GATE MENA DMCC v TABARAK INVESTMENT CAPITAL [2024] DIFC CA 002 — Costs allocation following retrial order (22 August 2024)

How did the Court of Appeal determine the liability for costs between Gate Mena DMCC and Tabarak Investment Capital following the order for a retrial?

The dispute arises from the underlying litigation in CA 002/2023, where the Appellants, Gate Mena DMCC (formerly Huobi OTC DMCC) and Huobi Mena FZE, sought to challenge the trial judgment of Justice Sir Richard Field. Following the Court of Appeal’s decision on 13 June 2024 to order a retrial, the parties were required to submit arguments regarding the costs of the initial trial and the subsequent appeal. The central issue was whether the costs should be stayed pending the outcome of the retrial or if an immediate order for a percentage of those costs should be made.

The Court ultimately determined that a stay of costs was inappropriate and that the Appellants should bear a significant portion of the Respondents' costs immediately. The Court’s order mandated that the Appellants pay 60% of the First Respondent’s costs of both the Appeal and the Trial, with the remaining 40% reserved as costs in the retrial. Regarding the Second Respondent, the Court ordered the Appellants to pay his costs of the Appeal in full. As noted in the judgment:

The Appellants shall pay 60% of the First Respondent's costs of the costs submissions. The balance of 40% of the Appellants’ and the First Respondent’s costs of the costs submissions shall be costs in the Retrial.

Which judges presided over the costs determination in CA 002/2023?

The costs determination was heard by a panel of the DIFC Court of Appeal comprising Chief Justice Tun Zaki Azmi, H.E. Justice Shamlan Al Sawalehi, and Justice Michael Black KC. The order was issued on 22 August 2024, following the submission of written arguments and reply submissions by the parties.

What were the specific legal arguments advanced by the Appellants and Respondents regarding the allocation of costs?

The Appellants argued for a stay of costs, suggesting that all costs should be addressed compendiously once the final result of the retrial is known. They sought to avoid immediate payment obligations, contending that the retrial would fundamentally alter the landscape of the litigation. Conversely, the Respondents argued that the costs of the Appeal and the Trial should follow the event, or at least be apportioned to reflect the work already performed. The First Respondent specifically requested that the costs previously directed to be "costs in the Appeal" or "costs in the case" be finalized in accordance with the Appeal Judgment. The Court noted the Appellants' strategic silence on certain aspects of the trial costs:

In particular, save to suggest that the costs consequences following the Trial Judgment should be set aside the Appellants deliberately decline to address the costs of the Trial in their costs submission dated 15 July 2024 (paragraph 10.a).

What was the precise doctrinal issue the Court had to resolve regarding the application of issue-based costs orders?

The Court had to determine whether it should engage in a granular, issue-based assessment of costs or apply a more pragmatic, percentage-based approach. The doctrinal challenge lay in balancing the need for fairness—ensuring parties are not penalized for issues they might eventually win at retrial—against the administrative burden of conducting complex issue-based assessments. The Court had to decide if the Appellants had met the threshold for identifying discrete issues that would justify a departure from the general rule of proportionality.

How did the Court of Appeal justify its preference for percentage-based costs orders over issue-based assessments?

The Court emphasized that issue-based costs orders are notoriously difficult to administer and often lead to further litigation. By adopting a percentage-based approach, the Court sought to provide finality and avoid the "unattractive" prospect of deferring all costs decisions until the conclusion of the retrial. The Court relied on established guidance to reject the Appellants' request for a stay, noting that the complexity of disentangling costs for specific issues often outweighs the benefit. As stated in the judgment:

The Court accepts the gloss added by both Respondents to the guidance given by Justice Chadwick:
(a) In order for a party to succeed in securing an issue-based costs order (properly so called) it will be necessary for the applicant to identify a discrete issue and the costs attributable to it.

The Court further reasoned that deferring the decision would be inefficient:

The suggestion would enable all the costs to be addressed compendiously at a time when the final result will be known, but the Court finds it unattractive.

Which DIFC statutes and RDC rules governed the Court's discretion in awarding these costs?

The Court exercised its broad discretion under the Rules of the DIFC Courts (RDC), specifically Part 38, which governs the assessment and allocation of costs. The Court referenced RDC 38.6, 38.7, 38.8, and 38.10, which provide the framework for determining whether costs should be awarded on a standard or indemnity basis and the timing of such assessments. The Court also relied on the principle that costs are subject to detailed assessment in default of agreement, ensuring that the quantum remains subject to judicial oversight.

How did the Court apply English precedents to the DIFC costs regime?

The Court looked to English jurisprudence to interpret the application of costs in the context of retrials and interim payments. It cited Multiplex Constructions (UK) Ltd v Cleveland and F&C Alternative Investments v Barthelemy to support the proposition that courts should avoid complex issue-based orders where a percentage-based approach is more practical. Furthermore, the Court referenced Investment Group Private Limited v Standard Chartered Bank to reinforce the DIFC Court’s stance that a stay of costs is only granted in "rare and compelling cases," which the Appellants failed to establish.

What was the final disposition and the specific monetary relief ordered by the Court?

The Court ordered the Appellants to pay 60% of the First Respondent’s costs of the Appeal and Trial, with 40% reserved as costs in the retrial. The Appellants were ordered to pay the Second Respondent’s costs of the Appeal in full. Specifically, the Court ordered an interim payment of AED 961,995.95 to the First Respondent and AED 919,900.50 to the Second Respondent. These sums were to be satisfied in part by the release of funds currently held in Court as security. Additionally, the Court confirmed that costs of the Trial would bear interest at 9% per annum from 5 October 2022.

What are the wider implications of this decision for practitioners litigating in the DIFC?

This decision serves as a clear warning to practitioners that the DIFC Court of Appeal favors finality in costs orders and is highly resistant to requests to stay costs pending a retrial. Litigants should anticipate that the Court will apply percentage-based allocations rather than entertaining complex, issue-by-issue arguments. Practitioners must be prepared to provide clear, evidence-based submissions on costs immediately following an appeal judgment, as the Court will not look favorably upon a party that declines to address trial costs in their submissions.

Where can I read the full judgment in Gate Mena DMCC v Tabarak Investment Capital [2024] DIFC CA 002?

The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-appeal/ca-0022023-1-gate-mena-dmcc-formerly-huobi-otc-dmcc-2-huobi-mena-fze-v-1-tabarak-investment-capital-limited-2-christian-thurner-1

Cases referred to in this judgment:

Legislation referenced:

• Rules of the DIFC Courts (RDC): Part 38 (38.6, 38.7, 38.8, 38.10)