Landmark ruling on DIFC Applicable Law: Al Tamimi & Company secures Total Dismissal of Multi-Million Dollar Employment and Fraud Claims

Al Tamimi & Company’s International Litigation Group has secured a complete dismissal of all claims against its client, Mr Sanjeev Gupta, in a significant judgment handed down by H.E. Justice Lord Angus Glennie on 26 February 2026. The judgment in Paramjit Kahlon v Liberty Steel Group Ltd & Others [2026] DIFC CFI 070 resolves, for the first time, a novel and important conflict between two DIFC Application Laws and offers valuable guidance on the DIFC Courts’ approach to contract formation, construction and implied terms.

Background

The Claimant, Mr Paramjit Kahlon, was the CEO of the CIS and Middle Eastern regions of ArcelorMittal before he took up a position in September 2019 with the second defendant, Liberty FE Trade DMCC (“Liberty DMCC“) as the company’s CEO. He claimed in excess of USD 31 million, allegedly due to him under a long-term incentive plan (“LTIP“) and an Annual Bonus scheme, which he said were terms of a contract of employment entered into with Liberty DMCC.  That contract, according to Mr Kahlon, was later novated to the first defendant, Liberty Steel Group Limited (“Liberty DIFC”) a DIFC registered company.

The Third Defendant, Mr Gupta, is Executive Chairman and part owner of the GFG Alliance, CEO of the Liberty Steel Group and sole shareholder and director of both of the Liberty Defendants. Al Tamimi & Company’s International Litigation Group acted for Mr Gupta, who faced employment claims and a separate claim in fraud brought against him personally.  In essence, Mr Kahlon alleged that Mr Gupta deceived him by directing the Liberty Defendants’ HR manager to issue a second offer letter (which he signed) altering the terms of his employment so as to deprive him of the LTIP, but without bringing the alteration to his attention.

The Court, following a 10-day trial, ordered that the Claimant’s claims against all Defendants fail and are dismissed in their entirety. In particular, the judge:

• rejected all of Mr Kahlon’s formulations of his LTIP entitlement;
• accepted the Liberty Defendants’ submission that Mr Kahlon was not entitled to a discretionary bonus for the final period of his employment due to “a very significant fall in the financial performance of the business units under his control.“; and
• rejected all allegations of deceit and fraud against Mr Gupta, finding that Mr Gupta did not have any dishonest intention in respect of dealing with the LTIP and annual bonus provisions.

A Novel Conflict Between the 2004 and 2005 DIFC Application Laws – Resolved

The judgment addresses, among other issues, an apparent conflict between two DIFC legislative instruments that had not previously been considered by the DIFC Courts.

The 2005 Application Law (DIFC Law No 10 of 2005) provides, by Articles 8 to 10, that the existence, validity, effect and interpretation of a contract shall be determined by the law which governs it; that an express choice of governing law shall be effective; and, crucially, that if the parties do not specify the governing law of a contract, “the contract shall be governed by the law of the DIFC“.

By contrast, the 2004 Application Law (DIFC Law No 3 of 2004) contains a “waterfall” under Article 8(2) under which, absent regulatory content or an agreed choice of law, the court applies “the laws of any Jurisdiction which appears to the Court or Arbitrator to be the one most closely related to the facts of and the persons concerned in the matter“, and then, failing that, the laws of England and Wales.

While application of the 2005 Application Law would point to the dispute being resolved according to DIFC law, application of the 2004 Application Law would point to it being resolved according to UAE law. Accordingly, there appeared to be a conflict between the provisions of the two Laws which had not previously been considered in the DIFC Courts, still less resolved. In reaching its conclusion, the Court considered two recent cases – The Industrial Group Ltd v Hamid [2022] DIFC CA 005 and Al Buhaira v Arab War Risks Insurance [2024] DIFC CFI 013, and Article 7 of DIFC Contract Law, which provides that “the Law relating to Application of DIFC Laws makes provision with respect to the choice by parties of governing law and jurisdictions in a contract” – a reference to the 2005 Application Law, with no reference to the 2004 Application Law.

The result is consistent with the approach taken in NS Investment Ltd v Ajay Sethi [2020] DIFC CFI 005, where the court held that DIFC law governed by virtue of Article 10 of the 2005 Application Law even where the defendant borrower was a JAFZA company and it was argued that Dubai law applied.

