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A new route to compensation for victims of corporate corruption overseas

Leigh Day partner, Paul Dowling, explains how a recent High Court judgment has created an affordable way for victims of corporate corruption overseas to claim damages in the English courts for the harm they have suffered.

I represented Mr Amjad Rihan, a former partner of the accountancy firm EY (formerly Ernst & Young), in a claim for damages in the English High Court.

Mr Rihan claimed that he was forced out of EY after he refused to cooperate with a cover-up of suspected money laundering by a major Dubai gold refiner, Kaloti Jewellery International. Mr Rihan and his team had discovered serious irregularities during an audit of the company.

Mr Rihan came under pressure from Kaloti and the Dubai regulator to conceal the audit findings. However, after Mr Rihan raised his concerns with EY’s senior global executives, they took control of the audit and came up with a plan that would ensure the damaging audit findings never saw the light of day. Having failed to receive the support of EY, Mr Rihan was left isolated in the face of heavy pressure from the Dubai regulator, which is an arm of the Dubai government. Human rights abuses against critics of the Dubai government have been widely reported in the media and by international NGOs.

Mr Rihan fled Dubai to England in fear of his and his family’s safety. He resigned from his post at EY and reported the matter to the NGO Global Witness, and the media, who then published the audit findings. Mr Rihan also approached Protect, who provided him with advice and assistance.

Mr Rihan sued EY for failing to conduct the audit in an ethical manner, which caused him the loss of his career. The High Court ruled in Mr Rihan’s favour in April 2020, awarding him USD$10.8m in damages EY appealed the judgment but then abandoned their appeal in December 2020. You can find a detailed analysis of the facts of Mr Rihan’s case and legal implications of the High Court’s judgment here.

In a fate that is all too common for whistleblowers, Mr Rihan’s career was destroyed. He was unable to secure employment in the same industry, or indeed other industries in which his skills would ordinarily have been welcomed. He left behind his home and highly successful career in Dubai, uprooting his family to the UK where he was unable to build a successful business. International corporate corruption had ruined his life.

Mr Rihan’s claim was not an ordinary whistleblowing case as it was not brought in the employment tribunal and did not seek to apply the Public Interest Disclosures Act 1998 (PIDA), a piece of legislation introduced specifically to protect whistleblowers from suffering harm after speaking up about wrongful practices in the workplace. Mr Rihan’s case did not qualify for a claim under PIDA because he worked outside of the UK.

Instead, Mr Rihan sued EY for negligence in the High Court. The companies that Mr Rihan sued were not his employer, but represented EY’s headquarters in London. Mr Rihan claimed that it was EY’s UK headquarters that was responsible for the harm that he suffered, because it had taken control over the audit and ultimately decided how the matter should be dealt with.

How has Mr Rihan’s case improved protection for whistleblowers and victims of corporate corruption?

Not all whistleblowers and victims of corporate corruption are covered by PIDA, particularly those who do not ordinarily work within the UK such as Mr Rihan. Prior to the judgment in Mr Rihan’s case, there was no clear route to compensation in the UK courts for those who had fallen victim to corruption whilst working overseas. This is a significant omission, because it is in overseas environments where workers may be exposed to the greatest risks, for example if there is weak local regulation or high levels of corruption. This leaves overseas workers particularly vulnerable and arguably in need of greater protection from becoming embroiled in unethical or unlawful conduct through no fault of their own.

Mr Rihan’s case has filled an important gap in the system, by offering whistleblowers and victims of corruption whose claims fall outside the scope of PIDA an avenue to take legal action. Those working overseas for UK companies or their subsidiaries may now be able to claim significant compensation if their organisation seeks to involve them in unethical or unlawful conduct, and they suffer damage to their career as a result.

One of the benefits of a claim in the High Court is that it may avoid the restrictive three-month time limit that is applicable to claims under PIDA in the employment tribunal. The ordinary period for commencing a claim in the High Court under English law is six years. However, the judge in Mr Rihan’s case made it clear that a claim cannot be brought outside of the employment tribunal simply because it has not been possible to comply with the three-month time limit. There must be a reason why the case is not included within PIDA at all, for example because it involves an overseas worker, in order to benefit from the new duty of care established in Mr Rihan’s case.

A further benefit of a High Court claim is that it enables lawyers to represent workers under conditional fee agreements (or “no win no fee” agreements), which are not available in employment tribunal claims. Under such agreements, lawyers can represent workers on the basis that if the claim fails, then they do not charge for their work. If the claim is successful, the claimant’s lawyers can seek to recover their costs from the opponent plus an uplift (“success fee”) from the client. This is a way for workers to fund their legal cases if they cannot afford to pay privately for a lawyer.

Not all victims of corporate corruption will have cases that can be brought in the High Court in the way that Mr Rihan did. It is important to take legal advice as to whether your claim falls outside the scope of PIDA in such a way that would make this route possible. However, the Rihan case is an important development in the law for those wishing to obtain compensation for harm caused by corruption in their workplace, particularly those who work overseas and do not benefit from the protections granted by PIDA.

Finally, I would be remiss not to briefly mention the recent EU Directive on Whistleblowing, which was passed by the EU Parliament on 16 April 2019 and which EU countries are required to implement into their national legislation by 17 December 2021. The scope of the EU Directive is wider than PIDA in certain respects, for example the Directive places obligations on employers to maintain internal systems for protection of whistleblowers, whilst PIDA only offers a remedy to those who are victimised for raising concerns.

Whilst the Directive does not apply to the UK now that it is no longer a member of the EU, overseas workers in EU Member States may benefit from the additional protections offered by the new Whistleblowing Directive. Further, depending on the circumstances, the law applicable to an international corruption claim brought in the English High Court by an individual working in an EU Member State may be the law of that EU Member State. It is therefore possible that those wishing to bring a legal claim such as Mr Rihan’s may also benefit from some of the protections afforded by the new Directive.

Paul Dowling November 2021
Corporate accountability Corruption Human rights international Whistleblowing

Paul Dowling

Paul is a specialist international human rights lawyer

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