Why did the Sixth Defendant in IDBI Bank v Mabani Delma General Contracting Co seek AED 376,263.70 in costs for interlocutory applications?
Following the successful setting aside of a Sanctions Order, the Sixth Defendant sought to recover legal costs incurred during two specific interlocutory proceedings: the "Set Aside Application" and the "Relief from Sanctions Application." The Sixth Defendant argued that the total amount of AED 376,263.70 was justified by the length of the proceedings and the contextual background required for legal practitioners to effectively represent his interests.
The Claimant, IDBI Bank, vehemently opposed this quantum, arguing that the costs were excessive and failed to meet the standards of proportionality required under the Rules of the DIFC Courts (RDC). The dispute centered on the efficiency of the Sixth Defendant’s legal team, which involved five practitioners. As noted in the court records:
Following the issuance of the Order, in particular paragraph 3 of the summary, the Sixth Defendant (hence, ‘Sixth Defendant’) filed his costs submissions dated 29 January 2026, with the Claimant responding in opposition on 3 February 2026.
The Claimant highlighted that the work performed by the Sixth Defendant did not justify such a significant financial outlay, especially when compared to the Claimant’s own costs for similar work.
Which judge presided over the costs assessment in the Court of First Instance?
The assessment of costs was conducted by H.E. Deputy Chief Justice Ali Al Madhani. The order was issued on 25 March 2026, following a hearing held on 8 July 2025, where the court had previously determined that the Sanctions Order against the Sixth Defendant should be set aside.
How did the Claimant and the Sixth Defendant argue their respective positions regarding the proportionality of legal fees?
The Claimant argued that the Sixth Defendant’s costs were incompatible with RDC Rules 38.18 and 38.21(1), asserting that the amount sought was disproportionately excessive given the nature of the applications. The Claimant pointed out that the Sixth Defendant utilized five practitioners for relatively straightforward tasks, and that the most senior members of the team failed to delegate appropriately, leading to inflated costs.
Conversely, the Sixth Defendant maintained that the complexity of the case, including the long history of proceedings prior to the hearing, necessitated the involvement of his legal team. He argued that the practitioners required a deep understanding of the broader context of the litigation to properly handle the applications. The Claimant’s opposition was summarized by the Court as follows:
In summary, the Claimant’s opposition is that the costs sought are incompatible with Rules 38.18 and 38.21(1) of Rules of the DIFC Courts (“RDC”), as, in consideration of all circumstances relating to the Applications, costs sought are disproportionately excessive in comparison to the matters in issue.
What was the precise doctrinal issue the Court had to resolve regarding the assessment of costs under the RDC?
The Court had to determine the scope of "reasonable and proportionate" costs for interlocutory applications. Specifically, the issue was whether a party can recover costs for a large legal team when the underlying applications are "materially similar" and lack significant legal complexity. The Court had to decide if the "contextual matters" of the broader litigation could justify costs that significantly exceeded the volume of work produced, or if the costs must be assessed strictly in relation to the specific applications for which they were awarded.
How did H.E. Deputy Chief Justice Ali Al Madhani apply the test of proportionality to the Sixth Defendant’s costs?
The Court applied a strict proportionality test, finding that the Sixth Defendant’s costs were not aligned with the actual work performed. The judge noted that the Sixth Defendant filed two witness statements totaling 23 pages, while the Claimant filed two totaling 21 pages, yet the Sixth Defendant’s costs were vastly higher. The Court emphasized that it would not hold the Claimant liable for costs incurred due to the Sixth Defendant's own procedural mistakes or inefficient staffing.
The Court’s reasoning focused on the necessity of the work performed rather than the seniority of the practitioners involved. As the judge observed:
I concur with the Claimant’s observations of the Sixth Defendant’s sought costs. My Order was clear in limiting costs to the Applications only, and therefore I will only consider what is reasonable for costs incurred for what are relatively straightforward applications that do not carry particular legal complexity necessary for five practitioners. Further, as recognised at paragraph 2 of the reasons of the Order, “The Applications are materially similar.
The Court concluded that the Sixth Defendant’s costs were unjustifiable when compared to the Claimant’s own expenditure for the same period.
Which RDC rules and specific comparative metrics did the Court use to evaluate the costs?
The Court relied heavily on RDC Rules 38.18 and 38.21(1), which govern the assessment of costs and the requirement for proportionality. The Court also utilized a comparative analysis between the Sixth Defendant’s costs and the Claimant’s costs submitted on 7 July 2025. The Court noted:
The Sixth Defendant did not produce a significantly higher volume of work; the Sixth Defendant filed two witness statements comprising a total of 23 pages, whereas the Claimant filed two witness statements totalling 21 pages, yet the Claimant’s costs as submitted on 7 July 2025 only amount to AED 150,393.70.
By contrasting these figures, the Court established that the Sixth Defendant’s request for AED 376,263.70 was fundamentally disproportionate to the actual output.
How did the Court address the Sixth Defendant’s reliance on the "length of proceedings" as a justification for higher costs?
The Sixth Defendant attempted to justify the additional AED 225,870 in costs by citing the long history of the case and the need for his practitioners to understand the broader context. The Court rejected this, clarifying that the previous order had explicitly limited the scope of recoverable costs to the two specific applications. The Court held that practitioners must focus on what is "reasonably practicable" for the specific applications in isolation, rather than charging for the entire history of the litigation.
Further, the Sixth Defendant relies on the length of proceedings prior to the Hearing and the contextual matters important for the practitioners to understand in order to explain some of the additional AED 225,870 sought in comparison to the Claimant.
The Court further noted that it would not allow the Claimant to be burdened by the costs of the Sixth Defendant’s own procedural errors, stating:
I do not find that the Claimant ought to be liable for costs unnecessarily incurred for the Sixth Defendant’s mistake.
What was the final disposition and the specific monetary relief ordered by the Court?
H.E. Deputy Chief Justice Ali Al Madhani ordered the Claimant to pay 50% of the Sixth Defendant’s sought costs. Given the original request of AED 376,263.70, the Court awarded AED 188,131.85. The Court ordered that these costs be paid within 14 days of the order, pursuant to RDC Rule 38.40. The judge’s rationale for this specific split was clear:
When taking into account all circumstances, in my view, half of the sought costs are proportionate to be awarded to the Sixth Defendant.
What are the wider implications of this decision for DIFC practitioners regarding cost recovery?
This ruling serves as a stern reminder that the DIFC Court will rigorously police the proportionality of costs in interlocutory matters. Practitioners must anticipate that the Court will look beyond the seniority of the legal team and the total hours billed, focusing instead on whether the staffing level was necessary for the complexity of the specific application. Litigants should be prepared to justify the use of multiple practitioners and ensure that costs are strictly tied to the specific motions at hand, rather than the broader history of the case. The decision reinforces that "contextual understanding" is not a blank check for excessive billing.
Where can I read the full judgment in IDBI Bank v Mabani Delma General Contracting Co [2026] DIFC CFI 070?
The full text of the order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0702018-idbi-bank-limited-v-1-mabani-delma-general-contracting-co-llc-2-heliopolis-electric-company-llc-3-delma-engineering-2 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-070-2018_20260325.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law cited in the provided order. |
Legislation referenced:
- Rules of the DIFC Courts (RDC): Rule 38.18, Rule 38.21(1), Rule 38.40
- Registrar’s Direction No. 1 of 2023