The practical takeaway is clear: where a contract has no express governing law clause and is litigated in the DIFC Courts, DIFC law will apply automatically by operation of Article 10 of the 2005 Application Law.

Contract Formation: “Metrics TBA” Does Not Prevent a Binding Contract

Mr Kahlon was recruited from a senior role at ArcelorMittal on the basis of a highly attractive remuneration package, including a LTIP worth up to USD 30 million and an Annual Bonus of up to USD 1 million. The key terms were set out in an offer letter signed and exchanged between the parties on 5 September 2019.

The Liberty Defendants argued that no binding contract had ever come into existence on the basis that the LTIP provision left the performance metrics by which Mr Kahlon would be assessed “to be agreed” at a later date. They contended that, because this fundamental term remained unresolved, no binding agreement had been reached.

However, the Court applying Article 27 of the DIFC Contract Law, confirmed that where the parties intend to conclude a contract, the fact that a term has been left to be agreed does not prevent a binding contract from coming into existence, provided there is a reasonable alternative means of rendering that term definite. Drawing on the UK Supreme Court decision in RTS Flexible Systems Ltd v Molkerei Alois Muller GmbH [2010] UKSC 14 – which the Court confirmed reflects the position under DIFC law – the Court found that an objective appraisal of the parties’ words and conduct demonstrated a clear intention to be bound. Both parties had proceeded for two years on the basis that a contract was in place, and Mr Kahlon had resigned from a senior role at ArcelorMittal on that basis.

The practical takeaway for contracting parties is an important one: leaving a term “to be agreed” in a signed contract does not automatically render the contract unenforceable. Where the parties’ words and conduct demonstrate a clear intention to be bound, DIFC courts will give effect to that intention – even where certain details remain outstanding.

Despite the Court’s finding above, all of Mr Kahlon’s damages claims ultimately failed. The defendants succeeded on the critical questions of whether the LTIP growth target was met (it was not), whether the Liberty Defendants could terminate without cause (they could), and whether Mr Gupta committed fraud (he did not).

No Implied Term Restricting Termination: DIFC Employment Law Prevails

An important aspect of the judgment concerns the limits of implied terms in DIFC employment contracts. The judge rejected Mr Kahlon’s argument that an implied term of mutual trust and confidence prevented the Liberty Defendants from terminating his employment before the three-year LTIP vesting period.

The Court noted that contractual obligations may be express or implied, and that under Article 57 of the DIFC Contract Law, implied obligations may arise from the nature and purpose of the contract, practices established between the parties and usages, good faith and fair dealing and reasonableness. However, the Court declined to imply such a term, reaffirming the established DIFC position that any restriction on the employer’s right to terminate would cut across the statutory termination regime under Articles 62 and 63 of the DIFC Employment Law.

The Fraud Claim: Dismissed

The claim in deceit against Mr Gupta personally, brought under Articles 282 and 285 of the UAE Civil Code – which is authoritatively considered practically identical to liability under the common law as set out in Derry v Peek – also failed because (inter alia):

• the omission of the LTIP from the second letter of offer was likely done for reasons of privacy and confidentiality, not because of any dishonest motive;
• it was far from clear that Mr Gupta played any significant role in this exercise or in the removal of these terms;
• Mr Gupta may have honestly believed at that time that there was more work to be done before any final agreement was reached with Mr Kahlon about bonuses and incentive provisions and he for that reason did not want mention of these provisions in the contract;
• it was unlikely Mr Gupta would adopt so clumsy a method of defrauding Mr Kahlon when the document was intended to be read and scrutinised by Mr Kahlon before signing it.

Conclusion

This judgment is essential reading for practitioners advising on DIFC employment and commercial contracts. It definitively resolves the long-standing uncertainty over the interaction between the 2004 and 2005 Application Laws, confirms that contracts with terms left to be agreed can be binding under DIFC law, and reaffirms the limits of implied terms in the DIFC employment context.

Al Tamimi & Company’s International Litigation Team, led by Rita Jaballah and Richard Bell, including Max Davis, Haleema Wahid, Kareem Bessisso and Laya Sumrein acted for Mr Gupta throughout the proceedings, successfully securing the complete dismissal of all claims at trial.