Judicial precedent has revealed to us time and time again how the compatibility of the facts relating to a dispute, with the documents supporting a party’s arguments, can impact a party’s position before the competent court during the course of legal proceedings. The significance of such compatibility is made clear in the reasoning of a recent Abu Dhabi court judgment (Abu Dhabi Court of Cassation 162-2021) in a case in which our litigation team successfully defended a healthcare facility client from all liability and costs in relation to a long-standing dispute by focussing on the correct application of the following two legal principles:

1. No compensation shall be awarded by a court to an injured party if they chose not to benefit from their health insurance;
2. No compensation shall be awarded by a court to an injured party for injuries that were not specifically claimed in the court proceedings.

The claimant filed case no. 254/2020 before the Abu Dhabi courts against our client, in its capacity as a healthcare facility, and others (collectively known as the ‘defendants’), to demand payment of:

• AED 5,002,450, representing medical expenses incurred by the claimant for the treatment of his son, who suffered an injury as a result of a medical error;
• AED 500,000, representing compensation for moral damages; and
• legal interest in the amount of 9% on the claimed amount, in addition to court fees and attorney expenses.

The claimant premised his legal grounds on a judgment issued in a previous case that established the liability of the defendants in relation to a medical error, and in which he was awarded compensation. However, the compensation did not include compensation for medical expenses or moral damages. As a result, the claimant filed case no. 254/2020 to claim compensation for medical expenses and moral damages.

The dispute was heard before the Court of First Instance, the Court of Appeal (appeal no. 254/2020), and eventually heard before the Court of Cassation (appeals no. 174, 187, 188/2021). Ultimately, as a result of our advocacy, our client was found not to be liable to the claimant, for reasons that are highlighted below.

• No compensation shall be awarded to an injured party if they choose not to benefit from the health insurance coverage available to them

This substantive defence argued by our litigation team before the Court of First Instance was based on the fact that the medical costs that were paid by the claimant from his own personal funds, in his capacity as the patient’s father, should not have been expended considering there was insurance coverage available to him from the medical centres approved by the insurer (the insurance company). The Court of First Instance upheld this reasoning and premised its judgment on the following key points:

• The insurer (the health insurance provider) was found to have refused to pay for the treatment as the service provided by the medical centre did not meet the standards of authorised medical providers at government hospitals.
• Health agencies accredited to the insured had not failed to provide medical care to the patient, especially since such care was available at the health agencies.
• While the claimant, in his capacity as guardian of the patient, had the right to opt for his son’s treatment at certain health centres, the centre must be accredited by the relevant health authority as the competent regulator that issues standards of treatment to companies and health centres.
• It was open to the claimant to seek alternative treatment for his son or to bear the cost of treatment in private medical centres in accordance with his financial means; however, this should not come at the expense of any other party.

The court dismissed the case and concluded that it did not recognise the invoices issued by the health centre that provided the medical care to the claimant’s son from 2015 to 2019.

• The Court of Appeal’s decision to compensate the claimant for damages that he did not claim

The claimant challenged the judgment of the Court of First Instance before the Court of Appeal, questioning the validity of the grounds on which the judgment was based. The claimant argued that the Court of First Instance had misapplied the law and violated his defence rights by failing to recognise the invoices provided as a basis for the claimant’s claim for compensation for expenses incurred in the treatment of his son.

The Court of Appeal heard the appeal and acknowledged that the claimant had incurred expenses for his son’s treatment at a time when he could have avoided such expense by resorting to the insurance coverage available for his son’s treatment. Despite this line of reasoning, the court awarded the claimant an amount of AED 600,000, representing the time, effort, and money expended as a result of the provision of care to his son and taking legal action against those who had caused harm to his son.

• The essence of the defence presented before the Court of Cassation: No compensation shall be awarded for damages not specifically claimed

The Court of Appeal issued a judgment awarding the claimant compensation for unspecified general damages which were not claimed by the claimant in the proceedings, despite the fact that the claimant had filed a case for compensation for quantifiable and specific expenses incurred while treating his ill son, in addition to compensation for moral damages.

