What was the nature of the dispute between ASW Hospitality AG and MAG Of Life FZ-LLC and what was the specific monetary stake at the conclusion of the proceedings?
The litigation arose from a contractual dispute within the hospitality sector, culminating in a substantive judgment delivered on 1 October 2024. Following the Court’s determination on the merits, the parties remained deadlocked regarding the ancillary issues of costs and interest. The Claimant, ASW Hospitality AG, sought recovery of costs and interest on a principal judgment sum of AED 1,928,609.20. The dispute was characterized by the Court as "hard-fought" and "somewhat personalised," reflecting the intensity of the underlying commercial disagreement.
The Court’s role in this specific order was to resolve the impasse created by the parties' inability to agree on the financial consequences of the judgment. As noted in the Court’s record:
I am grateful to the parties for their various submissions on these topics, namely the Claimant’s Costs Submissions and the Defendant’s Costs Submissions, dated 24 February 2025, and the Claimant’s Reply Costs Submissions and the MAG Reply Costs Submissions, dated 10 March 2025, together with their respective attachments. All of these have been considered.
The primary stake involved the quantification of recoverable costs and the determination of appropriate pre-judgment and post-judgment interest rates to be applied to the principal award.
Which judge presided over the costs and interest hearing for ASW Hospitality AG v MAG Of Life FZ-LLC in the DIFC Court of First Instance?
The matter was presided over by H.E. Justice Sir Peter Gross, sitting in the Court of First Instance. The order with reasons was issued on 2 April 2025, following the parties' failure to reach a consensus on the financial orders subsequent to the substantive judgment handed down on 1 October 2024.
What specific legal arguments did ASW Hospitality AG and MAG Of Life FZ-LLC advance regarding the apportionment of costs?
ASW Hospitality AG argued for the recovery of its costs based on the general principle that costs should follow the event, given that it was the successful party in the substantive litigation. Conversely, MAG Of Life FZ-LLC contended that the Court should significantly depart from the general rule. MAG’s counsel emphasized that ASW had only succeeded on a fraction of the issues raised during the trial.
The Defendant’s position was framed as follows:
The thrust of MAG’s submission was very different: “In the Judgment, the Judge found in favour of the Claimant (“ASW) on only two of the eight issues before him - allowing recovery under only one issue - and ordered MAG to pay ASW AED 1,928,609.20 (c.
MAG further argued that ASW should receive no costs, or at most 2.5% of its claimed costs, citing a Part 32 Offer to Settle dated 8 May 2023, in which MAG had offered USD 300,000 in full and final settlement.
What was the precise doctrinal issue the Court had to answer regarding the application of RDC 38.6 – 38.9?
The Court was required to determine whether the "general rule" that costs follow the event (RDC 38.7) should be applied strictly, or whether the Court’s discretion under RDC 38.8 and 38.9 necessitated an issue-based reduction. Specifically, the Court had to decide if the Claimant’s failure to succeed on six out of eight issues warranted a departure from the standard cost-shifting mechanism to ensure "practical justice," while simultaneously evaluating whether the conduct of the parties or any pre-trial settlement offers justified a further reduction in the recoverable amount.
How did H.E. Justice Sir Peter Gross apply the doctrine of "practical justice" to the apportionment of costs?
Justice Sir Peter Gross applied the test of "practical justice," which requires the Court to take a realistic view of the overall outcome of the litigation rather than engaging in a granular, issue-by-issue accounting that might distort the final result. While acknowledging that the Claimant was the overall successful party, the Judge exercised his discretion to award only 40% of the claimed costs, balancing the Claimant's success on the principal sum against its failure on the majority of the argued issues.
Regarding the conduct of the parties, the Court noted:
Fifthly, for completeness, although the case was hard-fought and, as described in the Judgment, somewhat personalised, I am not persuaded that the conduct of either party warrants a departure from the approach I have outlined. 16.
