The first team move case to be litigated to trial before the DIFC Courts

In a judgment handed down on 9 July 2025 (but only published on 1 August 2025), the Court of First Instance in the DIFC Courts has dismissed all of the claims brought against GSB Capital Ltd (“GSB”) by AES International. Ben Brown, Partner, and David True, Senior Associate, of Clyde & Co LLP, along with Stephen Doherty of Serle Court and Patrick Tomison of Outer Temple Chambers, represented GSB from the outset of proceedings.

The background

The background to the litigation was the move of four employees (referred to throughout the litigation as the “Former Employees” or “FEs”) from the employment of the First Claimant (“AES”) to the employment of GSB. Both AES and GSB operate in the wealth management sector. The FEs are financial advisers. AES’s core complaint was that the move of the FEs had led to significant financial losses to AES and its affiliated companies (who were joined as the Second and Third Claimants) due to the transfer of clients and assets under management away from AES and its affiliated companies. AES’s contention was that the clients moved not due to fair competition, but due to misappropriation of confidential information and breaches of non-solicitation covenants which were induced by GSB or were part of a conspiracy against AES.

AES is an onshore entity registered in the UAE. AES’s employment contracts with the FEs were made under UAE law. Following the resignation of the FEs from their employment with AES, the FEs and AES litigated in the Dubai Courts. Indeed, AES brought counterclaims against all of the FEs alleging that they had misappropriated confidential information and breached their post-termination restrictive covenants. AES’s counterclaims were all dismissed.

GSB is a DIFC entity. AES brought a claim against GSB in the DIFC Courts. The FEs were not joined as Defendants. AES obtained an interim injunction in the DIFC Courts against GSB preventing the use of certain confidential information which AES alleged had been acquired from the FEs. AES then brought claims against GSB for:

• Inducing or procuring breach of a legal right contrary to Article 32 of the DIFC Law of Obligations. The alleged underlying breaches were breaches of non-solicitation covenants, breaches of confidence, and breaches of directors’ duties.
• Unlawful conspiracy to commit the same alleged breaches above, contrary to Article 36 of the DIFC Law of Obligations.
• Misuse of confidential information, contrary to Article 37 of the DIFC Law of Obligations.

The litigation culminated in a 10-day trial in the DIFC Courts, involving evidence from 9 witnesses of fact and 2 expert witnesses on quantum at the end of February 2025.

The facts were highly contested. AES alleged that the FEs had stolen vast quantities of confidential information and were misusing that information to poach its clients, and that GSB had induced, or conspired with, the FEs to do that. In contrast, GSB’s position was that it – and the FEs - had done nothing wrong and that AES’s claim was vexatious and designed to prevent competition.

Insights from the judgment

The judgment is lengthy. It runs to 172 pages and 1,048 paragraphs. All of the claims against GSB were dismissed. The judgment contains a number of interesting insights and learning points for practitioners in the field of business competition in the DIFC. We have covered some (but not all) of the key points in this bulletin.

The enforceability of UAE non-solicitation covenants in the DIFC: Because the FEs’ employment contracts were governed by UAE federal law (as opposed to DIFC law), the post-termination restrictions within those contracts were governed by, and to be interpreted in accordance with, UAE federal law. AES were relying on alleged breaches of the non-solicitation clauses by the FE’s to establish a breach of a legal right by GSB for the purposes of Article 32 of the DIFC Law of Obligations.

The judge decided that the non-solicitation covenants were enforceable: §§446-455. He reached that conclusion based primarily on the common law principles concerning restraints of trade, based on the parties’ submission that the ‘presumption of similarity’ applied. Neither party called expert evidence on UAE federal law to suggest that a different position should be adopted under UAE federal law.

Whilst the Claimants’ claims ultimately failed (because there was no inducement or conspiracy, and only one upheld allegation of breach of non-solicitation covenants), the wider significance of the judgment is that non-solicitation covenants governed by UAE federal law can, in principle, be relied upon to establish an underlying breach of a legal right for the purposes of a claim under Article 32 of the DIFC Law of Obligations against a DIFC entity in the DIFC Courts. 

The confidentiality of phone numbers, WhatsApp contacts, and LinkedIn connections: A key plank of AES’s claim was that the FEs had retained the contact details of clients on their personal mobile phones and through LinkedIn connections, and that such retention amounted to a breach of the confidentiality clause in their employment contracts and/or their use amounted to a breach of confidence. The judge found that such contact details did not fall within the scope of the confidentiality clauses in their employment contracts: §§625-636.

Several factors led to that conclusion. First, the confidentiality clauses did not refer to such contact details specifically: §627. Second, LinkedIn connections are publicly visible and generally considered as part of an individual’s professional network: §628. Third, the evidence showed that AES had not impressed the confidentiality of such information on the FEs during their employment: §§629-634. Fourth, AES did not treat client contact details as confidential: §635.

The judgment does not establish that contact details – or even LinkedIn connections in the right circumstances – can never amount to confidential information belonging to an employer. As ever, the conclusion depends on the factual circumstances and a careful analysis of the way such information is treated. However, where employees are allowed (and even encouraged) to conduct business on their personal mobile phones, an employer will face an uphill battle to establish that any retained contact details amount to its confidential information in respect of which it is entitled to restrain use, rather than the employee’s professional connections which belong to them. 

The complexity of business protection litigation: One feature of this litigation was its scale. The Claimants were seeking to recover losses in respect of almost 250 policyholders in a claim valued at one point at £30 million (this was reduced to £8 million by trial). The basis of the Claimants’ quantum claim was that they were entitled to recover loss of revenue over the lifetime of all of the lost clients, subject only to a ‘sensitivity adjustment’ which was applied every year based on assumptions as to the likely level of attrition absent any alleged unlawful conduct. To borrow a phrase from the trial, the Claimants’ argument was that the Defendant should pay for the value of the dictionary, even if they had only looked up a few definitions.

This approach has obvious attractions for claimants, in seeking to increase the value of a claim without conducting forensic analysis of causation in respect of all clients alleged to have left as a consequence of unlawful conduct. However, as the judge held at §1043, “Courts require proof of losses caused by the defendant’s wrongful acts, not assumptions”. The Defendant had adduced evidence in relation to all 250 policyholders – both documentary and witness evidence – which was largely left unchallenged. Whilst the Claimants did not reach the stage of quantum, this case demonstrates the dangers of relying on assumptions rather than a detailed examination of the evidence.

Ben Brown, Partner, and David True, Senior Associate, of Clyde & Co LLP represented GSB throughout its successful defence of the claim. Stephen Doherty of Serle Court and Patrick Tomison of Outer Temple Chambers were instructed throughout the proceedings and represented GSB at trial.