This judgment confirms that DIFC-registered entities cannot bypass the jurisdiction of the DIFC Courts in employment disputes by referencing UAE law in their contracts, provided the work is performed within the Centre.
What were the specific claims and the underlying factual dispute in Lijani v Luang Restaurant/Lansur House Hospitality?
The dispute originated from an employment relationship between the Claimant, Lijani, and the Defendant, Luang Restaurant/Lansur House Hospitality, a restaurant operating within the DIFC. The Claimant sought a total of AED 13,500, encompassing unpaid wages, a one-month notice period, and various allowances following her termination during the Covid-19 pandemic.
The core of the disagreement centered on the Defendant’s failure to provide notice or payment in lieu of notice, alongside unauthorized deductions from the Claimant’s salary. As noted in the court record:
The underlying dispute arises over the employment of the Claimant by the Defendant pursuant to an Employment Contract dated 3 March 2019 (the “Employment Contract”).
The Claimant further alleged that the Defendant’s own documentation acknowledged the applicability of DIFC standards, specifically regarding end-of-service benefits. The Defendant, however, contested the forum, seeking to rely on the "Law of Dubai" clause within the contract to argue that the matter should be heard outside the DIFC judicial system.
Which judge presided over the jurisdiction hearing in Lijani v Luang Restaurant/Lansur House Hospitality and when did it take place?
The jurisdiction hearing was presided over by SCT Judge Maha Al Mehairi. The hearing took place on 7 June 2020, following the Defendant’s formal challenge to the court's authority filed on 27 May 2020. The final judgment was subsequently issued on 10 June 2020.
What were the specific legal arguments advanced by the parties regarding the applicability of the DIFC Courts’ jurisdiction?
The Defendant argued that the DIFC Courts lacked jurisdiction because the Employment Contract explicitly referenced "UAE laws" and "Law of Dubai" regarding gratuity and termination procedures. The Defendant contended that the absence of an express clause naming the DIFC Courts as the chosen forum, combined with the choice-of-law provision, demonstrated a clear intent by the parties to exclude the DIFC legal framework.
Conversely, the Claimant argued that her status as a DIFC-visa holder and the fact that her employment was performed entirely within the DIFC necessitated the application of DIFC law. The Claimant bolstered this position by pointing to the Defendant’s own termination letter, which stated:
In addition, the Claimant’s termination letter provided by the Defendant states that “Gratuity will be paid as per DIFC Employment law if applicable.”
This created a contradiction in the Defendant's position, as they sought to rely on UAE law for jurisdictional purposes while simultaneously referencing DIFC Employment Law for the calculation of terminal benefits.
What was the precise jurisdictional question the Small Claims Tribunal had to answer in this dispute?
The primary legal question was whether a choice-of-law clause referencing "UAE law" or "Law of Dubai" in an employment contract can effectively oust the jurisdiction of the DIFC Courts when the employer is a DIFC-registered entity and the employment is performed within the DIFC. The court had to determine if the statutory gateways provided by the Judicial Authority Law (JAL) could be overridden by the private contractual preferences of the parties, particularly when the employer operates under a DIFC license.
How did Judge Maha Al Mehairi apply the doctrine of "automatic jurisdiction" to the facts of this case?
Judge Al Mehairi determined that the jurisdictional gateways established by the JAL are not subject to the whims of contractual drafting when the fundamental criteria for DIFC nexus are met. The judge emphasized that the Defendant’s status as a DIFC-registered entity, coupled with the performance of the contract within the DIFC, triggered the court's authority regardless of the "Law of Dubai" reference.
The reasoning focused on the objective reality of the employment relationship rather than the subjective intent expressed in the contract's choice-of-law clause. As stated in the judgment:
As the Defendant is a DIFC registered entity, and as the Employment Contract central to the Claim was performed in the DIFC, the DIFC Courts have automatic jurisdiction over this claim.
The court concluded that the statutory requirements of Article 5(A) of the JAL were satisfied, rendering the Defendant’s attempt to contest jurisdiction unsuccessful.
Which specific provisions of the Judicial Authority Law did the court rely upon to establish its authority?
The court relied primarily on Article 5(A) of the Judicial Authority Law (Dubai Law No. 12 of 2004, as amended). Specifically, the court looked at:
- Article 5(A)(a): Which grants jurisdiction over claims to which a "Licensed DIFC Establishment" is a party.
- Article 5(A)(b): Which grants jurisdiction over claims arising out of or relating to a contract performed within the DIFC.
The court interpreted these provisions as creating an "automatic" jurisdictional hook for entities registered within the Centre, effectively overriding the Defendant's reliance on the contract's choice-of-law language.
How did the court reconcile the conflict between the "Law of Dubai" clause and the statutory jurisdiction of the DIFC Courts?
The court adopted a pragmatic approach, distinguishing between the governing law of a contract and the jurisdictional competence of the DIFC Courts. Judge Al Mehairi held that the contractual reference to the "Law of Dubai" did not preclude the DIFC Courts from exercising their statutory mandate. The court’s reasoning was that the location of the Defendant and the place of performance of the employment contract were the decisive factors.
As noted in the judgment:
I find that while the Employment Contract states ‘Law of Dubai’, the DIFC Courts maintains its jurisdiction due to the location and registration of the Defendant.
This indicates that for DIFC-registered entities, the DIFC Courts view their jurisdiction as a matter of public policy and statutory mandate that cannot be easily contracted away by the parties.
What was the final disposition of the Defendant’s application and the specific orders made by the court?
The Small Claims Tribunal denied the Defendant’s application to contest jurisdiction. The court explicitly ordered that the DIFC Courts have the authority to hear and determine the claim. Regarding the costs of the jurisdictional challenge, the court ordered that each party shall bear their own costs, maintaining the standard approach for Small Claims Tribunal matters where no significant imbalance is identified.
What are the wider implications of this ruling for practitioners representing DIFC-registered employers?
This ruling serves as a warning to DIFC-registered entities that they cannot rely on "UAE law" or "Dubai law" clauses to avoid the jurisdiction of the DIFC Courts. Practitioners must advise clients that if they are registered within the DIFC and the employment is performed within the DIFC, they are subject to the DIFC Courts' jurisdiction as a matter of law.
Future litigants must anticipate that the DIFC Courts will prioritize the statutory gateways under the Judicial Authority Law over private contractual attempts to shift the forum. Employers should ensure their employment contracts are explicitly aligned with DIFC Employment Law to avoid the confusion and legal costs associated with jurisdictional challenges that are likely to fail.
Where can I read the full judgment in Lijani v Luang Restaurant/Lansur House Hospitality [2020] DIFC SCT 160?
The full judgment is available on the official DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/small-claims-tribunal/lijani-v-luang-restaurant-lansur-house-hospitality-2020-difc-sct-160
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law was cited in this specific judgment. |
Legislation referenced:
- Judicial Authority Law (Dubai Law No. 12 of 2004, as amended) – Article 5(A)
- DIFC Employment Law