Dubai Court Dismisses Company’s Dh5 Million Non-compete Claim Against Employer, Rules Clause Unenforceable

Dubai court has dismissed a Dh5 million counterclaim against a senior executive, ruling that a non-compete clause relied upon by the employer was invalid and unenforceable, and ordering the company to pay the employee’s full contractual entitlements.

The Dubai Labour Court rejected claims that the former Chief Strategy Officer and Executive Investment Director had breached post-employment restrictions or misused confidential information, finding no supporting evidence of financial loss or wrongdoing.

The employer had sought Dh5 million in damages, alleging violation of a non-compete obligation after the executive was terminated without notice. The court, however, found the termination to be unjustified and held that the subsequent counterclaim was unsupported by credible evidence.

UAE-based legal consultancy Kaden Boriss, which represented the employee, said the non-compete clause was “overly broad in scope, geographically excessive, and legally unenforceable,” and argued that the claim was speculative in nature.

In its judgment, the court dismissed the Dh5 million claim in full and ruled that the restrictive covenant could not be enforced. It also declined to award any damages to the employer, citing a lack of proof of loss.

Instead, the court ordered the company to pay the employee’s contractual dues, including notice pay, accrued leave, end-of-service gratuity, and outstanding expenses, along with legal interest.

The ruling reinforces established UAE labour law principles that non-compete clauses must be reasonable in scope and supported by legitimate business interests to be enforceable. It also underscores the requirement for employers to provide clear and substantiated evidence when seeking substantial financial compensation.

Legal observers say the decision highlights the judiciary’s continued scrutiny of restrictive covenants in employment contracts, particularly in senior-level disputes involving allegations of confidential information misuse.

The case is being viewed as a reminder that termination decisions and subsequent claims must be grounded in documented evidence, and that broad non-compete restrictions cannot be used to justify large, unverified financial claims against former employees.

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