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Recovery of Litigation Costs: Overview (United Arab Emirates)

By Mohamed Abdelrehiem, Mahmoud Hamed, IN’P – IBRAHIM .N. PARTNERS

Reproduced from Practical Law with the permission of the publishers. For further information, visit Practical Law

Practice note: overview | Law stated as at 01-Jan-2024 | International.

A Practice Note (Note) providing an overview on rules and practices related to the recovery of litigation costs in the United Arab Emirates (UAE). This Note covers how parties can obtain a cost-order from the court, interest on a costs-award, security for costs, and whether a court can order the payment of a costs-order in foreign currency or in instalments. It also considers the enforcement of contractual costs provisions and how courts address costs related to an interim application, the costs of appeal, and in the context of a settlement.

This Note also looks at how effective the UAE’s legal costs framework is in managing the costs of litigation, and the recent developments and legislative reforms related to this topic.

Often the excessive costs of protracted litigation may deter a party from bringing, defending, or pursuing legal proceedings, even if the party has a strong case and good chance of winning in court. This is particularly the case in jurisdictions where costs are largely recoverable by the successful party. In other jurisdictions, lack of an effective legal framework to manage litigation costs can sometimes lead to a steady increase in false, frivolous, and speculative lawsuits.

It may not be possible to recover all litigation and legal costs incurred by a party. Recovery of costs incurred by a party in litigation from another party is subject to the rules of the court or other regulations.

This Note provides an overview of the rules relating to the recovery of costs in the UAE. It covers:

♦ Whether and, if so, how costs are recoverable.

♦ What costs are for the purposes of recoverability.

♦ How to obtain a costs order from the court.

♦ Other orders that the court may make regarding costs, including interest, security for costs, set-off, payment in instalments, and costs orders in foreign currency.

♦ How courts enforce contractual costs provisions.

♦ How courts address costs related to an interim relief application, on appeal, and in the context of a settlement.

♦ Enforcement of costs orders.

♦ It also looks at how effective the UAE’s legal costs framework is in managing litigation costs, and any recent developments and legislative reforms related to this topic.

♦ For more on how litigation is funded in the UAE, see Third-Party Litigation Funding in the UAE: Overview.

Litigation Costs

Litigation costs in the UAE comprise both:

♦ The expenses of the case (court fees).

♦ The legal fees (attorney fees).

The expenses of the case must include the attorney’s fees provided by the court in accordance with the controls and standards set forth in the law regulating the legal profession and the cost of translating the notification (Article 133.2, Federal Law no.42 of 2022 promulgating the Civil Procedures Law (CPC)). The notification refers to the document sent by the applicant to the defendant informing them of the initiation of the proceedings. This notification is sent by the court and is usually in Arabic. However, if the defendant does not understand Arabic, the applicant should send a translation of the notification to the defendant. The expenses of the case include the cost of the translation of the notification and attorney’s fees which are awarded in minimal amounts (Article 133.2, CPC).

Case expenses are the legal expenses related to bringing or defending a proceeding or a step in a proceeding. At the conclusion of a proceeding (or sometimes at certain interim stages of a proceeding), courts may order one party to pay all (or more often, a portion) of another party’s costs, subject to the outcome of the case proceedings.

Legal costs are costs incurred by litigants in relation to legal matters. This includes money paid to lawyers and third parties. Costs paid by a client to their lawyer (solicitor) are lawyer (solicitor) or client costs.

Articles 46 to 58 of Federal Law no.34 of 2022 regulating the advocacy and legal consultancy profession (Advocacy Law) apply to the professional or legal fees of lawyers and legal consultants or counsels. In practice, the court issuing the judgment, grants one of the parties an award for legal fees in the amount of AED 1000 to AED 2000. The court might also rule that the parties to the case must split the legal fees equally.

Rules and Practice

It is essential to first explain the structure of the UAE judicial system to understand the legal expenses of courts in each emirate of the UAE. The UAE has a federal judicial system, where most of the emirates fall under the jurisdiction of the Federal Supreme Court. The judicial system comprises three levels of litigation:

♦ Court of First Instance.

♦ Court of Appeal.

♦ Court of Cassation.