Consequently, we filed an appeal against the judgment issued by the Court of Appeal before the Court of Cassation, in which we argued that the competent court is obliged to include in its judgment an explanation of the factors contributing to the damage when calculating the amount of compensation and the amount to be awarded by the competent court is considered a legal issue to be decided by the said court. The Court of Cassation decided to overturn the judgment of the Court of Appeal and upheld the judgment issued by the Court of First Instance.

The key lessons from this case are that the availability of health insurance coverage to a claimant as well as the availability of health care services at medical centres approved by the respective insurance company prevents a claimant from claiming expenses for treatment, specifically in the event they decide to receive medical care in medical centres not included within the insurance coverage. Moreover, a judgment awarding compensation to a claimant for unspecified damages that are not being claimed by that party will likely result in the judgment being overturned.

The Abu Dhabi Court of Cassation has held that if a developer performs his obligations under a sale and purchase agreement either before or during the course of court proceedings, but before a final decision has been issued, the court will not grant the purchaser’s request for an order terminating the agreement (Abu Dhabi Court of Cassation judgment 21 of 2020). This article will consider the principles set out in this judgment with regard to implicit termination clauses and the termination of real estate agreements.

A purchaser entered into a sale and purchase agreement (“SPA”) with a developer for the sale of a real-estate unit in a project located in Saadiyat Island, Abu Dhabi. The project was delayed by several months beyond the agreed completion date. However, the developer eventually completed the project and requested the purchaser to pay the outstanding instalments. The purchaser did not accept the delay and initiated proceedings before the Abu Dhabi Court of First Instance, to request (i) the termination of the SPA because of the delay and (ii) the refund the paid instalments (the purchaser had failed to pay a number of instalments due under the SPA), and (iii) payment of compensation for loss of profit.

We represented the developer before the Court of First Instance. The main question in this case was whether the Court should agree to terminate the SPA based on the purchaser’s request.

We argued that although the project was delayed, it was almost complete by the time the purchaser filed the case, and relied on Article 272 of the UAE Civil Code. Article 272 provides that the judge has the power to grant the debtor (i.e. the developer in this case) an extension of time to perform its contractual obligation, and to award the creditor (i.e. the purchaser) compensation instead of terminating the bilateral contract. Article 272 of the Civil Code states:

“1. if one of the parties in a bilateral contract, does not perform his contractual obligations, the other party may, after serving a formal notification to the debtor, demand, before the court, the performance of the contract or its rescission.

The judge may either decree immediate specific performance of the contract or grant the debtor specified additional time to perform the contract, the judge may also grant an order of termination and compensation in all cases if deemed justified.” (Our translation)

This indicates that if the contract does not contain an explicit termination clause, and a cause for termination arises, the court is not bound to grant a request for termination based on an implicit termination clause enacted for the benefit of the non-defaulting party in the event that the other party defaults on his reciprocal obligation. The court may order the obligor to perform the contract immediately or may defer performance to a specified date. And the court may deny the request for termination if it finds, in all the circumstances that:

The obligor is no longer in default of performance of its obligations in that it has pre-empted a decision granting termination by performing its obligation either before or during the course of the proceedings, but before a final decision has been rendered, provided that such late fulfilment is not detrimental to the obligee seeking termination; or
The damage caused to the non-defaulting party may be remedied without termination, such as with pecuniary damages.
We also asserted that the developer agreed to pay the purchaser an amount equivalent to the loss of rent for the delayed period notwithstanding the fact that when the developer had completed the project, the purchaser had still failed to pay some of the instalments on the dates agreed in the SPA.

The Court of First Instance decided, amongst other directions, to (i) terminate the SPA and (ii) order the developer to refund the paid instalments, plus AED 100,000 in damages.

We appealed the above judgment on the grounds that the developer had demanded payment of the remaining outstanding instalments, completed the project and requested the purchaser to take delivery of the unit. As a result, the developer was deemed to have performed its major contractual obligations. We requested the Appeal Court to apply Article 272 of the UAE Civil Code, and accordingly to award the purchaser compensation for the loss of rent for the delayed period, instead of terminating the SPA. The Court of Appeal rejected the appeal and upheld the judgment issued by the Court of First Instance.

