You Left a DIFC Private Equity Firm: Will Your Carried Interest Pay Out, and Who Covers Claims From the Portfolio Company You Ran?

Your carried interest pays out only when the plan's trigger has happened, usually a distribution received by the house and credited to the plan account, and your leaver category fixes how many points you keep until then. An indemnity for claims third parties bring against you because you ran a portfolio company for the employer is a separate question. In CFI 098/2023, judgment of 6 August 2025, on a private equity leaver's claims, the carry claim and a claim for wages after the termination date failed, but the Court held that an indemnity implied into the employment contract survives the end of the employment, treated that finding as res judicata for future third-party liabilities from the portfolio company's bankruptcy, and gave judgment for AED 4,000, the one legal bill the employer had refused to pay.

This guide is for a senior employee who has left a DIFC private equity employer with unpaid carry points and is still pursued over a portfolio company managed for the house. It gives no advice on the tax demands or travel restrictions themselves, which appear only as the kind of third-party claim an indemnity can cover, and it cannot say which law governs your plan: that is a clause in your own document.

Fill in both columns from your own papers.

What did the DIFC Court decide in CFI 098/2023, and what did the employee recover?

Judgment for AED 4,000, every other claim dismissed, and an immediate assessment of costs. By the trial in June 2025 the case had narrowed to three claims: an agreed sum under the carry plan, wages under an implied contract from 12 August 2022 to 21 September 2023, and an implied indemnity against losses from the bona fide performance of his duties.

The employee held a DIFC employment contract dated 5 February 2014 as a vice president in private equity, joined a carried interest plan in 2015 or 2016 (the record gives both dates), and after a 2020 merger was told by the rebranded DIFC entity that his terms were unchanged and that it assumed all liabilities for his whole period of employment. He ran a portfolio company, a fast-food chain, which the pandemic left unable to pay its rents and creditors, and he was advised to leave the UAE and worked remotely. Asked to resign in March 2022, he said he would once the legal issues, including travel bans, were resolved. He was given notice on 12 May 2022 with 11 August 2022 as his last day, and on 6 July 2022 the Dubai Court of First Instance declared the portfolio company bankrupt.

He sued in the Small Claims Tribunal on 21 August 2023, valued the claim at AED 2,785,581, and the case moved to the Court of First Instance. A pre-trial order of 8 July 2024 declared the 2014 contract validly terminated on 11 August 2022 under its three-month notice clause and struck out the pleaded express contract after that date, the claim over the uncancelled visa and an express indemnity for the period after termination.

When does carried interest become payable to someone who has left?

When the plan says it does, and under this plan that meant after the house itself had received a distribution. Participants were entitled to plan payments "based on the Distributions received by Newland in respect of carried interest or special profits from the Funds". Each received an initial allocation of points "in respect of one or more of the Funds" out of 1,000 per fund, and reserve points still unallocated at a fund's liquidation went to that fund's participants pro rata. Once the house received a distribution and was satisfied that no clawback risk remained, it credited the amount to a plan account for that fund, and the credit was paid pro rata to the points each participant held at the time of the credit.

Three consequences followed. Points are a share of a pool that may never fill: the employee accepted in cross-examination that nothing was owed under any fund when he issued the claim, and that the third fund could not have generated carry even before he left. Timing is contractual: his earliest entitlement, on his own evidence, was a date in 2026, so no agreed sum was due when he sued or at trial. And the trigger sits in documents the leaver does not control: the fund's audited statements for 2024 recorded that no carried interest had ever been paid to the manager, that a provision on two earlier exits had been fully reversed in 2023, and that the last portfolio company was sold in February 2025 with USD 10 million of the price secured by a bank guarantee maturing after 31 December 2025.

Key takeaway. Under a points plan of this kind the house receives first, credits second and pays third. Until a distribution has been received and credited, a leaver with vested points holds an expectation, not a debt, and an agreed-sum claim fails on timing before anyone reads the leaver clause.

Which leaver category are you, and what does it do to your points?