The Judge concluded that while the Defendant’s arguments for a near-total denial of costs were excessive, the Claimant’s success did not warrant a full recovery, leading to the 40% apportionment.
Which specific DIFC statutes and Rules of the DIFC Courts (RDC) governed the Court's decision on costs?
The Court relied primarily on RDC 38.6 through 38.9. Rule 38.6 establishes the Court's broad discretion regarding the payment and amount of costs. Rule 38.7 articulates the "general rule" that the unsuccessful party pays the costs of the successful party, while Rule 38.8 mandates that the Court consider all circumstances, including the conduct of the parties and the degree of success on individual issues. Rule 38.9 further clarifies that conduct includes pre-proceedings behavior and the reasonableness of raising specific allegations.
How did the Court utilize English and DIFC precedents to interpret the discretion afforded by RDC 38.7?
The Court cited Al Khorafi v Bank Sarasin-Alpen (ME) Ltd [2009] DIFC CFI 026 to confirm that while the general rule is that costs follow the event, the Court maintains wide discretion to depart from this rule to achieve "practical justice." The Court also referenced Travellers’ Casualty v Sun Life [2006] EWHC 2885 (Comm) to reinforce the principle that the order must reflect the overall justice of the case. Furthermore, the Court clarified that Sky News Arabia FZ-LLC v Kassab Media FZ (LLC) [2017] CA 010 did not establish a new principle but merely reaffirmed the Court’s existing discretion to make issue-based orders.
What was the final disposition regarding monetary relief, interest, and costs?
The Court ordered MAG Of Life FZ-LLC to pay ASW Hospitality AG AED 640,000 in costs (representing 40% of the claimed amount). Additionally, the Court awarded pre-judgment simple interest on the principal sum of AED 1,928,609.20 at a rate of EIBOR + 1% from 7 March 2024 to 1 October 2024. Post-judgment interest was set at 9% per annum on the principal sum, the costs, and the pre-judgment interest (following a 28-day grace period for the latter).
The Court’s specific order on pre-judgment interest was:
Accordingly, I conclude that ASW is entitled to preJudgment simple interest on the sum of AED 1,928,609.20 from 7 March 2024 until 1 October 2024 at the rate of EIBOR + 1%. 20.
What are the wider implications of this ruling for practitioners regarding costs and interest in the DIFC?
This case reinforces that the DIFC Courts will not mechanically apply the "costs follow the event" rule when a claimant achieves only partial success. Practitioners should anticipate that the Court will conduct a realistic assessment of the overall litigation outcome. The ruling serves as a reminder that "hard-fought" or "personalised" litigation does not automatically trigger punitive cost orders unless specific conduct thresholds are met. Furthermore, the Court’s willingness to set a 9% post-judgment interest rate serves as a significant incentive for defendants to satisfy judgments promptly.
Where can I read the full judgment in ASW Hospitality AG v MAG Of Life FZ-LLC [2025] DIFC CFI 077?
The full judgment can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/court-first-instance/cfi-0772022-asw-hospitality-ag-v-mag-life-fz-llc-8 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/court-first-instance/DIFC_CFI-077-2022_20250402.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| Al Khorafi v Bank Sarasin-Alpen (ME) Ltd | [2009] DIFC CFI 026 | Affirmed the general rule that costs follow the event and the Court's discretion to depart from it. |
| Sky News Arabia FZ-LLC v Kassab Media FZ (LLC) | [2017] CA 010 | Clarified that the Court retains discretion to make issue-based cost orders. |
| Travellers’ Casualty v Sun Life | [2006] EWHC 2885 (Comm) | Cited for the principle that the object of costs orders is to do "practical justice." |
Legislation referenced:
- Rules of the DIFC Courts (RDC) 38.6
- Rules of the DIFC Courts (RDC) 38.7
- Rules of the DIFC Courts (RDC) 38.8
- Rules of the DIFC Courts (RDC) 38.9