We challenged the judgment of the Court of Appeal before the Abu Dhabi Court of Cassation, and presented the same legal arguments raised before the Court of Appeal and the Court of First Instance.

The Court of Cassation accepted our grounds for appeal, and issued its judgment in Abu Dhabi Court of Cassation judgment 21 of 2020. In its reasoning, the Court of Cassation confirmed that the developer had fully completed the project and that the unit was ready for handover prior to the date of issuing a final judgment in this dispute. Therefore, the Court of Appeal judgment had not complied with the applicable law provisions when it upheld the judgment issued by the Court of First Instance.

The residential unit in question was completed and was ready for occupancy. The developer had served a handover notice on the purchaser prior to the Court of Appeal’s ruling, yet the Court of Appeal granted the purchaser with the option of terminating the SPA, notwithstanding that it had fully performed the SPA by that stage, and without giving reasons for this oversight.

The Cassation Court highlighted that the Court of Appeal should have applied article 272 of the UAE Civil Code, and only have awarded the purchaser compensation for the loss of rent for the delayed period.

The judgment highlights that if performance remains possible and a developer is able to complete the project (and notifies the purchaser that the sold unit is ready for handover) prior to issuance of a final judgment by a court of law, then, the purchaser’s request to terminate the SPA may not be granted by the courts. Compensation may be awarded instead.

However, there may be exceptions to the foregoing in the event a clause in the relevant SPA allows for immediate termination of the agreement, without the need for a court order, if a project is delayed beyond the agreed date.

It has been suggested that the provisions of Law 8 of 2002 (the “Commercial Agency Law”) are more favourable to the local commercial agent rather than the principal. However, the sensible, pragmatic interpretation and application of such provisions by the Qatari courts has shown that the protection granted to the local agent is not unlimited and is subject to very specific conditions.

In this article we review a recent judgment of the Qatar Court of Cassation (Judgment No. 600/2021 confirming Appeal No. 1709/2019), in which the court considered the refusal by the commercial agent to cancel the commercial agency registration and the continued use of the principal’s trademark and trade name, despite the non-renewal of a fixed term contact.

In 1985, a foreign company appointed an exclusive local agent in Qatar based on a fixed term contract. The contract clearly stated that it was an indefinite contract automatically renewable for further terms unless a non-renewal notice was served by either party six months prior to the end of the term. The principal sent the agent a non-renewal notice a few years ago, confirming the non-renewal of the contract, and the end of its term.

The non-renewal notice was challenged by the agent before the court. As a result, the agent refused to cancel the agency on the basis that it was awaiting a court determination as to whether such non-renewal was lawful or not. The agent argued that renewing the contract automatically for subsequent terms over a period of 30 years had the effect of transforming the contract into an unlimited term contract which may not be terminated without the agreement of both parties or by a court order.

In this case, Al Tamimi & Company represented the principal who filed a claim requesting the cancellation of the unlawful agency and trade name registration, the prohibition of the agent’s unauthorised use of the principal’s trademark and trade name, and payment of compensation.

The Court of First Instance ruled in favour of the principal, confirming that a fixed term contract does not convert to an unlimited term contract merely based on the number of automatic renewals. Accordingly, the court concluded that the non-renewal was lawful and ordered the deregistration of the agent from the Commercial Agents Register, the cancellation of the principal’s trading name from the agent’s commercial registration, and a compensation to be paid by the agent to the principal amounting to QR 1,000,000.

The Court of Appeal upheld the decision issued by the Court of First Instance.

The Court of Cassation also dismissed the appeal filed by the agent in relation to the non-renewal and the compensation granted in favour of the principal, and confirmed the decision of the Court of First Instance (i.e., ordering the cancellation of the unlawful registration of the agent and awarding the principal compensation of QR 1,000,000 for the illegal use of the principal’s trade name and trademark post termination of the agreement).

