This appeal clarifies the primacy of termination clauses over performance-based conditions precedent in DIFC service agreements, overturning a Small Claims Tribunal decision that had erroneously restricted fee recovery.
How did the dispute between Osher and Ozmara regarding the AED 35,000 fee arise in CFI 009/2026?
The dispute centers on a Terms of Engagement Agreement dated 3 July 2024, under which the Claimant, Osher, provided services to the Respondent, Ozmara. The total fee for the engagement was set at AED 85,000, split into an initial payment of AED 50,000 and a subsequent payment of AED 35,000. While the initial sum was payable upon signing, the second installment was linked to the achievement of a specific "Target," defined as obtaining a lease renewal.
Following the termination of the agreement by the Claimant, a dispute emerged over whether the AED 35,000 remained payable despite the Target not being achieved. The Small Claims Tribunal initially ruled against the Claimant on this point, determining that the payment was strictly conditional on the Target. The Claimant appealed this finding, arguing that the contract, when read as a whole, mandated payment upon termination regardless of the Target's status. As noted in the court records:
In the Tribunal, the Claimant sought recovery of the full AED 85,000 together with a contractual late payment charge of 10% per week.
This disagreement over the interpretation of the fee structure led to the present appeal before the Court of First Instance.
Which judge presided over the appeal of the Small Claims Tribunal decision in Osher v Ozmara?
The appeal was heard by H.E. Justice Rene Le Miere in the DIFC Court of First Instance. The hearing took place on 11 March 2026, following the granting of permission to appeal by the same judge on 29 January 2026. The resulting Order with Reasons was issued on 12 March 2026.
What arguments did Osher and Ozmara advance regarding the interpretation of the Terms of Engagement Agreement?
The Claimant argued that the Small Claims Tribunal committed a legal error by isolating the "Target" condition from the rest of the contract. Specifically, the Claimant contended that the Tribunal failed to give effect to Clauses 2, 7, and 12 of the Agreement, which explicitly addressed the consequences of early termination. The Claimant’s position was that these clauses created an absolute entitlement to the full fees upon termination, overriding the performance-based condition precedent.
The Claimant submits that the Tribunal erred by construing the Agreement as if entitlement to the AED 35,000 depended solely on achievement of the Target, without giving effect to the termination provisions in Clauses 2, 7, and 12.
Conversely, the Respondent, Ozmara, maintained that the achievement of the Target was a strict condition precedent to the payment of the second installment. The Respondent argued that because the Target was not achieved or proven, the obligation to pay the AED 35,000 never crystallized, regardless of the termination of the agreement.
What was the precise legal question the Court of First Instance had to answer regarding the Small Claims Tribunal's interpretation?
The Court was tasked with determining whether the Small Claims Tribunal erred in law by treating the achievement of the "Target" as the exclusive route to entitlement for the AED 35,000 payment. The doctrinal issue focused on the principles of contractual interpretation—specifically, whether a lower tribunal is permitted to ignore express termination clauses in favor of a narrow reading of a performance milestone. The Court had to decide if the Tribunal failed to construe the Agreement as a whole, thereby misapplying the rules of contract construction under DIFC law.
How did Justice Rene Le Miere apply the doctrine of contractual interpretation to the Agreement?
Justice Le Miere found that the Tribunal’s narrow focus on the Target milestone was legally flawed because it rendered the termination provisions in Clauses 2, 7, and 12 redundant. The Court emphasized that a contract must be read in its entirety to give effect to all its parts. By ignoring the explicit language in Clause 12—which stated that the Company remained responsible for the full fees if the agreement was terminated prior to the completion of milestones—the Tribunal failed to apply the correct legal test for interpreting the parties' obligations.
It follows that the Tribunal erred in law by failing to construe the Agreement as a whole and by treating achievement of the Target as the sole route to entitlement to the AED 35,000.
The Court reasoned that the termination clauses were not merely secondary but were central to the risk allocation between the parties. Consequently, the Court held that the Claimant’s right to the fee was preserved by the termination provisions, notwithstanding the failure to reach the Target.
Which specific DIFC statutes and legal provisions were applied by the Court in Osher v Ozmara?
The Court relied on the DIFC Courts Law No. 2 of 2025, specifically Articles 17E(9) and 21B, which govern the appellate jurisdiction and the powers of the Court of First Instance to review decisions of the Small Claims Tribunal. Furthermore, the Court’s interpretation of the contract was grounded in the DIFC Contract Law 2004, particularly Articles 110 and 118. These articles provide the framework for contractual obligations and the consequences of breach or termination. While the Claimant had previously raised these articles in the Tribunal regarding interest, the Court focused on the overarching principles of contract interpretation inherent in these statutes to resolve the dispute over the AED 35,000 fee.
How did the Court address the Claimant's previous arguments regarding interest and penalties?
The Court noted that while the Claimant had sought interest and late payment charges in the original Tribunal proceedings, the scope of the appeal was strictly limited by the permission granted on 29 January 2026. The Court observed that the Tribunal had declined to award interest and that the Claimant had not successfully raised this as a ground for appeal.
Although the Claimant’s reply referenced Articles 110 and 118, the Tribunal did not award interest, and the Claimant did not raise any grounds of appeal related to this. The only appeal point concerning interest was about the enforceability of the contractual penalty clause.
Consequently, the Court did not disturb the Tribunal’s findings on interest or the late payment charge, focusing its intervention solely on the AED 35,000 fee entitlement.
What was the final disposition and the specific relief granted to Osher?
The Court allowed the appeal, set aside the Tribunal’s refusal to award the disputed sum, and entered judgment in favor of the Claimant for the full amount of AED 35,000.
The refusal by the Small Claims Tribunal to award the Claimant AED 35,000 is set aside.
Judgment will therefore be entered for the Claimant against the First Defendant in the further sum of AED 35,000.
Additionally, the Court ordered the First Defendant to pay the DIFC Courts’ filing fee of USD 584.07 to the Claimant. All other aspects of the original Tribunal judgment, including the dismissal of the claim against the Second Defendant, remained in force.
What are the wider implications of this ruling for practitioners drafting service agreements in the DIFC?
This decision serves as a critical reminder that termination clauses are not boilerplate and will be enforced by the DIFC Courts even when they appear to conflict with performance-based milestones. Practitioners must ensure that "entire fee" or "termination fee" clauses are clearly drafted to override conditions precedent if that is the intended commercial outcome. The case confirms that appellate courts will intervene when a lower tribunal adopts a "siloed" approach to contract interpretation, failing to reconcile termination rights with performance conditions. Future litigants should anticipate that the DIFC Courts will prioritize a holistic reading of the contract, ensuring that termination provisions are given their full intended effect.
Where can I read the full judgment in Osher v Ozmara [2026] DIFC CFI 009?
The full judgment can be accessed via the official DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0092026-osher-v-ozmara. The text is also available via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-009-2026_20260312.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external precedents cited in the provided text. |
Legislation referenced:
- DIFC Courts Law No. 2 of 2025 (Articles 17E(9) and 21B)
- DIFC Contract Law 2004 (Articles 110 and 118)
- Rules of the DIFC Courts (RDC)