hamid’s appeal must fail unless he can make good an alternative route by which they are incorporated into DIFC law (see further below). Though our decision does not rest on an explanation for the absence of any provisions dealing with malicious prosecution and abuse of process, it may be that, as with defamation, it was at the time thought that these were matters for the criminal courts. In that regard, it is to be recollected that the application of these torts to civil proceedings was only relatively recently established in English law itself.

110. Fourthly, Mr Bowden’s argument cannot be salvaged by recourse to the general maxim, ubi jus ibi remedium as inherent in a common law system. On the assumption that the absence of the torts from DIFC law discloses a “gap”, it has to be recognised that from time to time there are gaps in the remedies available in legal systems – as noted, until relatively recently there was just such a “gap” in English law. The question which then arises is the legitimate method of addressing the issue and, if thought desirable, closing the “gap”. For the reasons already given, if it is sought to incorporate the torts in DIFC law (and if the further matters discussed below do not achieve that), then any reform must be statutory. Such a reform would be a bridge too far for judicial “development” of the law and would cross the line into impermissible judicial legislation.

111. Fifthly, there can be no doubting that English law, very much including English common law, has featured importantly in furnishing the foundations for DIFC law. But it cannot be assumed, merely because there has been a common law development in English law, that any such development will be transplanted into DIFC law. The sources of DIFC law are not confined to English law, as readily demonstrated by the fact that DIFC arbitration law is based on the UNCITRAL Model Law and the DIFC Contract Law is derived from the UNIDROIT Principles of International Commercial Contracts.

112. Sixthly, overall, on the materials before us, we struggle to find room for the importation of a substantive tort (procedural and evidential matters might be different) into DIFC law, if not contained in the Law of Obligations. To such extent at least, the Law of Obligations comprises a code. (For completeness, in our judgment, the torts are indeed substantive torts, even though their subject-matter is focused on court proceedings; realistically, it could not be maintained that these torts are procedural only.)

(D) The Law of Obligations:

113. This topic can be taken briefly. Before the Judge, Art. 8 formed the basis of an argument on Mr Hamid’s behalf that the Law of Obligations contemplated actionable causes of action not provided for in that law. The Judge dismissed this argument (at [201] – [204] of the judgment). We agree with the Judge, essentially for the reasons he gave.

114. Art. 8 of the Law of Obligations provides as follows:

115. Reliance had been placed below on the words in Art. 8(1), “any other law”. As the Judge held, the flaw in that argument was that these words are not a reference to all torts recognised in legal systems internationally. Were it otherwise, that would mean incorporating “…a mass of conflicting mutually inconsistent principles, some of which are expressly excluded by Federal law” (at [203]). Art. 8(1) did not introduce anything into DIFC law; instead, it simply preserved any other rights already existing under DIFC law. Thus, Art. 8(1) was merely permissive, “…ensuring that the rights, obligations and liabilities created by the Law of Obligations are cumulative with any other rights, obligations and liabilities which exist” (ibid) under DIFC law. There were many situations in which parallel rights arose under DIFC law, for instance, rights of action under the Contract Law, Employment Law and Regulatory Law. Art. 8(1) did no more than provide that they are cumulative rather than mutually exclusive – hence the heading “Rights cumulative”. In our judgment, nothing more need be said, especially as Mr Bowden can get no linked assistance from his common law argument, for the reasons already given.

(E) The Waterfall Provisions:

116. (1) Introduction: The third route advocated by Mr Hamid for the incorporation of the torts in DIFC law was by way of the “Waterfall Provisions”. These are to be found in Art. 8(2) of the Law on the Application of Civil and Commercial Laws (the “LACCL”) and provide as follows:

117. In a nutshell, TIG contends that these are choice of law provisions, determining which system of law applies, whereas Mr Hamid maintains that they go to the content of whichever system of law is applicable.

118. It does not appear from the judgment that this route to incorporation of the torts in DIFC law was pressed by Mr Hamid below. At [196] – [197], the Judge did no more than utilise the Waterfall Provisions to determine the law governing the tortious claims. At [196], the Judge held that it was plain that DIFC law applied to the abuse of process claim, on the basis that the proceedings were conducted in the DIFC courts. As to malicious prosecution, UAE law included the offence of knowingly making false statements to the police but there was no civil cause of action akin to the tort of malicious prosecution in English law. At [197], the Judge held it to be reasonably arguable that DIFC law was the law most closely connected with the facts and persons featuring in the malicious prosecution claim, on the ground that TIG was incorporated in the DIFC, and the criminal complaint was closely connected to a contract of employment governed by DIFC law. The Judge therefore proceeded on the assumption that that the law applicable to both the abuse of process and malicious prosecution claims was DIFC law. The Judge made no further reference to the Waterfall Provisions.