As demonstrated in this case, the protection provided to local agents according to the Commercial Agency Law, is not absolute, which is a common misconception amongst foreign companies in the Qatar market. The court confirmed that an agency contract may be terminated at its agreed term notwithstanding the number of automatic renewals. Further, the court ruled that the refusal of the agent to deregister its name from the Commercial Agents Register after the termination of the Agreement, as well as the continued use of the principal’s trade name and trademark, would have significant financial consequences for the agent in question. This judgment provides helpful and important clarification, which should be borne in mind by principals and agents in Qatar alike and by those advising them.

In this article, we review and discuss an Abu Dhabi Court of Cassation judgment (1001-2021), which concerned an action to appoint an expert, to determine facts, which provides very helpful guidance on the scope and nature of such an action, including where a debtor commences such an action.

Under UAE civil procedure, it is open to a creditor, who wishes to establish the precise amount of the debt owed by a debtor, to file a case – called “an action to determine facts” – before the UAE courts requesting the appointment of an expert to investigate and opine on the amount of the debt in question. There is no requirement to file a substantive case in parallel to an action to determine facts.

Once the expert completes his investigation and submits his or her expert report, the creditor may amend the requests for relief in the statement of claim to include the actual debt amount as quantified by the expert. The creditor must pay the difference in court fees (i.e. the difference between a substantive case and an action to determine facts). Then the court will then issue a judgment on the merits of the case. It is important to note that there is a minimum court fee for an action to determine the facts as there is no amount being claimed at this stage, however, a creditor can claim the debt amount (as determined by the expert) by amending the statement of claim. The court fees will be determined in accordance with the claim amount.

In the present case, the claimant debtor had mortgaged two properties to a leading bank in the UAE in exchange for certain facilities. When the claimant defaulted on its mortgage repayments, the bank commenced foreclosure proceedings on the properties.

The claimant debtor filed an action with the Abu Dhabi Court of First Instance (“CFI”) to determine the facts to establish the actual debt amount. The expert opined that the debtor owed the amount of approximately AED 300 million to the bank. The debtor then amended the statement of claim, requesting the court to confirm the debt amount, and paid the additional court fees payable.

The CFI, the court of appeal and the court of cassation all accepted the findings of the expert and confirmed the debt amount.

Meanwhile, the Bank was successful in selling the properties for a total value of approximately AED 700 million in the foreclosure proceedings. The debtor then filed a new case before the CFI in which it claimed the difference between the amount recovered from the sale of two properties and the amount of the debt as established in the action to determine facts. The debtor argued that the debt amount had been established, confirmed by the judgment issued by the court and therefore the amount of the debt was res judicata.

The court of first instance and court of appeal both found in favour of the debtor and awarded it the balance of the sale proceeds, which amounted to approximately AED 400 million. However, the cassation court overturned the court of appeal judgment. It observed:

“It is settled that the court’s mandate, in an action to determine facts, ends once an expert is appointed and he files a report and the parties have had an opportunity to pass comment thereon. The court will leave the parties to litigate the merits of the claim in the course of any substantive proceedings the parties in interest may file. This is because the decision in the action to determine facts does not determine the controversy and does not touch the merits, as noted earlier. In other words, the judge seized of such action has no authority to address the substantive challenges the parties may raise against the expert report and must leave this to the trial court, which exercises review authority.”

The judgment of the Abu Dhabi Court of Cassation clarifies that:

• An action to determine facts is concluded once the court appointed expert submits his or her report and the parties to the dispute submit their comments thereon.
• The court of first instance to whom an action to determine facts has been issued cannot issue a judgment against any party, considering that it has not considered the substantive issues in dispute.
• The decision of the court in these types of cases does not have res judicata effect. The parties to the dispute have the right to dispute the expert report issued in the action to determine facts before the substantive court.
• Should the claimant amend its statement of claim following the submission of the expert report and pay the difference of court fees then the matter case will become a substantive case. The court will then be able to look into the merits of the case and issue a decision on the same.
• However, where a debtor initiates an action to determine facts, and after the submission of the expert report, it later amends its claim requesting the court to confirm the debt owed by him, the case will continue to be an action to determine facts and will have no res judicata

It is well established that the court’s mandate, in an action to determine facts, ends once an expert is appointed and he files a report and the parties have had an opportunity to pass comment thereon. The court will leave the parties to litigate the merits of the claim in the course of any substantive proceedings the parties in interest may file. This is because the decision in the action to determine facts does not determine the controversy and does not touch the merits, as noted earlier. In other words, the judge seized of such action has no authority to address the substantive challenges the parties may raise against the expert report and must leave this to the trial court, which exercises review authority.

