Claim No: CFI 044/2021
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 FIRST INSTANCE
BETWEEN
SHIRAZ MAHMOOD
Claimant
and
STANDARD CHARTERED BANK (DIFC BRANCH)
Defendant
JUDGMENT OF JUSTICE ROGER GILES
| Hearing : | 7 February 2022 |
|---|---|
| Counsel : | Ms. Bushra Ahmed for the Claimant Mr. Edward Kemp for the Defendant |
| Judgment : | 11 February 2022 |
UPONthe Defendant’s Application No. CFI-044-2021/1 for Immediate Judgment filed on 24 October 2021 (the“Application”)
AND UPONreviewing the submissions filed by the Defendant and the Claimant
AND UPONhearing counsel for the Claimant and the Defendant at the Application hearing on 7 February 2022
IT IS HEREBY ORDERED THAT:
1. Judgment is for the Defendant on the Contract claim and the Operating Law claim.
2. Claimant shall pay the Defendant’s costs assessed at USD 35,000.
3. Reserve liberty to apply for a different or additional order in relation to costs, which liberty if exercised is to be exercised within 14 days and may be exercised by letter to the Registry.
Issued by:
Nour Hineidi
Registrar
Date of issue: 11 February 2022
Time: 4pm
JUDGMENT
1. The Claimant was employed by the Defendant, from June 2017 under a written contract of employment (the“2017 Contract“). In January 2021, the Defendant terminated his employment on notice. Effective termination is not in issue, but in these proceedings the Claimant claims damages and other relief for breach by the Defendant of the discrimination and victimisation provisions of the Employment Law, DIFC Law No 2 of 2019 (the“Employment Law”); of whistleblowing provisions of the Operating Law, DIFC Law No 7 of 2018 (the“Operating Law”); and of a number of “implied and/or express and/or statutory obligations“ of the 2017 Contract.
2. The Defendant accepts that the Employment Law claim should go to trial, but applies for immediate judgment in its favour on the Operating Law claim and the contract claim. For the reasons which follow, immediate judgment on those claims should be ordered.
Background
3. The facts on which the Claimant relies are set out at length in the Particulars of Claim. This background is necessarily an incomplete summary, sufficient to understand the issues in the Application.
4. The Claimant was earlier employed by the Defendant as Senior Compliance Officer and then as Director of Compliance, and under the 2017 Contract as Global Head of Compliance, Islamic Banking. He reported to the Regional Head of Compliance, CIB & CB, Africa and Middle East. His responsibilities included, as the title indicates, oversight of compliance and risk management of the Defendant’s Islamic Banking business in a wide geographic area.
5. As Director of Compliance, the Claimant had reviewed a governance paper for Islamic Banking. He had advised the Regional Head of Compliance that there was a conflict of interest, and breach of the Defendant’s internal requirements and DIFC regulatory requirements, in the Head of Shariah reporting to the CEO of Islamic Banking (in the Particulars of Claim called the “Shariah Conflict of Interest”). As Global Head of Compliance, he prepared a Group Islamic Banking Compliance Framework (the“Framework”) which, amongst other things, highlighted the Shariah Conflict of Interest and recommended a review of the reporting line.
6. On the Claimant’s case, in this respect the Framework was not viewed favourably within the Defendant. He was shouted at in meetings, told he did not know what he was talking about, and pressured to remove references to the Shariah Conflict of Interest from the Framework or change the risk ratings so that the reporting line could be retained. He declined.
7. The Defendant had in place a “Speaking Up Policy” by which employees could inform of potential risks and suspected misconduct within it, with protection against consequent adverse treatment, and the Claimant submitted a Speak Up to the Group CEO and the Group Head, Brand & Marketing and Compliance on 30 March 2019 (the“First Speak Up”) and another Speak Up to the latter Group Head on 1 April 2019 (the“Second Speak Up”). The summary descriptions in the Particulars of Claim are that the First Speak Up “was in relation to the Group Compliance infrastructure and the challenges that the Claimant had faced in attempting to improve the Defendant’s culture”, and that the Second Speak Up “related to concerns regarding compliance and conduct issues within the Islamic Banking team”.
