The use of AI in employment litigation

In this article we highlight the risks of relying on AI in litigation as highlighted by a recent ADGM employment case.

On 18 December 2025, the Abu Dhabi Global Market (ADGM) Court of First Instance delivered a landmark judgment in the case of Arabyads Holding Limited v Gulrez Alam Marghood Alam LLC (access the judgment here).

The case has attracted significant attention due to the fact the Court found that the Defendant’s legal representative was liable to pay wasted costs because of their inappropriate use of AI in the preparation of Court documents.

This judgment comes on the back of the recent judgement in the Qatar Financial Centre (QFC) Civil and Commercial Court in the case of Jonathan David Sheppard v Jillion LLC judgment which also addressed the use of AI and the citation of ‘fake cases’. You can view of our article on that case here.

ADGM Court Rules of Conduct 2016 

The ADM Court Rules of Conduct (the Conduct Rules) identify the standards expected of lawyers when conducting proceedings in the ADGM, including the fundamental duty to “deliver legal service competently, diligently and as promptly as reasonably possible”. 

Furthermore, lawyers must not “recklessly mislead the Courts by making incorrect or misleading statements of fact or law to the Courts”.

The Court can sanction a lawyer for conduct that meets the applicable threshold, including the award of costs against a legal representative.

Background

The Claimant initiated proceedings against its former employee, the Defendant, alleging breach of an Employee Share Option Plan (ESOP) and related agreements. 

The Defendant instructed a UAE based law firm (the Firm) to act as his legal representative. The Firm prepared their client’s defence and a number of related applications. The defence filed by the Firm ran to 233 pages including exhibits and numerous case citations. 

In response, the Claimant filed an application requiring the Defendant to replead his defence which was directed to its length. The Claimant also alleged that the defence contained fictitious cases and misapplied authorities which suggested improper reliance on AI tools without adequate verification contrary to professional standards and the Firm’s duties to the Court and the parties. 

The Claimant’s application triggered six interrelated costs applications, including a claim for wasted costs against the Firm.

The Court’s Findings

Whilst the ADGM Court found that the Firm was not guilty of conduct that was intended to mislead the Court, it found that the way the Firm chose to research for and prepare the defence was a deliberate choice.

As a result, the Firm filed a defence which referred to authorities which did not exist, or which did not stand for the proposition cited. That conduct, in particular the Firm’s failure to verify legal research undertaken through AI was found to be feckless and amounted to a breach of the Conduct Rules.

In short, the Court concluded that the Firm’s conduct was unreasonable and as a result the Firm was ordered to pay costs on an indemnity basis in the sum of AED 282,508 to the Claimant. 

The use of AI in litigation

The judgment further highlights the dangers of using AI in the preparation of Court documents and litigation generally. The Court pointed out that it is important to recognise that the fault for reliance on AI “hallucinations” as factually accurate lies not with the research programme but with the person responsible for conducting the search. 

In the view of the Court, lawyers using AI tools for research purposes should start from the premise that all authorities and/or articles on a particular topic revealed by AI research may not necessary be accurately summarised in the response or may not exist. The onus is on the legal practitioner using AI for research to verify the existence of authorities on which they wish to rely and to confirm they stand for the propositions for which they are being offered. Without undertaking that verification task, the Court was of the view that a lawyer runs a serious risk that the Court may be misled.

Practical implications for legal practitioners

• The key lesson from this case is the absolute necessity for lawyers to verify the existence and content of any case law or authority cited in court. 
• Reliance on secondary sources, incomplete databases, or AI-generated content without proper verification is not acceptable and may result in findings of contempt or professional misconduct. 
• The submission of fake cases can have serious consequences, not only for the lawyers involved but also for their clients. Courts may disregard arguments based on non-existent authorities, potentially weakening a client’s position. 

Final thoughts

The judgment in Arabyads Holding Limited v Gulrez Alam Marghood Alam serves as a further timely warning to the legal profession and clients alike regarding the use of AI. Legal practitioners must ensure that all authorities cited are genuine and properly verified.

For further information contact Ben Brown or Lee Rogers. 

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