The leaver clause decides what you keep, and under this plan the category turned on how the employment ended, not on length of service. A Good Leaver retained 100 per cent of vested points and retained unvested points only if vesting had exceeded 70 per cent at the leaving date. A Good Leaver was a participant who ceased to be employed "by reason of his death or Permanent Disability or is terminated by Newland for no cause", and the definition of a participant excluded anyone under notice.

A resignation was not a Good Leaver event under that definition, while a termination without cause was: the employee was asked to resign in March 2022 and instead received a termination notice in May 2022. And the Court never decided his category, because the claim failed on the trigger and on the pleading before vesting or leaver status mattered, so nothing in the judgment rules on what a Good Leaver keeps under any other plan.

The cards restate the points side.

Can you claim damages because points were never allocated to the fund with the 2025 exit?

Not on the case that was run. The employee's evidence was that he held points in the fourth fund, the one with the 2025 exit, but that his copy of the schedule had gone missing. The plan committee member who gave evidence for the employer said points had been allocated once, at implementation, never in the fourth fund. The Court found him impressive and independent. In closing, the employee's counsel accepted that evidence, abandoned the other three funds, and advanced a new case: damages for failing to allocate points in the fourth fund when it went into liquidation in July 2020.

That case failed at every step. It had not been pleaded, foreshadowed or put to the employer's witnesses. The plan imposed no obligation to allocate points in any particular fund, because it promised an allocation "in respect of one or more of the Funds". There was no metric for the number of points, since the argument began by rejecting the employee's own evidence of what he held. There was no date of allocation, and the date would fix how much had vested by termination. And the fallback, that unallocated points were reserve points distributable pro rata on liquidation, met the witness's question: if there is no pro rata, pro rata to what?

Past those he had to prove loss, and he accepted that none had arisen by trial. The Court also tested a loss-of-a-chance route the pleading had not taken and found no real and substantial possibility of reserve points arriving in 2026: the fund's management agreement had switched off management and incentive fees after 30 June 2020 and during liquidation, the accrued performance fee had been clawed back, and a liquidation fee is not naturally described as carried interest or profit payments.

Which law governs the carry plan, and could the DIFC Courts hear the claim at all?

The judgment of 6 August 2025 does not say which law governs the plan and records no evidence of foreign law. The pre-trial order of 8 July 2024 in the same claim does record the clause: the plan "is subject to Kuwaiti law and any dispute in relation thereto is to be decided exclusively by the Kuwaiti courts". The judge's provisional view was that the employer would struggle to deny submission, because it had filed a defence on the merits in the Small Claims Tribunal instead of the jurisdictional challenge that Rule 53.14 of the Rules of the DIFC Courts requires it to signal within seven days of service, and because after the transfer it filed an acknowledgment of service on 11 January 2024 and never made the application that Rule 12.4 requires within 14 days, so that Rule 12.5(1) treated it as accepting jurisdiction. The point was left open, and the judgment reads the plan's words in ordinary contractual terms without deciding any question of Kuwaiti law.

Find the governing law and forum clause before choosing where to sue: Article 7 of the Contract Law leaves the choice of governing law and jurisdiction to the DIFC law on the application of DIFC laws. Do not read CFI 098/2023 as holding that DIFC law governs carry plans with foreign law clauses. And jurisdiction over an employment claim against a DIFC-registered employer now rests on Dubai Law No. 2 of 2025, Article 14(A)(1), claims by or against DIFC Establishments, and Article 14(A)(2), claims arising from contracts performed wholly or partly within the DIFC. This claim was commenced in 2023 under Dubai Law No. 12 of 2004, which Article 43(A) of the 2025 Law superseded.

Is a carry claim an employment claim with a six-month deadline, or a contract claim with six years?

The judgment does not decide this, and the answer controls whether you can sue at all. Article 10 of the DIFC Employment Law, consolidated text of July 2025, bars a court from considering a claim under that Law unless it is presented during the employment or within six months after the Termination Date, the day a notice period expires. Schedule 1 defines an Additional Payment to include any bonus, incentive or distribution that is discretionary, non-recurring, or calculated by reference to the profits of the employer or an affiliate. The employer argued at the strike-out stage that carry was a discretionary bonus under the contract and an Additional Payment under the Law, so the claim was out of time.

