What was the total amount of legal costs claimed by Nalani in ARB 027/2024 following the dismissal of Netty’s procedural applications?
The dispute arises from the Claimant’s (Nalani) efforts to recover costs incurred during enforcement proceedings, specifically following the failed attempts by the Defendant (Netty) to stay the enforcement and obtain permission to appeal (PTA). The core of the dispute centered on the quantum of legal fees deemed "reasonable and proportionate" under the DIFC Rules of Court.
The Claimant duly filed its Statement of Costs on 10 September 2025, claiming a total of AED 261,194.75.
The Claimant sought full recovery of these costs, arguing that the legal work performed was necessary to counter the procedural hurdles erected by the Defendant. The matter was brought before the Court to quantify the final award after the underlying applications were dismissed on 22 September 2025. Further details on the procedural history can be found at NALANI v NETTY [2025] DIFC ARB 027 — The High Cost of Procedural Obstruction in Enforcement Proceedings.
Which judge presided over the assessment of costs in the DIFC Court of First Instance on 2 October 2025?
The assessment of costs was conducted by H.E. Justice Shamlan Al Sawalehi, sitting in the Arbitration Division of the DIFC Court of First Instance. The order was issued on 2 October 2025, following the earlier dismissal of the Defendant’s applications on 22 September 2025.
What arguments did Nalani and Netty advance regarding the reasonableness of the legal fees in ARB 027/2024?
The Claimant maintained that the fees were justified by the complexity of the enforcement proceedings and the necessity of responding to the Defendant’s multiple procedural challenges. Nalani asserted that the staffing levels and the hours billed were commensurate with the demands of the case.
Conversely, the Defendant challenged the quantum of the costs, prompting the Court to scrutinize the Statement of Costs. While the Court ultimately found the hourly rates to be within the acceptable market range, the Defendant’s resistance necessitated a judicial review of the total expenditure to ensure it met the standards of proportionality required under the RDC.
What was the precise legal question H.E. Justice Shamlan Al Sawalehi had to answer regarding the assessment of costs under RDC 38.8?
The Court was tasked with determining whether the Claimant’s claimed costs of AED 261,194.75 were "proportionate" and "reasonable" under the standard basis of assessment. The legal question was not whether the hourly rates were excessive—as they were found to be compliant—but whether the total volume of work and the resulting bill were appropriate in the context of the overriding objective and the principles of judicial economy.
How did H.E. Justice Shamlan Al Sawalehi apply the standard basis of assessment to reduce the costs awarded to Nalani?
Justice Al Sawalehi utilized his discretionary powers under the RDC to ensure that the final award reflected a balanced approach to litigation costs. While acknowledging that the legal team’s rates were compliant with regulatory standards, he determined that a reduction was necessary to uphold the principles of proportionality.
However, in the exercise of my discretion under RDC 38.8 and RDC 38.23, and applying the standard basis of assessment, I consider that a reduction is warranted. I assess the Claimant’s recoverable costs at 80% of the amount claimed.
This reasoning highlights that even when individual billing components (such as hourly rates) are deemed acceptable, the Court retains the authority to apply a "global" reduction to the total bill to prevent excessive costs in enforcement matters.
Which specific RDC rules and Registrar’s Directions did the Court apply to determine the recoverability of costs?
The Court’s assessment was governed by Part 38 of the Rules of the DIFC Courts (RDC), specifically RDC 38.8 and RDC 38.23, which provide the framework for the standard basis of assessment and the Court’s discretion in awarding costs. Additionally, the Court referenced Registrar’s Direction No. 1 of 2023 to validate the hourly rates charged by the Claimant’s legal team. Furthermore, Practice Direction No. 4 of 2017 was applied to govern the interest rates applicable to the judgment debt.
How did the Court utilize Registrar’s Direction No. 1 of 2023 in the assessment of Nalani’s legal fees?
The Court used Registrar’s Direction No. 1 of 2023 as a benchmark for market-standard hourly rates. By confirming that the Claimant’s rates fell within this permitted range, the Court effectively narrowed the scope of the dispute to the proportionality of the total hours billed rather than the legitimacy of the rates themselves.
I am satisfied that the hourly rates charged fall within the market range permitted by Registrar’s Direction No. 1 of 2023.
This finding served as a foundational step in the Court's reasoning, allowing it to move directly to the application of its discretionary power to reduce the total amount based on the broader principles of judicial economy.
What was the final monetary relief awarded to Nalani, and what interest rate applies if Netty fails to pay within 14 days?
The Court ordered the Defendant to pay a total of AED 208,955.80. This amount represents 80% of the original claim.
The Defendant shall pay the Claimant AED 208,955.80 (the “Costs Award”), representing 80% of the total amount claimed in the Statement of Costs.
In the event the Defendant 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 for DIFC practitioners regarding the recoverability of costs in arbitration enforcement?
This decision serves as a reminder that the DIFC Courts will actively manage the proportionality of costs, even in cases where legal fees are technically compliant with hourly rate guidelines. Practitioners must anticipate that the Court will scrutinize the total "value" of the work performed against the complexity of the procedural issues. The deep editorial analysis of this case is at: Nalani v Netty [2025] DIFC ARB 027: The High Cost of Procedural Obstruction in Enforcement Proceedings.
Where can I read the full judgment in Nalani v Netty [2025] DIFC ARB 027?
The full order can be accessed via the DIFC Courts website at https://www.difccourts.ae/rules-decisions/judgments-orders/arbitration/arb-0272024-nalani-v-netty-3 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/arbitration/DIFC_ARB-027-2024_20251002.txt.
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| N/A | N/A | No external case law cited in this specific costs order. |
Legislation referenced:
- RDC 38.8
- RDC 38.23
- RDC 38.40
- Registrar’s Direction No. 1 of 2023
- Practice Direction No. 4 of 2017 (Interest on Judgments)