8. Again, on the Claimant’s case, that he had submitted the Speak Ups was leaked, and he was subjected to victimisation in many ways in particular from the Head of Shariah. He was further pressured to allow the Shariah reporting line to remain, and according to the Claimant, was attacked as to his nationality. It is alleged in the Particulars of Claim that he was subjected to detriment in many other ways, for example that he was relocated from his place in the Defendant’s offices and was “completely divorced and ostracised from the business he was supposed to be overseeing”. He was the subject of disciplinary proceedings, which he says were inappropriately conducted. He complained of victimisation, a review was conducted (the Claimant says, also inappropriately) and he was told none of his concerns were upheld. His position was made redundant, and his application for the replacement role was unsuccessful. His employment was then terminated. It is not necessary to give a complete catalogue of the Claimant’s complaints; on his case, his treatment gave an entitlement to relief on his claims.
Immediate Judgment
9. By RDC 24.1, immediate judgment may be given against a claimant on a claim if the Court considers that the claimant has no real prospect of succeeding on the claim and there is no other compelling reason why the case should be disposed of at a trial. The applicable principles are well known, and were not in dispute. The issues in the Application do not require that they be set out or examined in any detail, and reference may be made toGFH Capital Ltd v Haigh [2014] DIFC CFI 020 (10 November 2016) at [9], adopted on many subsequent occasions including with elegant restatement inThe Estate of Christos Papadopoulos v Standard Chartered Bank [2018] DIFC CFI 004 (27 February 2018) at [16]; but also, pertinent to this Application,Nest Investments Holding Lebanon SAL & Ors v Deloitte & Touche (ME) & Anor [2018] DIFC CFI 027 (12 February 2018) at [21] adopted fromEasy Air Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15] that:
“…. it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court has before it all the evidence necessary for the proper determination of the question and the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent’s case is bad in law, he will in truth have no prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better.“
The Contract Claim
10. It is convenient to go first to the contract claim; in the result, it was not maintained. This should be explained in the light of the Employment Law claim. That claim is a claim for breach of Articles 43(2) and 59(1) of the Employment Law, which provide respectively that an employer “shall provide and maintain a workplace that is free of discrimination and victimisation and without risks to an Employee’s health and safety“, and “must not discriminate against an Employee regarding employment or any term or condition of employment“ on stated grounds, relevantly the employee’s race, nationality or religion.
11. In the Particulars of Claim, the Claimant alleged:
“The implied and/or express and/or statutory terms of the 2017 Contract
16. At all material times, the 2017 Contract contained the following implied and/or express and/or statutory obligations – the Defendant was to:
16.1 Provide the Claimant with a safe place of work, free from harassment, bullying and discrimination of any kind;
16.2 Take appropriate and reasonable steps to maintain the health and wellbeing of the Claimant;
16.3 Take immediate and proper action to prevent any kind of harassment and/or bullying and/or discrimination of the Claimant;
16.4 Take all reasonable and proper steps, in a timely manner, to investigate and appropriately resolve any complaints of harassment and/or bullying and/or discrimination of the Claimant; and
16.5 Act upon any grievance or complaint, informal or formal, made by the Claimant, in a timely manner.
17. Further or alternatively, the Defendant owed the Claimant a duty of care to provide a safe place of work, free from harassment and bullying of any kind and/or to take appropriate and reasonable steps to maintain the health and wellbeing of the Claimant.”
12. From its place under the heading, and from the later allegations of breach similarly headed, it is evident that the duty of care in para 17 is alleged as a contractual duty of care, not a duty of care in tort. That is confirmed by the summary of the Claimant’s case in para 5 of the Particulars of Claim, which refers to breach of the provisions of the Employment Law, the Operating Law, and “the implied and/or express terms of the Defendant’s [sic] employment contract“, without mention of a claim in tort.
13. The Defendant submitted that it should have immediate judgment on the contract claim on the ground that the Employment Law provided a statutory scheme regulating the employment relationship, and it was not open to add to or vary it by the implication of terms not found as express terms of the employment contract; it referred toHana Al Herz v The Dubai International Financial Centre Authority [2013] DIFC CA 004 (26 November 2014) at [67]-[70] and [115] andJohnson v Unisys Ltd [2001] UKHL 13. It became unnecessary to consider the submission. The pleading was manifestly bad, lumping together the three categories of express term, implied term and statutory term and doing so without any particulars or other explanation of their respective sources. In the Application, Ms Ahmed counsel for the Claimant, accepted that there was no relevant express term in the 2017 Contract; she disclaimed any implied term, and for any statutory term sourced it solely in Articles 43(2) and 59(1) of the Employment Law. It was accepted that the Articles did not support the pleaded terms, and that the contract claim added nothing to the Employment Law claim and could be deleted.
