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The Limits of Anti-Suit Injunctions and Arbitration Clauses
The recent High Court decision in Clyde & Co LLP v Jalan [2026]EWHC 403 (Comm) serves as a pivotal warning for international firms operating in the UAE.
The ruling clarifies the court’s reluctance to enforce London arbitration clauses when they conflict with mandatory local labour regulations, specifically where MOHRE (Ministry of Human Resources andEmiratisation) contracts are in place.
1. The Core Dispute: Arbitration vs. Mandatory Local Law
The Claimant, Clyde & Co, sought an Anti-Suit Injunction (ASI) in London to restrain Mr. Jalan from pursuing a claim in the Dubai Labour Court. The firm argued that their relationship was governed by a contractual agreement to arbitrate in London.
The "High Probability" Test
Under English law, an ASI will typically only be granted if the applicant can demonstrate a "high probability" that a valid and enforceable arbitration agreement exists.
In this instance, the Court refused the injunction, citing a lack of contractual clarity. The presence of multiple, inconsistent agreements, mostnotably the MOHRE contracts required by UAE law, created an ambiguity that prevented the court from asserting the primacy of the London arbitration clause.
2. The "Just and Convenient" Discretion
Crucially, the Judge held that even if a valid arbitration agreement had existed, he would have exercised his discretion to refuse the injunctionon the grounds that it was not "just and convenient."
Employee vs. Partner Status: The Court highlighted that Clyde & Co had deliberately structured the relationship as an employer-employee dynamic rather than a partnership
Regulatory Compliance: By choosing to hire Mr. Jalan as an employee in the UAE, the firm was bound by the mandatory protections of UAE Labour Law. The Court signalled that a firm cannot benefit from the administrative ease of an employment structure while simultaneously attempting to bypass the associated local legal obligations
Bargaining Power: The judgmentr einforces the court’s sensitivity to the unequal bargaining dynamics inherent in employment, particularly when an employer attempts to move a domestic labour dispute to a foreign, private arbitral forum
3. Transparency and the "Open Justice" Principle
In a subsequent ruling ([2026] EWHC 534 (Comm)), the firm’sapplication to keep the proceedings private was rejected.
The Court prioritised the principle of Open Justice, determining that the public interest in the intersection of international arbitration and mandatory labour laws outweighed the firm's desire for confidentiality. This highlights a significant "reputational risk" for firms: jurisdictional disputes intended for private arbitration may ultimately be ventilated in the public record of the High Court.
4. Strategic Implications
Contractual Inconsistency: Ensuring all supplemental agreements expressly account for MOHRE mandatory terms rather than using standard MOHRE forms alongside bespoke "Side Letters" or English-law contracts.
Arbitration Enforceability: Recognising that English courts may defer to local "mandatory" laws for employees rather than attempting to carve out labour disputes from local courts via London arbitration.
Publicity Risk: Assessing the reputational impact of apublic jurisdictional battle before filing for an ASI as High Court ASI applications are subject to open justice
Conclusion: A Lesson in Jurisdictional Humility
The Jalan decision reminds global organizations that" Business as usual" requires a deep respect for local regulatory frameworks. Where a firm adopts a local employment structure to facilitate operations, it must be prepared to litigate within that jurisdiction's specific labour courts.
