The DIFC Court of First Instance clarifies that discretionary costs orders designated as "costs in the case" are substantive judicial decisions rather than clerical errors, rendering them immune to correction via the Slip Rule.
Why did the Claimants in CFI-033-2015 seek to set aside the costs order made by H.E. Justice Shamlan Al Sawalehi on 8 February 2018?
The dispute arose from a series of procedural applications in the ongoing litigation between Orion Holdings Overseas Limited (in liquidation) and the defendants, including Privatbank Ihag Zurich AG. Following a hearing on 23 January 2018, H.E. Justice Shamlan Al Sawalehi dismissed the Third Defendant’s jurisdiction application but designated the costs of that application as "costs in the case." Dissatisfied with this outcome, the Claimants sought to have the order amended, arguing that the Third Defendant should have been ordered to pay the costs outright.
The Claimants filed an application to set aside the original costs order, essentially requesting that the Court substitute the "costs in the case" designation with a direct order for the Third Defendant to pay the costs of both the Jurisdiction Application and a subsequent Amendment Application. As noted in the court records:
An order pursuant to RDC Rule 4.13(1) that the Court of First Instance set aside its order as to costs respect of the Jurisdiction Application dated 23 August 2017 and the Amendment Application dated 16 November 2017, as set out at paragraph 3 of the Order.
The Claimants’ primary objective was to secure an immediate financial recovery of their legal expenses rather than waiting for the conclusion of the proceedings, where "costs in the case" would typically be resolved.
Which judge presided over the application to set aside the costs order in CFI-033-2015?
The application to set aside the costs order was heard by H.E. Justice Omar Al Muhairi of the DIFC Court of First Instance. The order was issued on 8 April 2018, following the Claimants' request to revisit the earlier decision made by H.E. Justice Shamlan Al Sawalehi.
What arguments did the Claimants advance regarding the application of RDC 36.41 to the costs order?
The Claimants argued that the designation of costs as "costs in the case" was an error that the Court should rectify under the "Slip Rule" (RDC 36.41). By invoking this rule, the Claimants sought to characterize the original costs order as a clerical mistake or an accidental slip that did not reflect the judge's true intention. They contended that because they were the successful party in the jurisdiction challenge, the standard principle—that the loser pays the winner's costs—should have been applied immediately.
Conversely, the Court had to weigh the Claimants' request against the established principle that costs are a matter of judicial discretion. The Claimants essentially argued that the Court had the power to "fix" the order to align with the general rule of cost-shifting, rather than leaving the costs to be determined at the end of the trial.
What was the precise legal question H.E. Justice Omar Al Muhairi had to answer regarding the scope of the Slip Rule?
The Court was tasked with determining whether a costs order designated as "costs in the case" constitutes a "typographical error" or "clerical mistake" within the meaning of RDC 36.41. The legal question was whether the Slip Rule could be utilized as a mechanism to challenge the substance of a judge’s discretionary decision on costs, or if such a challenge is strictly reserved for the appellate process. The Court had to decide if the original judge’s decision was a deliberate exercise of discretion or a procedural oversight subject to summary correction.
How did H.E. Justice Omar Al Muhairi apply the test for the Slip Rule to the costs order?
H.E. Justice Omar Al Muhairi reasoned that the Slip Rule is strictly limited to correcting errors that do not reflect the judge's actual intent. He examined the nature of "costs in the case" orders, noting that they are standard procedural tools used by judges to reserve the final decision on costs until the conclusion of the trial. He concluded that H.E. Justice Shamlan Al Sawalehi had consciously applied this rule, and therefore, no error had occurred.
This type of order is usually made at interim hearings and means that the party entitled to costs at the end of the trial will be entitled to the costs of this part of the proceedings. It is clear that the Judge in his Reasons intended to make this order and he did not make a typographical error. Therefore, RDC 36.41 (the Slip Rule) does not apply.
The judge emphasized that because the original order was a deliberate exercise of judicial discretion, it could not be bypassed or corrected through the Slip Rule.
Which specific DIFC statutes and RDC rules were central to the Court’s determination?
The Court relied heavily on RDC 36.41, which governs the correction of errors in judgments or orders (the Slip Rule). Additionally, the Court referenced RDC 4.2(1), which grants the Court the power to extend or shorten time limits for compliance with rules or orders. The Court also cited RDC 38.7, which outlines the general rule that the unsuccessful party pays the successful party's costs, while simultaneously acknowledging the Court's inherent discretion to depart from that rule based on the specific circumstances of the case.
How did the Court interpret the relationship between RDC 12 and the discretionary nature of costs?
The Court interpreted RDC 12 as providing the framework for interim costs orders. H.E. Justice Omar Al Muhairi explained that "costs in the case" is a specific application of this rule, designed to ensure that the party who ultimately prevails in the litigation is the one who recovers the costs of interim applications. By citing this rule, the Court reinforced that the trial judge is best positioned to assess the overall conduct of the litigation and that such discretionary decisions are not "slips" but rather strategic procedural determinations.
What was the final outcome and the specific orders made by the Court on 8 April 2018?
The Court granted the Claimants' application for an extension of time to file their request, acknowledging that it was in the interest of justice to hear the merits of the application. However, the Court ultimately dismissed the application to set aside the costs order itself.
The claimant’s application pursuant to RDC Rule 4.13(1) that the Court of First Instance set aside its order as to costs dated 8 February 2018 is dismissed.
The Court further ordered that there be no order as to costs regarding the application itself, effectively leaving the parties to bear their own costs for this specific procedural challenge.
What are the wider implications of this ruling for DIFC practitioners?
This decision serves as a firm reminder that the Slip Rule is not a vehicle for re-litigating discretionary costs orders. Practitioners must understand that if a judge designates costs as "costs in the case," this is a substantive decision that cannot be challenged as a clerical error. Any attempt to overturn such an order must be pursued through the formal appellate process, provided the grounds for appeal—such as an error in principle or a decision that is plainly unsustainable—are met. Litigants should anticipate that the DIFC Courts will strictly guard the finality of discretionary orders made by trial judges.
Where can I read the full judgment in Orion Holdings Overseas Limited v Mohammed Abu Al Haj [2018] DIFC CFI 033?
The full judgment is available on the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0332015-1-orion-holdings-overseas-limited-2-orion-global-financial-services-llc-3-orion-capital-limited-liquidation-v-1-moha-2
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external precedents cited in the provided text. |
Legislation referenced:
- RDC 4.2(1) (Extension of time)
- RDC 4.13(1) (Setting aside orders)
- RDC 4.14(2) (Time limits)
- RDC 12 (Interim costs orders)
- RDC 36.41 (The Slip Rule)
- RDC 38.7 (General rule on costs)