14. It is not a case of deletion by striking out; the Claimant pleaded a claim which is not maintained because it is not maintainable as pleaded, and the Defendant is entitled to judgment on the claim.
The Operating Law Claim
15. The Operating Law introduced whistleblower protection into the conduct of business in the DIFC. The key provision is Article 64:
“64.Whistleblower Protection
(1) A person who makes a disclosure of information specified in Article 64(2) to the Registrar, the Registered Person’s auditor or a member of the audit team, a Director or other Officer of a Registered Person, is entitled to the protection set out in Article 64(3)(c ).
(2) For the purposes of Article 64(1), the disclosure of fact made by the person shall:
(a) include the identity of that person;
(b) relate to a reasonable suspicion that the Registered Person has or may have contravened a provision of this Law, the Regulations or any other Legislation administered by the Registrar;
(b) be made in good faith; and
(c) the Registrar shall not disclose the identity of such a person unless required to do so for a regulatory purpose or by a Court.
(3) Where a person makes a disclosure under Article 64(2):
(a) such person shall not be subject to any legal or contractual liability for making that disclosure;
(b) no contractual, civil or other remedy or right shall be enforced against such person by another person for making that disclosure, or any consequence resulting from such disclosure; and
(c ) such person shall not be dismissed from his current employment, or otherwise subject to any action by the employer or any related party of the employer which is reasonably likely to cause detriment to that person.
(4) Any person who takes any action which contravenes the requirements in Article 64(2)(c) is liable to a fine, as set out in Schedule 2.”
16. On the Claimant’s case, each of the Speak Ups was a disclosure of information within Article 64(1), and triggered protection from dismissal from employment and other detrimental action; and he alleged that his treatment was in breach of his entitlement to protection. In the Particulars of Claim, the Speak Ups were called “Disclosures”, and that they were disclosures of information within Article 64(1) was pleaded:
“148. The Disclosures made by the Claimant to the Defendant’s Group Chief Executive… and Group Head of Corporate Affairs, Brand and Marketing/Group Head of Conduct, Financial Crime and Compliance [sic]… included his identity and related to a suspicion that the Defendant has or may have contravened laws and regulations to which it was subject” .
17. This also was a manifestly bad pleading. The criterion in Article 64(2)(b) is not contravention of a law or regulation to which the Defendant was subject, but contravention of a provision of a law or regulation falling within the defined terms of the Law (being the Operating Law itself), the Regulations, and other Legislation administered by the Registrar. Nowhere was it pleaded or particularised what provision(s) of what law(s) or regulation(s), according to the reasonable suspicion, had been or may have been contravened – the provision(s) being a necessary element in satisfying the “disclosure of information specified in Article 64(2)”.
18. It was not in dispute that the Defendant was a Registered Person. The Defendant submitted that it should have immediate judgment on the Operating Law claim on the ground that the Speak Ups did not relate to a reasonable suspicion that it had or may have contravened a provision of a law or regulation falling within the defined terms – in short, because no reasonably suspected contravention by it of a provision of any such law or regulation could be discerned.
19. In the absence of pleading or particularising what provision(s) of what law(s) or regulation(s), the Claimant sought to identify them in submissions. This was not without difficulty. In his skeleton argument, he relied on contraventions of Articles 70, 71 and 72 of the Companies Law, DIFC Law No 5 of 2018 (the“Companies Law”), and of a host of provisions of the DFSA Handbook (the“Handbook”) and of the Market Law, DIFC Law No 1 of 2012 (the“Market Law”) and the DFSA Code of Market Conduct. As was later accepted by the Claimant, while the Companies Law is a law administered by the Registrar, the Articles stipulate duties owed by directors, not by the Defendant, and the Handbook and the Market Law are not laws or regulations administered by the Registrar. On the eve of the hearing of the Application the Claimant submitted a supplemental skeleton argument relying on new contraventions, of Articles 62 and 35 of the Operating Law, and Ms Ahmed confirmed at the hearing of the Application that they alone were relied on. It was agreed that para 148 of the Particulars of Claim, set out above, should be taken to be particularised by replacing the words “laws and regulations to which it was subject“ with the words “Article 62 of the Operating Law and/or Article 35 of the Operating Law“, as those contraventions were explained in the supplementary skeleton.