The employee answered that plan payments were not discretionary, that the claim was for breach of a free-standing contract, and that Article 123(1) of the DIFC Contract Law gave six years from accrual of the cause of action. The judge in July 2024 found both the non-discretionary reading and the six-year route more than merely arguable, and the trial judgment disposed of carry on other grounds without returning to limitation. An approved but unpaid bonus raises the same classification question on different facts, covered in the guide on an approved DIFC bonus that has not been paid.

Deadline warning. Treat six months from the Termination Date as the date by which a carry claim must be on file, however the plan describes the payment. The six-year contract period was held arguable and never decided, and a claim that depends on winning that argument first carries a limitation defence built in.

You kept working after the termination date: is there an implied contract of employment?

Only if it is necessary to imply one to give the relationship business reality, and here it was not. Paragraph 3 of Schedule 1 to the Employment Law defines an Employment Contract as a contract of service or apprenticeship "whether express or implied", but says nothing more about implied contracts. The judgment therefore drew on English authority, treated as persuasive because the DIFC definition matches the English statutory wording up to the word "writing", and took from it the propositions that a contract must be necessary to give business reality to the dealings, that conduct no more consistent with a contract than without one is not enough, that the parties' own understanding that no contract exists weighs heavily against one, and that an implied employment contract must still show the irreducible minimum of mutual obligation and control.

The employee pointed to seven indicators: committees and prospectuses still naming him, a bank mandate, tax records, payment authorisations, negotiations with buyers, lawyers the employer still appointed for him, and a visa that ran to October 2023. The Court was not persuaded. The minima were absent, the prospectus entries were as easily explained by carelessness as by intention, the rest by the employer's failure to update records or by ad hoc help, and the conduct looked more like a consultancy, which another group entity had offered him and he had declined. The judgment adds that the employer freely accepted his services and must be taken to have understood that he ought to be fairly paid, but that was not the claim brought and there was no material from which to value it.

Does an indemnity for claims from your portfolio directorship survive the end of your employment?

Yes, on the reasoning of CFI 098/2023. The employee relied on an English Commercial Court decision, applying Jersey law, about a corporate services firm whose employees sat as directors of client companies, which treated it as absurd that such an employer owed no indemnity for work done in good faith. At the strike-out stage the judge had already found it strongly arguable that, in private equity, where employees must become directors or managers of portfolio companies to monitor or protect the house's investment, absent an express indemnity, their contracts carry an implied one against claims and losses arising from the bona fide exercise of those duties.

At trial the employee's counsel had tied the indemnity to the implied post-termination contract. The Court said the concession was wrongly made: an indemnity implied in the contract that terminated in August 2022 could survive termination, because neither party controls when a third party might sue and a later claim was within their reasonable contemplation. The English material is persuasive only. Two limits travel with the finding. The express indemnity the employee said he had by email was struck out for the period after termination, because the pleading confined it to the employment. And the indemnity found is implied into a terminated DIFC employment contract, not a general rule for every former director.

What does the indemnity cover, and what does it leave out?

Payments to third parties and the cost of their claims, not your own lost income. The employer cited an English Court of Appeal decision for the proposition that there is no general principle entitling a person who acts on another's instructions to be indemnified against all losses. The Court called that a gross oversimplification: the claimant there had sought his own loss of earnings, and in every reported case where an indemnity had been ordered it was for payments the agent or employee had made, or was liable to make, to a third party.

The employer had paid every legal bill for the bankruptcy proceedings except one. When its contract with the lawyer expired and she went unpaid, the employee paid her AED 4,000 himself on 3 January 2024 and the remaining travel bans were lifted. The Court saw no reason why he should not be indemnified. The declaration he also wanted, covering any tax or other liabilities from the bankruptcy, including a tax authority's demands for a subsidiary's overdue taxes, was refused because none had been pleaded, the employer having also called it premature. The Court then said that the judgment is a res judicata between the parties and that, should any such liability be imposed, it has held that the employer remains liable to indemnify him against costs and claims by third parties arising out of his former employment.

Can you sue the employer for leaving your visa uncancelled or for terminating you while the cases were pending?

