Dubai International Financial Centre Courts: Following its success at trial, Qatar General Insurance & Reinsurance Company QPSC sought indemnity costs against Emrgent Risk Solutions Limited, relying on a pattern of disruptive litigation conduct, including late changes of position, withdrawal of witnesses, last-minute notifications concerning contested issues and procedural applications. Sapna Jhangiani, J., accepted that many of the complaints were well-founded and found that the defendant’s conduct had been “disorganised, often very last-minute, and in many instances highly disruptive to the proceedings”. However, the Court held that the conduct, while misguided and often highly inconvenient, did not disclose dishonesty, bad faith, abuse of process or other misconduct capable of taking the matter outside the norm. Observing that the high threshold for indemnity costs had not been met, the Court awarded the claimant its costs on the standard basis, subject to detailed assessment if not agreed, and ordered a payment on account representing 65% of the claimant’s claimed costs.
Background
The present proceedings concerned the costs consequences following trial. There was no dispute that the claimant, having succeeded at trial, was entitled to its costs in principle. The dispute before the Court was confined to the basis on which costs should be awarded, the amount of any interim payment on account, and the treatment of costs arising from an earlier application concerning adjournment of the trial and the admission of expert underwriting evidence.
The claimant sought costs on the indemnity basis and a payment on account of 85% of its claimed costs. It further sought recovery of the remaining costs arising from the defendant’s earlier application. The defendant contended that costs should be awarded on the standard basis, with a payment on account of 50%, and submitted that the remaining application costs should be dealt with during detailed assessment.
Analysis, Law, and Decision
A. Applicable principles governing indemnity costs
The Court noted that under Practice Direction 5 of 2014, indemnity costs may be justified where the facts or conduct take the case outside the norm, including deliberate misconduct, unreasonable conduct to a high degree, or abuse of process. The Court further observed that, under the Rules of the DIFC Courts, it must consider all relevant circumstances, including the conduct of the parties, whether it was reasonable to contest issues, the manner in which the defence was pursued, the complexity of the proceedings, the importance of the matter, and the circumstances in which the work was undertaken.
The Court accepted the defendant’s submission that indemnity costs are reserved for exceptional cases and that the threshold is a high one. Referring to Excelsior Commercial & Industrial Holdings Ltd v. Salisbury Hammer Aspden & Johnson, [2002] EWCA Civ 879 and Balmoral Group Ltd v. Borealis Ltd [2006] EWHC 2531, the Court recognized that the required unreasonableness must be “to a high degree” and not merely conduct which, viewed with hindsight, can be criticised as wrong or misguided.
B. Complaints raised by the claimant
The claimant relied on several matters which it submitted, taken together, demonstrated a pattern of unreasonable litigation conduct. The claimant complained that the defendant continued to contest whether a cancellation notice had been sent despite disclosure material allegedly demonstrating that the notice had not been sent, only abandoning the issue on the eve of trial.
The claimant also complained that the defendant failed to clarify whether breach would be admitted if the cancellation notice had not been sent, resulting in uncertainty even at trial. Further complaints concerned the late withdrawal of a witness whose evidence had initially required the claimant to prepare for cross-examination, the late notification that certain issues were no longer contested after witnesses had already begun travelling to the UAE, difficulties surrounding the defendant’s expert evidence, the defendant’s application to adduce underwriting evidence coupled with an adjournment application, and an application to amend the defence at the close of evidence during a four-day trial.
After reviewing the parties’ submissions and the correspondence between them, the Court accepted that most of the claimant’s complaints were well-founded. The Court observed that the matters raised by the claimant described conduct that could best be characterised as, “disorganised, often very last-minute, and in many instances highly disruptive to the proceedings.”
However, the Court accepted the defendant’s submission that, even taken at their highest, the complaints related to case-management decisions made within an evolving litigation landscape. The Court stated that the decisions may be regarded as “misguided and often highly inconvenient”, but did not disclose dishonesty, bad faith, abuse of process, or other misconduct capable of taking the matter outside the norm.
The Court further noted that the proceedings involved hard-fought commercial litigation concerning complex insurance and reinsurance issues, several parties, multiple policies, and matters of significant importance to the parties. In all the circumstances, the Court concluded that the defendant’s conduct did not warrant departure from the usual order for costs on the standard basis.
C. Interim payment on account
The Court noted that an interim payment on account is the ordinary practice of the DIFC Court following judgment and that the amount awarded must not exceed what is likely to be recovered on detailed assessment. Although both parties accepted that 50% is generally the starting point, the Court emphasised that it possesses an unfettered discretion and must assess all relevant circumstances.
The claimant relied on the DIFC Court’s Assessment of Costs Guide, which states that receiving parties recover, on average, approximately 85% of their costs on detailed assessment conducted on the standard basis. The defendant argued that 85% was not an appropriate interim-payment benchmark and submitted that significant reductions could occur during assessment, including in relation to trial bundle preparation and staffing arrangements. Taking account of all circumstances, the Court held that an interim payment of 65% of the claimant’s claimed costs represented a realistic figure unlikely to exceed the amount ultimately recoverable on detailed assessment. Accordingly, the Court ordered a payment on account of AED 4,342,386.59.
D. Remaining costs of the defendant’s application
The Court also considered the claimant’s request for immediate payment of the remainder of its costs arising from the defendant’s earlier application concerning adjournment of the trial and admission of expert underwriting evidence. The defendant argued that those costs should await detailed assessment because issues connected with the underwriting evidence could become relevant in the future. The Court rejected that contention and noted that the claimant had succeeded and had already been awarded costs of the proceedings on the standard basis. The Court further noted that it had previously assessed 50% of the costs of the application at AED 123,500.
Therefore, the Court held that the claimant was immediately entitled to AED 123,500 representing the remaining 50% costs of that application.
Decision
The Court:
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awarded the claimant its costs of the proceedings on the standard basis, to be submitted to detailed assessment if not agreed;
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ordered the defendant to pay AED 4,342,386.59 as a payment on account of costs;
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ordered the defendant to pay a further AED 123,500 in respect of the remaining costs of the earlier application.
[Qatar General Insurance & Reinsurance Company QPSC v. Emrgent Risk Solutions Limited, Claim No. CFI 053 of 2024, decided on 12-9-2026]