Article 62 Contravention
20. Article 62 of the Operating Law relevantly provides:
“ 62. Obligation of disclosure to the Registrar
(1) Subject to Article 62(2), a Registered Person… shall disclose to the Registrar any matter which reasonably tends to show one (1) of the following:
(a) a contravention, or likely contravention of a provision of this Law, the Regulations or any other Legislation administered by the Registrar;
(b) a failure, or likely failure, to comply with any obligation to which a person is subject under such Legislation; or
(c )….”.
21. The Claimant pointed to the generality of “a person” and “any obligation”, and submitted that these words extended to the obligations of the Defendant’s directors. He submitted that the Speak Ups included disclosures of fact relating to the directors’ failure to comply with their obligations under the Companies Law, with regard to the earlier skeleton instancing the duty under Article 70 to promote the success of the Defendant, the duty under Article 71 to exercise independent judgment, and the duty under Article 73 to avoid conflicts of interest. According to the submission, the Defendant was thereupon required under Article 62(1)(b) to disclose those failures to the Registrar; it did not do so, and that contravention of the Operating Law was a reasonably suspected contravention for the purposes of Article 64(2)(b).
22. However, this does not fulfil Article 64(2)(b).
23. Let it be assumed that the Speak Ups provided matter which showed that the Defendant’s directors failed to comply with their directorial obligations under the Companies Law; that the Defendant was thereupon required to disclose those failures to the Registrar; and that it did not do so. The contravention of Article 62 would lie in the neglect to advise the Registrar, an entirely different thing from the directors’ failures which, on the Claimant’s argument, were disclosed in the Speak Ups. Unless, additionally, the Speak Ups themselves also disclosed facts relating to the neglect to disclose the directors’ failures to the Registrar, their disclosure of fact would not relate to a reasonable suspicion that the Defendant had or may have contravened Article 62.
24. Neither Speak Up discloses facts relating to the neglect to disclose the directors’ failures to the Registrar, by way of reasonable suspicion or at all. They are lengthy documents, 14 pages plus 36 pages of appendices in the case of the First Speak Up and four pages plus 20 pages of appendices in the case of the Second Speak Up. I invited Ms Ahmed to draw attention to particular matters, but have considered them in their entirety. The particular matters were put forward by Ms Ahmed as indications of the directors’ failures in their duties; I am unable to see in either Speak Up a disclosure of fact relating to the different matter of a reasonable suspicion that the Defendant has or may have contravened Article 62.
25. For completeness, and to return to the assumption made above, not in my view did the Speak Ups provide matter showing that the Defendant’s directors failed to comply with their directorial obligations; or more accurately, matter showing a failure or likely failure. For an obligation to disclose to the Registrar under Article 62, the “matter” does not have to be found in one of the Speak Ups, but that was the Claimant’s argument, and I do not think it is to be found there. The disclosure obligation in Article 62(2)(b) is in strong terms, requiring actual failure or likely failure, no doubt because the Registrar is not to be burdened with possibilities or contentions emanating from differences of opinion over the person’s conduct. I illustrate some of the matters to which attention was drawn. One was the Claimant’s view that the Defendant was “mired in… a myriad of complexity, inefficiency and complacency”, to the detriment of shareholder value; another that “the governance and control culture within Islamic Banking was far from satisfactory”, for reasons then given. Perhaps more pertinently, the Claimant explained and argued for the Shariah Conflict of Interest, and expressed other concerns about compliance matters. At one point when dealing with a comment which he saw as a questioning of his integrity, he said that it would call in question the integrity of the Islamic Banking compliance function “and could expose the bank’s Islamic Banking business to regulatory scrutiny”, which the comment scarcely warranted. I do not think the matter provided by the Speak Ups rises above the Claimant’s firmly held contentions and to the level of likely failure by the Defendant’s directors in their duties.
Article 35 Contravention
26. Article 35 of the Operating Law is concerned with involvement in contraventions. By Article 35(1), if a person is “knowingly concerned“ in a contravention of the Law, the Regulations or any other legislation administered by the Registrar committed by another person, then “the first person as well as the other person commits a contravention and is liable to be proceeded against and dealt with accordingly”. Article 35(4) contains an exhaustive definition of when a person is knowingly concerned in a contravention, which it is unnecessary to set out.
27. Here also the Claimant submitted that the Speak Ups included disclosures of fact relating to the directors’ failure to comply with their obligations under the Companies Law. The submission then went that the Defendant was knowingly concerned in the directors’ contraventions of the Companies Law, and so that the Speak Ups equally included disclosures of fact relating to contravention of the Companies Law by the Defendant; and that contravention of the Companies Law, by the Defendant, was a reasonably suspected contravention for the purposes of Article 64(2)(b).