Not in negligence: the order of 8 July 2024 struck both claims out. The employee had pleaded a duty of care under the DIFC Law of Obligations, breached by failing to cancel his DIFC employment visa within 30 days and by terminating him while cases were pending. Applying earlier DIFC Court of Appeal and Court of First Instance authority, the judge held that the Employment Law exclusively governs the relationship of employer and employee in the DIFC, so that no concurrent duty of care arises under another DIFC law. The visa duty exists, but it lives in Article 57(3) of the Employment Law, which requires employer and employee to cooperate to cancel an employer-sponsored residence visa as soon as reasonably practicable and within 30 days of the Termination Date.

The guide on a former DIFC employer that will not cancel your visa covers that ground, and the guide on a DIFC absconding case after a walk-out covers the different case of an absconding report. The end-of-service and Article 19 penalty claims were settled by consent in September 2023, so the judgment says nothing about them, and the guide on an unpaid DIFC final settlement covers those. A settlement offer with a waiver form, calculated only to the termination date, was declined. Under Article 11(2)(b) a waiver of rights under the Law binds only in a written agreement in which the employee warrants an opportunity to take independent legal advice, or after court mediation, and Article 11(1) makes any other waiver void.

Which court hears the claim, and why did this one leave the Small Claims Tribunal?

The Tribunal hears claims up to AED 500,000 without agreement, and employment claims of any value only where all parties elect in writing, under Rule 53.2. The employee began there in August 2023 with an unvalued claim, a consent order in September 2023 settled the end-of-service items and kept the wages and carry disputes before the Tribunal, listed for November, and in October 2023 he valued the claim at AED 2,785,581. The employer would not agree to lift the Tribunal's limit, the hearing was vacated, and the case was transferred to the Court of First Instance, where a fresh claim form was issued on 29 December 2023.

The employee requested default judgment on 7 March 2024, and the employer answered within days with an application for immediate judgment and strike-out under Rule 4.16 and Part 24. A claimant cannot obtain default judgment while such an application is pending. The application removed three claims and sent the implied contract, the implied indemnity and the carry claim to trial, with a defence ordered within 14 days.

What did the litigation cost, and where does the case stand now?

The only published costs ruling is the order of 19 July 2024 on the strike-out application. Of nine heads of claim, three went to trial. The judge held that the employer had prevailed, that a proportional order under Rule 38.10 was the right tool, and awarded the employer 65 per cent of its costs of the application. Those costs were assessed immediately under Rule 38.30 and made costs in the case: payable by the employee on top of any other costs if the employer won at trial, and borne by each side if the employee won.

The judgment of 6 August 2025 ordered an immediate assessment of the trial costs and directed submissions on interest and costs in August 2025. At the time of writing, searches of the DIFC Courts' published judgments and orders by claim number and by both pseudonyms found no later order in the claim, no application for permission to appeal and no Court of Appeal listing, and a search of the Conflicts of Jurisdiction Tribunal's published decisions found nothing concerning the claim. Those searches are not a court-file certification. The post-trial costs and interest ruling is unpublished.

The cards restate the claims side.

How should a former private equity employee build the carry and indemnity file?

The order of work follows the order in which the Court tested the claims.

1. Ask the employer in writing for the executed plan, every allocation letter, the vesting schedule and any later allocation.
2. Fix your Termination Date from the notice and the contract, then read the plan's leaver definitions against how the employment actually ended.
3. For each fund, establish its stage, whether the house has received any distribution, and what the audited statements say about carried interest paid or provided for.
4. Decide whether you claim an agreed sum that has fallen due or damages for a breach, and plead every alternative at the outset.
5. Read the governing law and forum clause, and record what the employer does in response to the claim.
6. Diary six months from the Termination Date under Article 10 and file inside it, whatever view you take of the six-year contract period.
7. List every third-party claim from the portfolio role with its date and the body pursuing it.
8. Plead the declaration about future liabilities expressly, with evidence that they are real.
9. Choose the forum by value: above AED 500,000 the claim stays in the Tribunal only if every party elects in writing.
10. Settle the end-of-service items separately if you can, and sign nothing described as a waiver until the Article 11(2)(b) conditions are met.