This article reviews the judgment of the Abu Dhabi Global Market (“ADGM”) Court of First Instance on an application brought by the Claimant on 13 October 2022 (the “Application”) to set aside a Final Award dated 19 January 2022 and the “Decision and Addendum to the Final Award” dated 9 May 2022 (collectively, the “Award”), which were issued by an arbitral tribunal in an arbitration in an ICC Case.

The judgment is notable because the ADGM Court of First Instance accepted jurisdiction over an application to set aside an arbitral award rendered in ICC proceedings seated in onshore Abu Dhabi.

The main contractor (the “Defendant”) was engaged on a project involving the procurement and construction of an integrated gas development pipeline. The Defendant appointed a sub-contractor (the “Claimant”), which entered into a contract for the execution of civil works and the erection of a steel structure at phase 1 of the project (the “Contract”).

Clause 32.3.1 of the Contract provided that the parties would resolve their dispute through arbitration seated in Abu Dhabi in accordance with the Rules of the International Chamber of Commerce (“ICC Rules”). Clause 32.1 confirmed that the Contract was governed by the local laws of Abu Dhabi and the federal laws of the UAE.

A dispute arose between the parties concerning the performance of their respective obligations under the Contract. On 5 March 2019, the Claimant commenced an ICC arbitration pursuant to the arbitration agreement in Clause 32 of the Contract.
The arbitral tribunal (by majority) awarded the sum of USD 2,136,124.72 plus interest at the rate of 2% per annum. The arbitral tribunal subsequently amended the “Final Award” by way of a “Decision and Addendum to Final Award” pursuant to Article 36 of the ICC Rules.

The Claimant was dissatisfied with the Award since the arbitral tribunal had disallowed its claims beyond the awarded amount. On 20 June 2022, it brought proceedings before the Abu Dhabi Court of Appeal to set aside the Award pursuant to Articles 16 and 53 of Federal Law No. 6 of 2018 on Arbitration (the “Federal Arbitration Law”).

On 6 July 2022, the Abu Dhabi Court of Appeal dismissed the Claimant’s application. The court decided, on its own motion, that: (i) it had no jurisdiction to rule on the set aside application, and (ii) since the branch office of the ICC is located in the ADGM, the jurisdiction to set aside the Award rested with ADGM Courts, and thus the set aside application should be heard by the ADGM Courts.

The Claimant challenged the Court of Appeal judgment on appeal before the Court of Cassation. On 19 September 2022, the Court of Cassation rejected the appeal and rendered a final and conclusive judgment upholding the Abu Dhabi Court of Appeal judgment.

On 13 October 2022, the Claimant filed its application to set aside the Award before the ADGM Court of First Instance.

1. Whether the ADGM Courts had jurisdiction to grant the relief sought by the Claimant, and, if so, on what basis?

The Respondent argued that it was not suggested that ADGM is the proper seat of any ICC arbitration conducted in the Emirate of Abu Dhabi, but that in the “exceptional circumstances” of Claimant’s application, and in light of the written consent of both parties to submit to the jurisdiction, there exists a “narrow exception” for ADGM Courts to assume jurisdiction and to decide the present application on its merits.

The ADGM Court of First Instance noted that the circumstances of this case were unusual and expressed its initial hesitation to accept jurisdiction. However, the court stated that such hesitation has been met by the parties’ express The ADGM Court of First Instance noted that the circumstances of this case were unusual and expressed its initial hesitation to accept jurisdiction. However, the court stated that such hesitation has been met by the parties’ express agreement in writing that they wished to submit to the jurisdiction of the ADGM Courts, and that in so doing they wished to ‘opt in’ to the jurisdiction of the ADGM Courts pursuant to Abu Dhabi Law No. 4 of 2013 (as amended by Abu Dhabi Law No 12 of 2020) (the “Founding Law”), which permits parties to refer their disputes to ADGM Courts notwithstanding a lack of nexus to the ADGM.