28. I was not addressed on whether the Defendant could, as a matter of law, be knowingly concerned in its directors’ contraventions, and in the absence of contest from the Defendant will assume that it could. The question here is not whether the Speak Ups provided matter showing failure or likely failure of the Defendant’s directors to comply with their directorial obligations, as in Article 62(2)(b), it is whether the disclosure of fact in the Speak Ups relates to a reasonable suspicion that the Defendant has or may have contravened a provision of the Companies Law by being knowingly concerned in contraventions of provisions of the Companies Law by the directors. There are the two elements, the directors’ contravention and the Defendant’s contravention by knowing involvement.
29. The Defendant accepted that it was not necessary that the reasonable suspicion be found in explicit terms in the disclosure of information/fact to which Article 64 refers, but submitted that commercial reality required sufficient clarity that the Registered Person could know when the Article’s protection had arisen, including clarity on the necessary contravention. The Claimant submitted that it was sufficient that facts were disclosed from which a contravention could be inferred. For example, it was said of the Claimant’s view above-mentioned that the Defendant was “mired in… a myriad of complexity, inefficiency and complacency“ that it was to be inferred from that “fact” that the Defendant was not complying with the law, generally and, as I understood the submission, in that its directors were contravening the Companies Law by failing in their duties; and the same as to the comment above-mentioned and exposure to regulatory scrutiny.
30. The Claimant’s approach cannot be accepted. The whistleblower protection is important, but the Registered Person, commonly an employer as was the Defendant, must be able to know with reasonable certainty when the protection of Article 64 is enlivened; and so must be able to discern with reasonable certainty whether, inter alia, the disclosure of information/fact relates to a reasonable suspicion that the Registered Person has or may have committed a contravention, including of what provision of what law or regulation. This is necessary so that the Registered Person can so conduct itself that it protects the person making the disclosure, in that person’s interests; and also so that the Registered Person can so conduct itself that it avoids liability to the person making the disclosure, in the Registered Person’s own interests. “Relate[s] to” requires a relationship, so that the reasonable suspicion must be found in the disclosure of information/fact, and the suspicion to be discerned must be a reasonable suspicion: a reasonable suspicion is not necessarily found in what a mind intent on finding contravention (or Counsel arguing for contravention) can subsequently suggest.
31. Again, in addition to the particular matters to which attention was drawn I have considered the Speak Ups in their entirety. For like reasons to my conclusion concerning matter showing failure or likely failure of the Defendant’s directors to comply with their directorial duties, I do not think that there can be discerned in the Speak Ups a reasonable suspicion that the Defendant’s directors contravened or may have contravened those duties; and there is no basis at all for discerning a reasonable suspicion that the Defendant was knowingly concerned in any such contravention.
32. In relation to the newly suggested Articles 62 and 35 contraventions, I consider that immediate judgment may properly be given in accordance with these conclusions. Whether the Speak Ups satisfy Article 64(2)(b) turns on their contents, and the Court will be in no better position at trial: it is a “grasp the nettle” occasion. While I have otherwise come to my conclusions, it may be observed that the fact that the Claimant initially did not plead or particularise what provision(s) of what law(s) or regulation(s), according to the reasonable suspicion, had been or may have been contravened; then propounded provisions of laws and regulations which were not maintainable and were abandoned; and on the eve of the hearing of the application propounded Articles 62 and 35 in the manner described above, is of itself an indication that the Speak Ups did not enliven Article 64.
Costs
33. The Defendant succeeds in the Application, and it is difficult to see any costs order other than that the Claimant pay the Defendant’s costs of the Application. The Defendant filed a Statement of Costs, albeit (as the Claimant protested) after the hearing of the Application, in the total amount of USD 45,896.34. It appears to me that the hours there detailed exceed the hours reasonably to be devoted to the Application, but the Defendant is also entitled to the costs of responding to the contract claim and the Operating Law claim prior to the Application. Hoping to avoid subjecting the parties to the further expense of a contest over assessment, my present view is a broad assessment that the costs including Counsel’s fees should be USD 35,000. I propose to make orders accordingly but, having not heard the parties on costs, will reserve liberty to apply in the event that either seeks a different or additional order, in which event the disposition and/or amount of costs can be determined with the benefit of submissions.