This order clarifies that the DIFC Court of First Instance will not import the cost-shifting practices of English Employment Tribunals into DIFC employment litigation, reaffirming the application of the general rule that costs follow the event.
What were the specific claims brought by Hana Al Herz against the DIFC Authority in CFI 011/2012?
The litigation arose from the termination of the Claimant’s employment in a senior management position. Following the termination on 31 January 2012, Hana Al Herz initiated proceedings against the Dubai International Financial Centre Authority, seeking a broad range of remedies. The dispute centered on the nature of her employment contract and the circumstances surrounding her departure.
The Claimant’s prayer for relief was extensive, encompassing:
(g) Compensation for unauthorised deduction from wages pursuant to Article 17 of the DIFC Employment Law” By my judgment, issued on 10 July 2013, it was decided that the Claimant’s submissions must be rejected and that consequently the claim failed.
The factual background involved a complex series of events leading to the Defendant's decision to terminate the Claimant. As noted in the court records,
The Claimant was employed by the Defendant in a highly paid management role until 31 January 2012 when the Defendant terminated that employment.
The claim was ultimately dismissed in its entirety by Justice Sir Anthony Colman in his July 2013 judgment, leading to the subsequent dispute over the incidence of costs.
Which judge presided over the costs application in Hana Al Herz v The Dubai International Financial Centre Authority?
The costs application was presided over by Justice Sir Anthony Colman, sitting in the DIFC Court of First Instance. The order, issued on 3 November 2015, followed the substantive judgment delivered by the same judge on 10 July 2013. The procedural history of this matter also includes earlier case management and procedural orders, such as the HANA AL HERZ v DUBAI INTERNATIONAL FINANCIAL CENTRE AUTHORITY [2012] DIFC CFI 011 — Procedural extension and cost assessment (09 May 2012) and the HANA AL HERZ v DUBAI INTERNATIONAL FINANCIAL CENTRE AUTHORITY [2012] DIFC CFI 011 — Case Management Order (28 August 2012).
What arguments did Hana Al Herz advance regarding the incidence of costs compared to the DIFC Authority's position?
The parties held divergent views on how the court should exercise its discretion regarding costs under the Rules of the DIFC Courts (RDC). The Defendant, the DIFC Authority, argued for the application of the general rule under RDC Rule 38.7(1), which dictates that the unsuccessful party should pay the costs of the successful party. They maintained that having succeeded on all issues, there was no justification for departing from this standard practice.
Conversely, the Claimant argued that the court should exercise its discretion under RDC Rules 38.6 and 38.7 to make "no order as to costs," effectively requiring each party to bear their own legal expenses. The Claimant’s argument was predicated on the assertion that because the DIFC Employment Law is modeled on English law, the DIFC Court should adopt the practice of English Employment Tribunals. The Claimant contended that the underlying rationale of the English tribunal system—ensuring access to justice regardless of means—should be imported into the DIFC context.
What was the precise legal question Justice Sir Anthony Colman had to answer regarding the application of English procedural practices to DIFC costs?
The court was tasked with determining whether the discretionary procedural practices of English Employment Tribunals—specifically the "no costs" rule—could be imported into the DIFC Court of First Instance when adjudicating employment disputes. The core issue was whether the incorporation of English substantive law via the Law on the Application of Civil and Commercial Laws in the DIFC (Law No. 3 of 2004) extended to the discretionary cost-shifting mechanisms utilized by specialized tribunals in England and Wales.
How did Justice Sir Anthony Colman apply the doctrine of judicial discretion to the Claimant’s request for a "no order as to costs"?
Justice Colman rejected the Claimant’s attempt to equate the DIFC Court with an English Employment Tribunal. He reasoned that the DIFC Court is a court of general jurisdiction, and that the "no costs" practice in England is specific to the lower-tier tribunal system, which typically handles smaller claims. He emphasized that the complexity and value of the current claim would have necessitated a hearing in the English High Court, not an Employment Tribunal, had the matter been brought in England.
The judge highlighted the distinction between substantive law and procedural discretion:
It follows that, in relation to a case such as this, for the judge in the DIFC Courts to take into account, in exercising the discretion as to the incidence of costs, the practice of employment tribunals in England and Wales would be to have regard to a consideration irrelevant to the exercise of his discretion.
He further noted that even in the English system, the "no costs" rule does not apply universally, particularly at the appellate level. Consequently, he concluded that the Claimant's reliance on English tribunal practice was misplaced and that the general rule of costs following the event must prevail.
Which specific DIFC statutes and RDC rules were cited in the court's reasoning on costs?
The court relied heavily on the Rules of the DIFC Courts (RDC) to determine the allocation of costs. Specifically, the court referenced RDC Rule 38.7(1), which establishes the general rule that the unsuccessful party pays the costs of the successful party. The court also considered the scope of its discretion under RDC Rules 38.6 and 38.7.
Regarding the substantive law, the court referenced Article 17 and Article 68 of the DIFC Employment Law 2005, which formed the basis of the original claim. Furthermore, the court addressed the application of English law under Article 8 of the Law on the Application of Civil and Commercial Laws in the DIFC (Law No. 3 of 2004), clarifying that this provision does not mandate the adoption of foreign procedural cost-shifting practices.
How did the court distinguish the cited English precedents regarding costs in employment litigation?
The court analyzed the English practice of "no costs" in employment tribunals, noting that it is a localized procedural convention designed for a specific forum. Justice Colman observed that:
Given the substantial amount of damages which would in this case be recovered by the Claimant if she were entirely successful as well as the complexity of the issues involved, there can be little doubt that, had this claim been brought in England, it would have been heard in the High Court and that the usual principle of costs following the event would apply.
The court further noted that even within the English system, the "no costs" rule is not absolute, stating:
If the claim goes on appeal to the Employment Appeals Tribunal there is no general practice not to award costs to the successful party.
By drawing these distinctions, the court effectively neutralized the Claimant’s argument that English tribunal practice should dictate the cost outcome in the DIFC.
What was the final disposition and the specific order regarding costs made by the court?
The court ruled in favor of the Defendant, the DIFC Authority, and ordered the Claimant to pay the Defendant's costs. The order specified that the costs were to be calculated on the "standard basis."
As stated in the order:
Accordingly, in the present case I have no doubt that the order should be that the Claimant must pay the costs of the Defendant up to and including judgment in the CFI together with the costs of this application, on the standard basis to be assessed if not agreed.
The Registrar was tasked with the assessment of these costs should the parties fail to reach an agreement on the quantum.
What are the wider implications for practitioners regarding costs in DIFC employment disputes?
This judgment serves as a definitive warning to litigants that the DIFC Court will not adopt the procedural idiosyncrasies of foreign employment tribunals, even when the underlying substantive law is derived from English law. Practitioners must anticipate that the DIFC Court will adhere strictly to the RDC rules regarding costs, meaning that the "loser pays" principle remains the default position. Litigants should not rely on the expectation of a "no order as to costs" outcome simply because their claim is employment-related.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No specific case precedents were cited in the text of this order. |
Legislation referenced:
- DIFC Employment Law 2005 (Articles 17, 68)
- Law on the Application of Civil and Commercial Laws in the DIFC, Law No. 3 of 2004 (Article 8)
- RDC Rule 38.56
- RDC Rule 38.7(1)
- RDC Rule 38.6
Where can I read the full judgment in Hana Al Herz v The Dubai International Financial Centre Authority [2015] DIFC CFI 011?
Full judgment available on the DIFC Courts website
Direct link to judgment text