Judgment has been handed down by the Abu Dhabi Global Market Court in Alkhawaja v TPL Investment Management Ltd (1) TPL Reit Management Company Ltd (2). This was the highest value claim ever heard in the ADGM Employment Division. After a withdrawn application by the Claimant for summary judgment the trial extended over five days in three hearing windows.
The Claimant was the former CEO of an ADGM investment manager (D1) and a former director of its Pakistan Real Estate Investment Trust parent (D2). She brought a claim, which she quantified by the end of expert evidence at over $5m, for sums she claimed to be due under an Incentive Letter Agreement. On its face this entitled her to perpetual revenue share in respect of three multi-million dollar real investment projects in Karachi. She also brought a related wrongful termination claim under the ADGM Employment Regulations.
The Defendants contended that the ILA was void as having been entered into in breach of the requirements of both their Articles of Association. Alternatively it was in any event voidable as having been entered into in breach of fiduciary duty. They defended the termination claim on conduct grounds.
In its reserved judgment the ADGM court a) upheld both defences to the ILA claim b) found a wrongful termination, to be compensated according to the regulations in the agreed sum of $150,027.
The decision will be of interest to practitioners for:
- Confirming the continuing (and often forgotten) effect of established English caselaw on director remuneration agreements;
- Underlining the positive duties on directors entering into lucrative contracts with companies for their own benefit;
- Its discussion of breach of fiduciary duty, one of the first such analyses in the ADGM;
- Showing that reliance on the ‘unvarnished’ Laws v London Chronicle[1] test for wrongful dismissal is perilous under the ADGM employment regulations – Reg 56 focusing on whether there subsisted ‘circumstances where a reasonable Employer would consider immediate termination to be warranted.’
James Bickford Smith acted for the Defendants from the start of proceedings, and at trial – leading James Green for the first hearing window, Lily Church of Erskine Chambers for the delivery of written closings and in the second hearing window, and then appearing alone in the final hearing window. He was instructed by Al Tamimi.
A copy of the Judgment can be found here.
[1] Laws v London Chronicle (Indicator Newspapers) Ltd [1959] 1 WLR 698