There is also the execution court which is responsible for the execution of judgments.

However, Dubai, Abu Dhabi, and Ras Al Khaimah have their own judicial system up to the Court of Cassation, while the other emirates (Sharjah, Ajman, Fujairah, and Umm Al Quwain) fall under the Federal Courts (Federal Court of First Instance, Federal Court of Appeal, and Federal Supreme Court). Execution is segregated between the emirates and involves separate expenses and costs.

UAE laws with provisions regulating costs and expenses include the following:

Federal Law no.42 of 2022 promulgating the CPC. The CPC regulates procedure in all civil (including labour and commercial) claims before all courts in the seven emirates. Articles 133 to 136, CPC provide general rules in relation to litigation costs and expenses.

Law No.21 of 2015 (including its annex) regarding the regulation of judicial fees of Dubai Courts. This law prescribes the main procedure for the regulation of judicial fees before the Dubai Courts only, as well as the costs and expenses of claims.

Law No.9 of 2016 (including its annex) regarding the regulation of judicial fees of Ras al-Khaimah Courts. This law prescribes the main procedure for the regulation of judicial fees, as well as the costs and expenses of claims before Ras al-Khaimah Courts.

Law No.13 of 2017 regarding the regulation of judicial fees of Abu Dhabi Courts. This law prescribes the main procedure for the regulation of judicial fees, as well as the costs and expenses of claims before Abu Dhabi Courts. Articles 60 and 61 list the fee for each action.

Federal Law No.13 of 2016 (including its annex) regarding the regulation of judicial fees of Federal Courts. This law prescribes the main procedure for the regulation of judicial fees, as well as the costs and expenses of claims before Federal Courts.

Federal Law No.34 of 2022 regulating the legal profession and legal consultancy. This law aims to regulate and develop the legal profession in the UAE, Articles 46 to 58 regulate the professional fees of lawyers. Ministry of Justice Decision No.666 of 2015, regarding the rules of professional conduct and ethics of the legal profession (Code of Conduct MOJ Decision). This decision prescribes the Code of Conduct and ethics of lawyers in relation to their clients and colleagues.

Rules framed by the High Court in the UAE, as well as the High Courts of each respective emirate.

While there are four main sets of laws that regulate court fees and expenses in the UAE (Dubai, Ras Al Khaimah, Abu Dhabi, and Federal), most of these laws share the same provisions in their respective laws. The differences relate to cost figures and percentages rather than legal principles and the application mechanism of litigation costs (such as payment of costs, recovery of costs, calculation of costs, and how the court rules on costs). The application mechanism of litigation costs is regulated mainly by the CPC.

Lawyer’s Duty to Inform Clients About Costs

The nature of the relationship between a lawyer and their client in the UAE is considered fiduciary. Therefore, it is mandatory that advocates be fully transparent with their clients over both legal and litigation costs and expenses. The time element of disclosure is also very important, and lawyers should share with their client, as early as possible, an explanation of all types of litigation costs involved.

Lawyers have an obligation to sign with their clients a written engagement or contract that includes litigation costs and expenses (both legal and administrative). Lawyers are entitled to receive their legal fees for the work they perform within the limits of their power of attorney. They may also collect the expenses incurred by them for the conduct of the cases or the works for which they have been entrusted. The contract of legal fees shall be in writing by any means prior to undertaking the agreed work. The fees shall be payable in accordance with this Contract (Article 46, Advocacy Law).

In addition, the legal fees contract must specify the work assigned to the lawyer, its nature, and its requirements in accordance with the law and customs (Article 49.1, Advocacy Law).

Factors to consider when determining legal fees are as follows:

♦ The type and nature of the work assigned to the lawyer, and the estimated effort and the skills required to perform it.

♦ The time expected to complete the work required from the lawyer.

♦ The significance of the case or the disputed interests.

♦ The experience and status of the lawyer, and the seniority of their registration and the reputation and prestige of their firm.

♦ Expenditures of the lawyer’s office, such as research expenses and charges.

(Article 47, Advocacy Law.)