119. Before us, Mr Bowden criticised the Judge’s approach. On the footing that if (i) DIFC law was the law “most closely connected” under Art. 8(2)(d), but (ii) the torts were not incorporated in DIFC law so that no remedy existed under that law, then (iii) the words “failing which” meant that the court was to apply English law under Art. 8(2)(e). In short, the focus of Mr Bowden’s submission was on the substantive content of the torts - and the application of the words “failing which” hinged on the content of the law in question. It was, he submitted, a “nonsense” to choose a law which does not exist.

120. (2) Discussion and conclusions: We are, with respect, unable to read the Waterfall Provisions in the manner urged by Mr Bowden. In our judgment, Art. 8 of the LACCL is concerned with choice of law rules going to determining the applicable system of law rather than the content of that system of law. The wording of Art. 8(1) is plainly expressed. The rights and liabilities are to be determined “according to the laws for the time being in force in the Jurisdiction chosen in accordance with paragraph (2)”. The content of the law in the jurisdiction chosen in accordance with Art. 8(2) is neither here nor there; it is whatever laws are for the time being in force in the jurisdiction chosen. The jurisdiction chosen in accordance with Art. 8(2) is unaffected, regardless of whether a particular remedy is available or not. The fact that there is a “gap” in the law in the jurisdiction chosen in accordance with Art. 8(2), does not trigger a default selection of the next jurisdiction in line. The words “failing which” do not refer to whether a particular tort or remedy is part of the law in question; they refer instead to whether the specified choice of law rule is established. Thus, defaulting to English law under Art. 8(2)(e) only arises if there is no close connection or other connecting factors requiring the selection of another jurisdiction under Art. 8(2)(a) – (d). So far as concerns Art. 8(2)(d), the close connection goes to the facts and parties – not to the substantive content of the jurisdiction under consideration.

121. The question then arises of whether the choice of law assumption of the application of DIFC law by way of Art. 8(2)(d) was soundly based. We can see no reason for displacing the Judge’s assumption and defaulting to English law under Art. 8(2)(e). We accept Mr Montagu-Smith’s submission that English law is not more closely associated with the facts and the parties simply because DIFC law does not include the torts.

122. For completeness, that the default position under the Waterfall Provisions – absent any other choice of law connecting factor – is English law rather than DIFC law, may or may not be curious. But it is nothing to the point and does not assist on the issue before us.

123. It is fair to say that the position in DIFC authority has not always been expressed as clearly as might be desirable. Some brief examples suffice.

124. In Dutch Equity Partners v Daman [2006] CFI 001 (24 July 2007), DCJ Hwang (as he then was), spoke (at [88]) of English (company) law under Art. 8(2)(e) supplementing Dubai statutory company law which did not provide an exhaustive code. That said, given the common law basis for DIFC Companies Law, as observed by DCJ Hwang himself (at [87]), reliance on English law would, with respect, have been justified as a matter of statutory interpretation without the need for reference to the Waterfall Provisions.

125. In Forsyth Partners Global Distributors Limited [2007] DIFC CFI 005 006 007, Justice Hwang very correctly approached the Waterfall Provisions as addressing choice of law but then, with respect, appears to have conflated the rules for choice of law with a consideration of the contents of the systems of law in question in coming to his conclusion (at [40] and following). Insofar as Justice Hwang did so, we respectfully cannot agree and decline to follow that approach. We express no view on the correctness of the decision in Forsyth, which is not relevant to the present discussion.

126. More recently, and with respect correctly, in Nest Investments v Deloitte & Touche [2016] CFI 027 (12 February 2018), at [29], Justice Roger Giles spoke of Art. 8(1) and the introductory words of Art. 8(2) of LACCL calling for “selection of the laws of a jurisdiction”. See too, to like effect, Justice Sir John Chadwick in Al Khorafi v Bank Sarasin-Alpen (ME) Ltd [2009] CFI 026 (21 August 2014), at [360] – [362].

127. Ultimately, in our judgment, the position was most accurately and succinctly expressed in Pearl Petroleum (supra), at [17], where reference was made by Justice Sir Jeremy Cooke to “waterfall” or “cascade” provisions, providing certainty through a “hierarchy for determining the applicable law”. Should there remain any lingering doubt as to the nature of the Waterfall Provisions we agree with and adopt the approach in Pearl Petroleum and hold that these are choice of law provisions which do not say anything as to the content of the law determined to be applicable. Taken overall, the state of authority does not dissuade us from our very clear view of the nature of the Waterfall Provisions, based on the plain language of Arts. 8(1) and (2) of LACCL and the good sense that attaches to treating the Waterfall Provisions in this way. Were it otherwise, the Court would be bound to conduct an open-ended search, defaulting from one system to the next until it found a system of law containing a provision aiding the individual litigant in question. That cannot be right.

128. For these reasons therefore, we dismiss Mr Bowden’s third proposed route to the incorporation of the torts in DIFC law, so that Mr Hamid’s appeal on Issue III must fail.