Where do these claims go wrong?

In our experience, the costly errors are made before the hearing, in how the claim is framed. The claim went through four iterations, the last in closing. A carry claim pleaded as an agreed sum when nothing had fallen due, with the damages case for non-allocation raised only in closing, gave the Court every reason to stop at the pleading. The claim that fitted the facts, fair payment for services the employer freely accepted, is the one the judgment says was not brought. And the indemnity, which succeeded, was argued as dependent on the contract claim that failed, a link the Court itself had to cut.

Common mistake. Treating the points statement as an invoice. A leaver who demands carry before the house has received and credited a distribution is suing for a sum that is not due, and a court reaches the leaver clause only after the trigger is proved.

Frequently Asked Questions

Is my carried interest payable now that I have left the firm? Only if the plan's payment trigger has happened. Under the plan in CFI 098/2023 the house first had to receive a distribution from the fund under its own carried interest entitlement, then credit it to the plan account, and only then pay participants pro rata to their points. The employee accepted that nothing was due when he sued or at trial, and the carry claim failed on that basis before his leaver status was examined.

What is a good leaver under a carry plan, and did the Court decide the employee's category? It is whatever your plan says. Under that plan a Good Leaver was someone who left by death, permanent disability or termination for no cause, who kept all vested points and the unvested balance only if vesting had passed 70 per cent at the leaving date. The Court never decided the employee's category, because the claim failed on the trigger and on the pleading first.

Can I claim damages because my employer never allocated points to the fund with the 2025 exit? Not on the reasoning of CFI 098/2023 unless you can show an obligation to allocate in that fund, a metric for the number of points, a date for the allocation and a real and substantial possibility of a distribution. The plan promised an allocation in one or more of the funds, which imposed no duty to allocate in a particular one, and the case was in any event raised in closing without having been pleaded or put to the witnesses.

My plan says it is governed by Kuwaiti law and that Kuwaiti courts have exclusive jurisdiction. Can I still sue in the DIFC Courts? Possibly, depending on what the employer does. The plan in CFI 098/2023 contained that clause, but the employer filed a defence on the merits in the Small Claims Tribunal and made no application under Rule 12.4 within 14 days of its acknowledgment of service, and the judge's provisional view was that it had submitted to the jurisdiction. The trial judgment decided no question of Kuwaiti law and does not hold that DIFC law governs such plans.

How long do I have to bring a carry claim? File within six months of your Termination Date. Article 10 of the Employment Law bars a claim under that Law presented later than six months after the Termination Date, and the employer argued that carry was an Additional Payment within the Law. The employee's answer, a six-year period for breach of contract under Article 123(1) of the Contract Law, was held arguable at the strike-out stage and never decided, so the six-month date is the safe one.

I kept approving payments and sitting on committees after my termination date. Am I owed salary? Not under an implied contract of employment unless it is necessary to imply one and the conduct shows mutual obligation and control. The Court found that being left on committees, bank mandates and tax records was as consistent with carelessness or ad hoc help as with employment, that the conduct looked like a consultancy, and that the employee had declined a consultancy contract. It added that he ought to have been fairly paid for the services, but no claim for their value was before it.

Does my former employer have to pay for the lawyer defending me in the portfolio company's bankruptcy cases? On the reasoning of CFI 098/2023, yes, where you were put into the company in furtherance of your duties and acted in good faith. The Court held that an indemnity implied into the employment contract survived its termination and covered costs and claims by third parties, and entered judgment for the AED 4,000 legal bill the employer had refused to pay. The indemnity does not cover your own loss of earnings.

A tax authority is sending me demands for the portfolio company's unpaid taxes. Does the judgment cover that? The Court granted no declaration because none had been pleaded, but it said that the judgment is a res judicata between the parties and that, should such a liability be imposed, the employer remains liable to indemnify the employee against costs and claims by third parties arising out of his former employment. The judgment does not decide whether the authority can pursue the employee, and that question is outside this guide.

This article is for general informational purposes only and does not constitute legal advice. Consult a qualified advocate for advice on your specific situation.

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