This order finalizes the cost recovery phase of a protracted litigation concerning Islamic finance obligations, specifically addressing the quantum of indemnity costs awarded to the Claimant following the substantive judgment.
What was the total monetary value of the indemnity costs awarded to Mashreq Al Islami Finance Company against Babar Rehman in the April 2019 order?
The litigation between Mashreq Al Islami Finance Company and Babar Rehman involved significant procedural hurdles, including multiple applications to set aside default judgments and disputes regarding the admissibility of expert evidence on Sharia law. Following the substantive judgment delivered on 24 March 2019, the Court turned its attention to the assessment of legal costs. The Court determined that the Claimant was entitled to recover its costs on an indemnity basis, reflecting the complexity and the procedural history of the matter.
The final assessment resulted in a substantial financial obligation imposed upon the Defendant. As specified in the order:
The Claimant’s costs are hereby immediately assessed in the amount of AED 884,635.92 (the “Costs Sum”) and the Defendant is required to pay the Costs Sum in full within 28 days of this order.
This amount covers the entirety of the proceedings, including the initial default judgment phase and the subsequent contested applications. Further context on the procedural history of this dispute can be found in the earlier MASHREQ AL ISLAMI FINANCE COMPANY v BABAR REHMAN [2018] DIFC CFI 016 — Setting aside default judgment (05 April 2018) and the subsequent MASHREQ AL ISLAMI FINANCE COMPANY v BABAR REHMAN [2018] DIFC CFI 016 — Setting aside default judgment in Ijara disputes (15 April 2018).
Which judge presided over the assessment of costs in CFI 016/2017 and in which DIFC division was the order issued?
The order was issued by H.E. Justice Omar Al Muhairi, sitting in the DIFC Court of First Instance. The order was formally issued on 08 April 2019, following the substantive judgment rendered by the same judge on 24 March 2019.
What specific legal arguments did Mashreq Al Islami Finance Company advance to justify an award of costs on an indemnity basis against Babar Rehman?
Mashreq Al Islami Finance Company argued that the conduct of the litigation by the Defendant necessitated a departure from the standard basis of cost recovery. The Claimant’s submissions emphasized the resources expended in resisting the Defendant’s repeated attempts to set aside the default judgment and the additional costs incurred due to the Defendant’s application to introduce expert evidence regarding Sharia law.
The Claimant contended that these procedural maneuvers significantly increased the complexity and duration of the proceedings. By seeking an indemnity basis, the Claimant effectively argued that the Defendant’s litigation strategy was such that the Claimant should be fully indemnified for its legal expenditure rather than receiving the standard "proportionate" recovery typically associated with the standard basis under the Rules of the DIFC Courts (RDC).
What was the precise doctrinal issue the Court had to resolve regarding the application of RDC 38.6 to 38.9 in the context of this finance dispute?
The Court was required to determine whether the circumstances of the case warranted the exercise of its discretion to award costs on an indemnity basis rather than the standard basis. The doctrinal issue centered on the interpretation of RDC 38.6 to 38.9, which govern the Court’s power to award costs. Specifically, the Court had to decide if the Defendant’s procedural conduct—specifically the resistance to the default judgment and the late-stage introduction of Sharia law expert evidence—constituted sufficient grounds to justify the higher threshold of indemnity costs. The Court had to balance the principle of "loser pays" with the specific procedural history of the case to ensure that the Claimant was not unfairly burdened by the costs of resisting what the Court deemed to be unnecessary or protracted procedural challenges.
How did H.E. Justice Omar Al Muhairi justify the shift from standard costs to indemnity costs in the final order?
Justice Al Muhairi reviewed the entire procedural history of the case, noting the various orders that preceded the final judgment. The reasoning was rooted in the necessity of compensating the Claimant for the entirety of the legal work necessitated by the Defendant's specific procedural choices. The Court explicitly referenced the previous judicial history, including:
Justice Omar Al Muhairi dated 15 April 2018, the Case Management Order of Judicial Officer Maha Al Mehairi dated 19 September 2018, the Order of Judicial Officer Maha Al Mehairi dated 7 November 2018, and the Order of H.E.
By acknowledging these prior orders, the Court established that the litigation had been unusually protracted. Consequently, the Court concluded that the Defendant’s conduct throughout these stages justified the application of the indemnity basis:
The Defendant shall pay the Claimant’s costs of these proceedings on the indemnity basis.
This reasoning reflects the Court's application of its discretionary powers under the RDC to penalize or compensate for litigation conduct that deviates from standard procedural efficiency.
Which specific RDC rules were cited as the authority for the assessment of costs in this matter?
The Court relied upon RDC 38.6 to 38.9 as the primary authority for the assessment of costs. These rules provide the framework for the Court’s discretion in awarding costs, including the power to order costs on an indemnity basis. The Court specifically invoked these rules to justify the immediate assessment of the AED 884,635.92 sum, ensuring that the Claimant’s recovery was not subject to further lengthy taxation proceedings.
How did the Court utilize the procedural history of the case to support the final costs order?
The Court utilized the procedural history as a record of the "incidental" costs incurred by the Claimant. By citing the specific orders of Judicial Officer Maha Al Mehairi and the previous orders of Justice Al Muhairi, the Court demonstrated that the costs were not merely for the trial itself, but for the extensive work required to defend the Claimant’s position during the interlocutory stages. This history served as the evidentiary basis for the Court’s finding that the Claimant was entitled to costs for seeking the default judgment, resisting the set-aside application, and addressing the Sharia law expert evidence application.
What was the final disposition of the costs application and what timeline was imposed for payment?
The Court ordered the Defendant to pay the Claimant’s costs on an indemnity basis. The total amount was assessed at AED 884,635.92. The Defendant was granted a period of 28 days from the date of the order (08 April 2019) to satisfy the payment in full.
What does this ruling imply for future litigants in DIFC finance disputes regarding the risk of indemnity costs?
This case serves as a warning to litigants who engage in aggressive procedural tactics, such as repeated applications to set aside default judgments or the late introduction of complex expert evidence. The ruling highlights that the DIFC Court is willing to utilize its powers under RDC 38.6 to 38.9 to award indemnity costs when it perceives that the opposing party has unnecessarily increased the costs of litigation. Future litigants must anticipate that if their procedural conduct is viewed as a hindrance to the efficient administration of justice, they risk being held liable for the entirety of the successful party's legal costs, rather than a standard, reduced portion.
Where can I read the full judgment in Mashreq Al Islami Finance Company v Babar Rehman [2019] DIFC CFI 016?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0162017-mashreq-al-islami-finance-company-pjsc-v-mr-babar-rehman-1 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-016-2017_20190408.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Mashreq Al Islami Finance Company v Babar Rehman | [2018] DIFC CFI 016 | Procedural history/Prior orders |
Legislation referenced:
- Rules of the DIFC Courts (RDC) 38.6 to 38.9