Clyde & Co: Extraordinary behaviour
The “disproportionately aggressive and unnecessary” behaviour of Clyde & Co in a dispute with one of its senior lawyers in Dubai “verges on bullying”, the High Court has ruled.
Mr Justice Michael Green rejected [1] the global law firm’s application for an anti-suit injunction (ASI) to stop corporate lawyer Abhimanyu Jalan – who is the equivalent of a senior equity partner – from bringing proceedings in the Dubai Labour Court over his bonus.
Clyde argued that the proceedings were in breach of an English arbitration agreement contained in his contract of employment, but the judge found that the Dubai court had jurisdiction.
“I think the tone and content of the correspondence from or on behalf of Clyde is unreasonably pressurising and verges on bullying,” he said.
“I understand that Clyde considers this to be an important point of principle and it does not want a precedent set for partners/members employed in foreign jurisdictions.
“But it has chosen to structure the relationship in this way and it can hardly complain if Mr Jalan was only seeking to litigate his claim in his place of employment in accordance with local law.
“To treat a long-standing employee, with a senior role in the organisation, in this way does not reflect well on Clyde.
“There is no reason to think that it would not get a fair and just outcome from the Dubai proceedings in relation to what seems to me to be a relatively modest claim by Mr Jalan.”
Mr Jalan’s monetary claim is only around £300,000, while he has incurred costs of nearly £350,000 on the ASI proceedings, which the judge said were “considerably less” than Clyde’s costs. “That is, in itself, a further form of undue pressure being applied to Mr Jalan.”
Green J concluded: “In short, I cannot be satisfied at this stage that Clyde has shown that there is a high probability of there being a still valid and binding arbitration agreement covering the matters in dispute in the Dubai proceedings.
“Accordingly, it cannot be said that Mr Jalan has acted in breach of the arbitration agreement by pursuing the Dubai proceedings and that he should be stopped from continuing to be in breach by an ASI.”
To comply with UAE law and Clyde’s licence to operate in Dubai, and to preserve Mr Jalan’s immigration status, the pair had to periodically file employment contracts in specific form with the UAE Ministry of Human Resources of Emiratisation (MOHRE).
These recognised that UAE labour law applied and rendered the arbitration agreement void.
Green J said he found it “difficult to understand how Clyde can casually seek to relegate the MOHRE contracts to meaningless pieces of paper”. They formed part of the contractual relationship.
In his evidence, Mr Jalan said that when the contractual documentation was signed in 2006, he was told that the arbitration mechanisms in his terms of engagement were not valid and unenforceable under UAE law.
“Clyde has attacked this evidence and invited me to disbelieve it. Extraordinarily, [counsel], presumably on instructions, in his reply submissions, accused Mr Jalan, still effectively a partner of Clyde and practising lawyer of many years standing, of lying in his witness statement in respect of which he had signed a statement of truth.
“I do not understand why Clyde felt the need to go so far with this serious allegation at this stage of the litigation when the evidence obviously cannot be tested.”
The judge noted that Clyde’s own employment team in Dubai appeared to advise clients that employment contracts must be governed by UAE law with exclusive jurisdiction for the local courts.
Despite this, last October Clyde threatened to dismiss Mr Jalan if he did not withdraw the Dubai proceedings.
In a second ruling [2], Green J rejected Clyde’s objection to the first decision being published.
There was “no good reason to derogate from the open justice principle”, he said. “Such publication does not undermine the privacy of arbitral proceedings; that remains preserved and protected.
“And it is important in the public interest that not only the judgment be available for public scrutiny and to be used as a possible precedent, but also that Mr Jalan, the principal party, be allowed to refer to and share the Judgment.”
He went on to refuse the law firm permission to appeal and ordered it to make an interim costs payment of 50% of Mr Jalan’s incurred costs, nearly £174,000.
But the judge rejected his application for costs on the indemnity basis. “I do consider that Clyde’s behaviour has been disproportionately aggressive and unnecessary,” he said.
“Nevertheless, while extraordinary, I do not think it has caused Mr Jalan to incur increased costs or that the court should express its disapproval by ordering indemnity costs in relation to the whole application.”