The ADGM Court of First Instance confirmed that, given the parties’ written agreement as to jurisdiction, which satisfies one of the jurisdictional gateways contained in the Founding Law, there was no need for the court to consider whether, on the facts of this case, any of the other jurisdictional gateways had been satisfied.

Accordingly, the ADGM Court of First Instance accepted the case on the basis that the parties opted into the jurisdiction of the court, which of itself is sufficient to find jurisdiction.

2. Whether the provisions of Part 3 of the ADGM Arbitration Regulations be applied in determining the application, or should the Federal Arbitration Law be applied?

The ADGM Court of First Instance noted that, under Section 58 of the ADGM Arbitration Regulations 2015 (the “ADGM Arbitration Regulations”), recourse to the ADGM Courts against an arbitral award is predicated upon the arbitration in question having its seat in the ADGM, which was not the case in the present matter, it being undisputed that the seat of the subject arbitration was mainland Abu Dhabi. The court noted that neither party sought to argue that the establishment of an ICC Case Management Office within the ADGM affected the contractual choice of arbitral seat.

The ADGM Court of First Instance concluded that it therefore must apply Federal Law No. 6 of 2018 on Arbitration (the “Federal Arbitration Law”), which was the governing arbitration law to which the parties agreed in the Contract. The ADGM Court of First Instance confirmed that the ADGM Arbitration Regulations had no application.

3. Whether the application was time-barred?

The ADGM Court of First Instance referred to Article 54(2) of the Federal Arbitration Law, which provides that the action to set aside an arbitral award (termed an ‘action in nullity’) “shall not be heard after thirty (30) days have elapsed following the date of notification of the arbitral award to the applicant requesting the nullification”.

The ADGM Court of First Instance noted that the Claimant’s initiation of proceedings before the Abu Dhabi Court of Appeal was in compliance with the time requirement under Article 54(2), notwithstanding that the Abu Dhabi Court of Appeal and the Court of Cassation declined to hear the merits of the case considering their view that jurisdiction was vested in ADGM Courts.

Accordingly, the ADGM Court of First Instance held that there could be no reliance upon the three-month prescriptive period under Article 58(2)(c) of the ADGM Arbitration Regulations, and the Claimant’s contentions to the contrary must fail.

4. Whether any of the irregularities alleged on the part of the arbitral tribunal formed a basis for granting the relief sought by the Claimant?

The ADGM Court of First Instance considered that the Claimant’s ‘grounds’ for setting aside the Award amounted to no more than alleged factual and/or legal errors on the part of the arbitral tribunal in its assessment and evaluation of the merits of the arbitral dispute, and that, even if such criticisms were to be valid (on which the court took no view), this could not undermine the validity of the Award.

The Respondent submitted that the Claimant failed to demonstrate and prove how the alleged ‘errors’ of the arbitral tribunal offended the public policy of the UAE. The ADGM Court of First Instance agreed with this.

In deciding the application, the ADGM Court of First Instance considered the differing categories itemised in Article 53(1)(a)-(h) of the Federal Arbitration Law, none of which applied in the instant case. Accordingly, there was no case made to satisfy any of the statutory requirements and thus justify setting aside the Award.

In deciding the application, the ADGM Court of First Instance considered the differing categories itemised in Article 53(1)(a)-(h) of the Federal Arbitration Law, none of which applied in the instant case. Accordingly, there was no case made to satisfy any of the statutory requirements and thus justify setting aside the Award.

Furthermore, the ADGM Court of First Instance rejected the contention that there is a mechanism under the Federal Arbitration Law (or, for that matter, under the ADGM Arbitration Regulations) to ‘re-open’ any arbitration after the Award is rendered. The ADGM Court of First Instance thus confirmed that, in principle, either the Award must be set aside or not; there can be no question of any ‘halfway house’.

