What was the specific monetary dispute regarding the Claimant's Statement of Costs in OM v OTTILIE?
The dispute centered on the quantum of legal costs recoverable by the Claimant, OM, following the dismissal of the Defendant’s, OTTILIE, jurisdictional challenge. Having successfully defended its position in the proceedings, the Claimant sought reimbursement for the expenses incurred during the litigation.
The Claimant duly filed its Statement of Costs on 3 November 2025, claiming a total of AED 523,789.45.
The Claimant’s application for costs followed the Court’s earlier ruling on 28 October 2025, which had favored the Claimant and directed the Defendant to cover the costs of the application on a standard basis. The total amount claimed of AED 523,789.45 comprised professional legal fees as well as various disbursements, including translation, attestation, courier services, and court filing fees. For further context on the underlying procedural history, see OM v OTTILIE [2025] DIFC CFI ARB 017 — Procedural failure and the limits of jurisdictional challenges — order dated 2025-10-28.
Which judge presided over the assessment of costs in ARB 017/2025?
H.E. Justice Shamlan Al Sawalehi presided over the assessment of costs in this matter. The order was issued within the Arbitration Division of the DIFC Courts on 10 November 2025, following the substantive determination of the jurisdictional challenge heard in October 2025.
What were the respective positions of OM and OTTILIE regarding the recoverability of legal costs?
The Claimant, OM, maintained that the entirety of the AED 523,789.45 claimed in its Statement of Costs was reasonably and proportionately incurred in response to the Defendant’s unsuccessful jurisdictional challenge. The Claimant sought full recovery of these costs as the prevailing party in the application.
Conversely, the Defendant, OTTILIE, having failed in its jurisdictional challenge filed under Part 12 of the RDC, was subject to the Court’s order to pay the Claimant’s costs on a standard basis. While the Defendant did not succeed in its challenge, the Court’s assessment process allowed for a critical review of the Claimant's bill to ensure that the costs were not only reasonable but also proportionate to the issues at stake.
What was the precise legal question H.E. Justice Shamlan Al Sawalehi had to answer regarding the Claimant's Statement of Costs?
The Court was tasked with determining the appropriate quantum of costs to be awarded to the Claimant under the standard basis of assessment. The primary legal question was whether the total amount claimed of AED 523,789.45 met the threshold of proportionality required by the Rules of the DIFC Courts (RDC), or whether the Court should exercise its discretion to reduce the award to better reflect the scope of the issues determined.
This Order concerns the Claimant’s entitlement to costs pursuant to paragraph 3 of the Order dated 28 October 2025, by which I dismissed the Defendant’s Jurisdictional Challenge Application and granted the Claimant’s Application.
How did H.E. Justice Shamlan Al Sawalehi apply the test of proportionality to the costs claimed in OM v OTTILIE?
In evaluating the Statement of Costs, the Court acknowledged that the fees and expenses were indeed incurred in connection with the litigation. However, the Court exercised its judicial discretion to ensure that the final award did not exceed what was proportionate to the complexity and importance of the jurisdictional issues resolved.
Nonetheless, exercising my discretion under RDC 38.8 and RDC 38.23, and applying the standard basis of assessment, I consider that a reduction to 80% is appropriate to reflect proportionality between the work undertaken and the scope of the issues determined.
The judge concluded that while the work was necessary, a 20% reduction was required to align the final figure with the principle of proportionality. This resulted in a final award of AED 419,031.56, which the Court deemed a fair and reasonable quantification of the recoverable costs.
Which specific RDC rules and Practice Directions were applied by the Court in assessing the costs?
The Court’s assessment was governed by Part 38 of the Rules of the DIFC Courts (RDC), which provides the framework for the assessment of costs. Specifically, the Court relied upon RDC 38.8 and RDC 38.23, which grant the Court the discretion to assess costs on a standard basis and to ensure that such costs are proportionate to the matters in dispute.
Furthermore, the Court referenced RDC 38.40 regarding the timeline for payment. Regarding the potential for late payment, the Court invoked Practice Direction No. 4 of 2017, which governs the accrual of interest on judgments, setting the interest rate at 9% per annum in the event of a failure to pay within the prescribed 14-day window.
How did the Court utilize its discretion under the RDC to reach the final costs award?
The Court utilized its discretion to balance the Claimant's right to recover costs with the overarching requirement that litigation costs remain proportionate. By citing RDC 38.8 and RDC 38.23, the Court affirmed that it is not bound to award the full amount claimed simply because the expenses were incurred.
I am satisfied that the fees and expenses were reasonably and proportionately incurred in connection with the Defendant’s unsuccessful Application and the Claimant’s related Application.
The Court’s reasoning process involved a two-step verification: first, confirming that the costs were reasonably incurred, and second, applying a proportionality filter to ensure the final sum was appropriate for the specific jurisdictional challenge at hand. This led to the final determination that 80% of the claimed amount was the appropriate recovery.
What was the final disposition and the specific monetary relief ordered by the Court?
The Court ordered the Defendant to pay the Claimant a total of AED 419,031.56. This amount represents 80% of the total costs claimed in the Statement of Costs.
The Defendant shall pay the Claimant the amount of AED 419,031.56 (the “Costs Award”), representing 80% of the total amount claimed in the Statement of Costs.
The Court further ordered that this payment be made within 14 days. Should the Defendant fail to comply with this timeline, interest will accrue at a rate of 9% per annum from the date of the order until the date of full payment.
In the event the Defendant fails to pay the Costs Award within 14 days of this Order, interest shall accrue at 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 the OM v OTTILIE ruling for DIFC practitioners?
This order serves as a reminder to practitioners that the DIFC Courts maintain a rigorous approach to cost proportionality, even when a party is successful in an application. Practitioners should anticipate that the Court will critically review Statements of Costs to ensure that the legal fees incurred are commensurate with the complexity of the issues determined.
The ruling reinforces that the Court will not hesitate to apply a percentage reduction to claimed costs if it determines that the total amount is disproportionate to the scope of the issues. Consequently, when drafting Statements of Costs, practitioners should ensure that the work performed is clearly linked to the specific issues resolved, as the Court will exercise its discretion under RDC 38.8 and RDC 38.23 to align the final award with its assessment of proportionality.
Where can I read the full judgment in OM v OTTILIE [2025] DIFC ARB 017?
The full order can be accessed via the DIFC Courts website: https://www.difccourts.ae/rules-decisions/judgments-orders/arbitration/arb-0172025-om-v-ottilie-1 or via the CDN link: https://littdb.sfo2.cdn.digitaloceanspaces.com/litt/AE/DIFC/judgments/arbitration/DIFC_ARB-017-2025_20251110.txt
Cases referred to in this judgment:
| Case | Citation | How used |
|---|---|---|
| OM v OTTILIE | [2025] DIFC CFI ARB 017 | Procedural history and basis for costs order |
Legislation referenced:
- Rules of the DIFC Courts (RDC): Part 12, Part 38, RDC 38.8, RDC 38.23, RDC 38.40
- Practice Direction No. 4 of 2017 (Interest on Judgments)