This order finalizes the costs recovery process in the ongoing dispute between Union Insurance Company and International Precious Metals Refiners, following the court's refusal to grant the claimant permission to appeal a stay of proceedings.
What is the nature of the cost dispute between Union Insurance Company and International Precious Metals Refiners in CFI 064/2022?
The dispute concerns the quantification of legal costs following the dismissal of the Claimant’s application for permission to appeal a stay of proceedings. Having successfully defended the stay application, the Defendant sought recovery of its legal expenses, submitting a Statement of Costs totaling AED 87,150. The court was tasked with determining the appropriate quantum to be awarded to the Defendant, balancing the principle of indemnity against the court's duty to ensure proportionality in litigation costs.
As noted in the court's reasoning:
The Defendant is seeking a costs award against the Claimant pursuant to the Order dated 26 June 2025, which dismissed the Claimant’s Application for Permission to Appeal.
The court ultimately determined that while the hourly rates and time spent were generally reasonable, a reduction was necessary to satisfy the requirements of the Rules of the DIFC Courts (RDC). Consequently, the court ordered:
The Claimant shall pay the Defendant AED 69,720 (the “Costs Award”), being 80% of the total amount of costs claimed in the Statement of Costs (AED 87,150).
Further details regarding the procedural history of this matter can be found in UNION INSURANCE v INTERNATIONAL PRECIOUS METALS REFINERS [2022] DIFC CFI 064 — procedural management of a jurisdictional challenge (29 November 2022).
Which judge presided over the assessment of costs in CFI 064/2022?
H.E. Justice Shamlan Al Sawalehi presided over this matter in the DIFC Court of First Instance. The order was issued on 11 July 2025, following the court's earlier dismissal of the Claimant's Application for Permission to Appeal on 26 June 2025.
What were the specific arguments advanced by the parties regarding the AED 87,150 costs claim?
The Defendant sought full recovery of its costs, filing a Statement of Costs on 3 July 2025 that detailed professional fees incurred by its legal representatives. The Defendant’s position was that the total of AED 87,150 was a reasonable reflection of the work required to defend the unsuccessful appeal application.
In the Statement of Costs dated 3 July 2025, the Defendant claims a total of AED 87,150, which includes professional fees incurred by legal representatives.
The Claimant, while not explicitly detailed in the final order, would have been afforded the opportunity to challenge the reasonableness of these fees under the standard basis of assessment. The court acknowledged the Defendant's position but ultimately exercised its discretion to adjust the final figure downward.
What was the precise legal question the court had to answer regarding the assessment of costs under RDC Part 38?
The court was required to determine whether the costs claimed by the Defendant were "reasonable and proportionate" under the standard basis of assessment as prescribed by the RDC. Specifically, the court had to decide if the hourly rates and the time expended by the Defendant’s legal team warranted the full amount of AED 87,150, or if the court’s discretion under RDC 38.8 and 38.23 necessitated a reduction to ensure judicial economy and fairness.
How did H.E. Justice Shamlan Al Sawalehi apply the test of proportionality to the costs award?
Justice Al Sawalehi conducted a two-fold assessment. First, he reviewed the hourly rates and the time claimed, finding them to be within the reasonable range of market expectations for the nature of the dispute. Second, he applied the court's discretionary power to ensure the final award was proportionate to the issues at stake in the appeal application.
In the circumstances, I consider that an award of 80% of the Defendant’s claimed costs reflects a fair and proportionate outcome, consistent with the principles of reasonableness and judicial economy.
This reasoning demonstrates that even when hourly rates are deemed reasonable, the court retains the authority to apply a global reduction to align the costs with the complexity and significance of the specific application being adjudicated.
Which specific RDC rules and Practice Directions were applied by the court in CFI 064/2022?
The court relied heavily on Part 38 of the Rules of the DIFC Courts (RDC), which governs the assessment of costs. Specifically, the court invoked RDC 38.8 and 38.23, which grant the court the discretion to assess costs on a standard basis. Additionally, the court applied RDC 38.40 regarding the timeline for payment and Practice Direction No. 4 of 2017 to establish the interest rate applicable to the judgment debt in the event of non-payment.
How did the court utilize its discretion under RDC 38.8 and 38.23 to adjust the Defendant's costs?
The court utilized these rules to move beyond a mere mathematical check of the Statement of Costs. By citing these specific provisions, Justice Al Sawalehi emphasized that the court is not a rubber stamp for legal invoices.
However, in exercising my discretion under RDC 38.8 and 38.23, and taking into account the standard basis of assessment, I find that a reduction is appropriate.
This approach confirms that the court will actively manage the costs burden on litigants, ensuring that the final amount awarded is not merely "reasonable" in terms of rates, but also "proportionate" in terms of the overall litigation effort.
What was the final disposition and the specific orders made regarding the payment of costs?
The court ordered the Claimant to pay the Defendant the sum of AED 69,720. This amount represents 80% of the total costs claimed. The court further mandated that this payment be made within 14 days.
The Claimant shall pay the Costs Award within 14 days from the date of this Order pursuant to RDC 38.40.
Furthermore, the court included a protective provision regarding interest:
In the event the Claimant fails to pay the Costs Award within 14 days of this Order, interest shall accrue at the rate of 9% per annum from the date of this Order until full payment is made, in accordance with Practice Direction No. 4 of 2017.
What are the wider implications of this ruling for practitioners in the DIFC?
This order serves as a reminder that the DIFC Court of First Instance maintains a rigorous approach to costs assessment, even when the underlying legal work is deemed competent. Practitioners should anticipate that the court will frequently exercise its discretion to reduce claimed costs by a percentage (in this case, 20%) to satisfy the "proportionality" requirement, even if hourly rates are accepted as market-standard. Litigants must be prepared to justify not just the hourly rates, but the necessity of the time spent on every application, as the court will prioritize judicial economy in its final assessment.
Where can I read the full judgment in Union Insurance Company PJSC v International Precious Metals Refiners LLC [2025] DIFC CFI 064?
The full order can be accessed via the DIFC Courts website at: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0642022-union-insurance-company-pjsc-v-international-precious-metals-refiners-llc-13 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-064-2022_20250711.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | N/A |
Legislation referenced:
- Rules of the DIFC Courts (RDC): Part 38, RDC 38.8, RDC 38.23, RDC 38.40
- Practice Direction No. 4 of 2017 (Interest on Judgments)