This is the first court judgement in which the ADGM Courts have assumed supervisory jurisdiction over an arbitration seated in onshore Abu Dhabi. This judgment avoided a jurisdictional lacuna in circumstances where the Abu Dhabi courts declined jurisdiction over the application. However, the ADGM Court of First Instance did so on the basis of the parties’ consent to its jurisdiction for the purpose of determining the application, so an open question remains as to whether the ADGM Courts will assume jurisdiction over an onshore Abu Dhabi seated ICC arbitration where the parties do not consent to the jurisdiction of the ADGM Courts. Finally, it is notable that, having accepted jurisdiction, the ADGM Court of First Instance applied the Federal Arbitration Law, rather than the ADGM Arbitration Regulations

The enforceability of simulated or sham contracts is a common issue which lawyers frequently encounter in Bahrain. A simulated contract has the appearance of a contract but a legal relationship is not created. Article 131, 132 of the Bahraini Civil Code addresses the issue of simulated contracts. This article discusses a recent Bahraini Court of Cassation judgment No. 28/2022/00445/9 and the courts’ approach with respect to simulated contracts.

A former employee (the Claimant) of a KSA branch of a global architectural and engineering company (the Defendant), filed a labour case against the Defendant’s Bahrain branch to claim an amount of approximately BHD 60,000 (Sixty Thousand Bahraini Dinars) which represented unpaid salary and end of service entitlements for his alleged employment with the Employer’s Bahrain branch.

In reality, there was no employment relationship between Employer’s Bahrain branch and the former employee. Hence, the former employee’s claims were based on the simulated contract which was submitted as evidence of an employment relationship with the Employer’s Bahrain branch.

It was argued by the Defendant that it did not have an employment relationship with the Claimant because the employment contract of record was simulated and of no legal effect as its sole and true purpose was to allow the Claimant to secure a residence visa in Bahrain. The Claimant did not undertake any work for the Defendant as would entitle him to the claimed It was argued by the Defendant that it did not have an employment relationship with the Claimant because the employment contract of record was simulated and of no legal effect as its sole and true purpose was to allow the Claimant to secure a residence visa in Bahrain. The Claimant did not undertake any work for the Defendant as would entitle him to the claimed It was argued by the Defendant that it did not have an employment relationship with the Claimant because the employment contract of record was simulated and of no legal effect as its sole and true purpose was to allow the Claimant to secure a residence visa in Bahrain. The Claimant did not undertake any work for the Defendant as would entitle him to the claimed amounts. The Claimant’s employment relationship was with the Defendant’s Dammam, KSA branch and spanned the period from 2016 to 2021, the date his services were terminated. The Claimant received his monthly salary and entitlements from the company’s KSA branch.

In support of its defence, the Defendant submitted copies of the true employment contract executed between the former employee and the Employer’s KSA branch and email correspondence between the former employee and the Employer’s KSA and Bahrain branches. Further, precedents from the Egyptian Court of Cassation in addition to the Bahrain Court of Cassation Court were submitted to prove that a simulated contract could be disproved by written evidence which proved the contrary.

The High Labour Court in Bahrain held that the employment contract by the former employee was a sham/simulated contract and therefore did not establish any rights nor obligations between the parties. Therefore, the High Labour Court rejected the former employee’s claims in full and ordered him to pay legal expenses.

The former employee appealed the decision. The Court of Cassation upheld the High Labour Court decision. The Court of Cassation noted that the trial court had full discretion to find the facts and to weigh the evidence in the case, including witness testimony, and deduce the existence, or otherwise, of an employment relationship in a sound exercise of discretion.

The Court of Appeal agreed with the findings of the trial court that the employment contract underlying the Claimant’s claim was concluded to allow him to secure a residence visa in Bahrain, his preferred country of residence, and that he exercised his employment for the account of the Defendant’s KSA branch from which he received all his entitlements according to the evidence from the Respondent’s witnesses. The Court preferred that evidence over the evidence given by the Claimant’s witness.

The Court of Cassation thus upheld High Labour Court decision and its reasoning and consequently decided to dismiss the action.

The judgment confirms that the courts in Bahrain may and will look at all the facts and evidence surrounding alleged simulated/sham contracts and will dismiss claims for relief sought thereunder.