The DIFC Court of First Instance has affirmed its authority to compel an interim payment of costs, ordering the Claimant to pay USD 445,450 to the Defendant following a pattern of procedural delay.
What was the specific dispute regarding the USD 445,450 interim costs application in NS Investments v Ajay Sethi?
The dispute centered on the Defendant’s attempt to recover a portion of legal fees incurred throughout the protracted litigation of the Part 7 Claim. Following the conclusion of the main proceedings, where the Defendant emerged successful in every application—including those reaching the Court of Appeal—the Claimant failed to settle the associated legal costs. The Defendant, represented by M.B. Kemp LLP, sought an order for an interim payment to mitigate the financial burden of the litigation.
As noted in the court records:
The Defendant of the Part 7 Claim has submitted this Costs Application seeking an order for the Claimant of the Part 7 Claim to pay 50% of the Defendant’s costs on account within 7 days of issue of the sought order, pursuant to Rule 38.14 of the Rules of the DIFC Courts (the “RDC”).
The Claimant’s refusal to engage in amicable resolution regarding these costs, despite repeated attempts by the Defendant in August and September 2024, necessitated this formal application. The amount of USD 445,450 represents exactly 50% of the total legal fees submitted by the Defendant’s counsel.
Which judge presided over the costs application in NS Investments v Ajay Sethi in the Court of First Instance?
H.E. Deputy Chief Justice Ali Al Madhani presided over the application in the Court of First Instance. The order was issued on 7 February 2026, following a history of procedural history involving the same judge and Chief Justice Zaki Azmi regarding previous appeal permissions.
What arguments did the parties advance regarding the application for interim costs under RDC 38.14?
The Defendant argued that because they had been successful in every application throughout the proceedings, including those before the Court of Appeal, their entitlement to costs was incontestable. They contended that the Claimant’s persistent refusal to pay, despite documented attempts at amicable resolution, constituted unnecessary delay. The Defendant submitted that the Court should exercise its discretion to order an interim payment to ensure the prevailing party was not unfairly prejudiced by the Claimant’s avoidance tactics.
The Claimant’s position was characterized by a failure to cooperate with the Defendant’s requests for payment. The Defendant’s counsel, M.B. Kemp LLP, emphasized that the requested amount was reasonable and proportionate to the work performed. As stated in the court's reasoning:
In support of engaging RDC 38, the Defendant submits that as it has been successful in every application within these proceedings up to and including in the Court of Appeal, and it is the entitled party in proceedings, and the Claimant has failed to cover the costs as directed, the Court should permit the Costs Application.
What was the precise legal question the Court had to answer regarding the application of RDC 38.14?
The Court was required to determine whether it possessed the jurisdictional authority to order an interim payment of costs on account before a final assessment by the Registrar, and whether the specific circumstances—namely the Claimant’s conduct and the Defendant’s success in all prior applications—justified such an order. The doctrinal issue focused on the Court's discretionary power to prevent a successful party from being out-of-pocket for an unreasonable duration due to the opposing party's dilatory behavior.
How did H.E. Deputy Chief Justice Ali Al Madhani apply the test for interim costs on account?
The Court applied the principle that where a party has been ordered to pay costs, the Court may order a portion to be paid on account before the final assessment. The judge found the Defendant’s request for 50% of the total fees to be both reasonable and proportionate, particularly in light of the Claimant’s refusal to engage in settlement discussions. The judge explicitly noted the necessity of the order to address the Claimant's obstructionist behavior.
The reasoning is summarized as follows:
It is also within the Court’s power to order costs on account to be paid before assessment, as per RDC 38.14, on which the Defendant relies.
The Court further emphasized that the quantum of the fees was consistent with the complexity of the case and the volume of applications defended, thereby meeting the threshold for fairness.
Which specific statutes and RDC rules were applied by the Court in NS Investments v Ajay Sethi?
The primary authority relied upon was Rule 38.14 of the Rules of the DIFC Courts (RDC), which provides the Court with the power to order an amount to be paid on account before costs are assessed. The Court also referenced the precedent established in China State Construction Engineering Corporation (Middle East) et al [2024] CA 009, which dictates that quantum amounts must be proportionate and necessary in balance with the work performed.
How did the Court utilize the precedent of China State Construction Engineering Corporation (Middle East) et al [2024] CA 009?
The Court utilized the China State Construction precedent to validate the reasonableness of the legal fees submitted by M.B. Kemp LLP. H.E. Deputy Chief Justice Ali Al Madhani cited the guidance provided by H.E. Chief Justice Wayne Martin, which requires that costs be proportionate to the value of the case and the nature of the applications made. By applying this test, the Court confirmed that the requested USD 445,450 was not excessive but rather a fair reflection of the expenditure required to defend the various stages of the litigation.
What was the final disposition and the specific relief granted to the Defendant?
The Court granted the Costs Application in full, ordering the Claimant to pay the interim amount within a strict timeframe. The order also included a provision for the costs of the application itself.
The specific orders were:
Therefore, I order that the Claimant in the Claim must pay 50% of the Defendant's costs on account within 7 days from the date of issue of this Order, amounting to USD 445,450.00 only, pursuant to RDC 38.14 by way of interim payment.
Additionally, the Court ordered:
The Claimant shall also pay the Defendant the costs of the Costs Application to be assessed by the Registrar if not agreed.
What are the wider implications of this ruling for practitioners in the DIFC?
This case reinforces the Court’s proactive stance in managing costs and preventing the abuse of process through unnecessary delay. Practitioners should anticipate that the DIFC Courts will readily exercise their powers under RDC 38.14 to order interim payments where a party has been consistently successful in their applications and the opposing party has failed to engage in reasonable settlement discussions. The ruling serves as a warning that the Court will not tolerate the withholding of costs by a losing party when the entitlement is clear and the quantum is supported by a detailed breakdown of legal fees.
Where can I read the full judgment in NS Investments v Ajay Sethi [2026] DIFC CFI 055?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0552020-ns-investments-ltd-v-ajay-sethi-3 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-055-2020_20260207.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| China State Construction Engineering Corporation (Middle East) et al | [2024] CA 009 | Used to establish the test for proportionality and necessity of quantum amounts in costs assessments. |
Legislation referenced:
- Rules of the DIFC Courts (RDC) 38.14