The Code of Conduct MOJ Decision sets out the lawyer’s obligation to act in good faith and the factors present in the lawyer’s agreement with the client. This includes the costs to be incurred by the client during the proceedings and the basis for those costs, as well as the grounds of any expenses imposed on the client, including expenses and payments related to third parties.

The attorney legal advisor or the firm must, when assigned by the client, prepare a written agreement containing at least the following matters:

♦ The scope of the legal services to be rendered and any other matters of importance.

♦ The name or names of the lawyer(s) or legal advisor(s) who will provide the legal services.

♦ The basis on which any expenses to be imposed on the client including expenses and payments related to third parties will be estimated.

♦ The estimated fees for the scope of legal services to be rendered by the attorney legal counsel or the firm and the basis of this assessment.

♦ Details of any insurance policy maintained by the lawyer or the legal counsel or the firm covering indemnity against the risks and errors of the legal profession.

♦ Details of the person(s) authorised by the firm to receive complaints related to the lawyer or the legal counsel, the firm, or the legal services.

(Article 4.c.1, Code of Conduct MOJ Decision.)

Obtaining a Costs Award

Generally, UAE courts do not recognise costs awards that are separate to the final judgment on the merits of the case. UAE courts do not issue an award of costs that is independent from the original judgment.

Legal and litigation costs are included in the judge’s final decision on the claim. Article 133.1 of the CPC requires the court to include the costs award in its judgment. These costs, which are included in the court’s judgment, can be recovered or collected (by the party in whose favour costs have been awarded) through the normal procedures of execution of the issued judgment. In Federal Courts, the payment of judicial fees becomes an obligation of the party compelled by the judgment to pay the lawsuit expenses (Article 22.1, Federal Law No. 13 of 2016).

Determining Which Party Pays the Costs

Courts in the UAE have absolute discretion in terms of the award of costs in favour of either party of the claim or counterclaim. In principle, and based on practice, the unsuccessful party in the claim or counterclaim must pay the litigation costs, including the legal costs.

If there is more than one unsuccessful party to the claim, the court can oblige them to pay the litigation costs equally or proportionally, each equal to their interest in the claim, as the court deems appropriate.

They will not be required to join in solidarity unless they are in solidarity with their stated obligation, and the legal fees shall not be counted by the number of convicted parties, convicted persons, or the number of agents (see Article 133, CPC). Similarly in relation to legal fees, if A and B were in solidarity in their litigious obligation, they are in solidarity in legal fees. Legal fees (attorney’s fees) are not multiplied by the number of the defendants. For instance, If the legal fees are AED 2000 and the number of defendants is four, the total remains AED 2000, and not AED 8000. Although very unlikely in practice, courts may rule that unsuccessful parties may not jointly pay the fees between them.

Articles 134, 135, and 136 of the CPC have further elaborated on the discretionary power of the court in terms of the award of costs.

If each of the opponents fails in some of the claims or requests, the court may decide that each party shall bear the expenses for their claims or requests or divide the expenses between them, as the court deems appropriate in its judgment. They may also rule them all on one of them (Article 135, CPC). This is subject to the discretionary power of the court.

In many cases, the court orders the unsuccessful party to pay the legal costs and fees associated with the part of the claim that they did not prevail on. The specific allocation of costs can vary, and it is at the discretion of the court.

In practice, a successful party can recover all the costs or expenses paid in the claim. This happens when the successful party does not lose any part of the claims or requests made in the claim. In this case, the judge will probably rule that the unsuccessful party is obliged to pay all the costs or expenses including the successful party’s expenses (see Article 133.2, CPC).

The rationale behind this approach is that the unsuccessful party has caused the successful party to incur expenses (litigation costs) by insisting on resolving the dispute through the court rather than an amicable settlement.

Although there are rules in relation to which party shall bear the costs of litigation (including legal costs) (Articles 133 to 136, CPC), the court, which renders the judgment, has an absolute discretionary power to rule in favour of either party in terms of litigation costs.

Articles 134, 135, and 136 provide some exceptions to the general rule that litigation costs are payable by the unsuccessful party provided in Article 133.2. However, they are designed to provide judges with different solutions or options while determining the party that shall bear costs, rather than limiting their powers in terms of awarding the costs. See Factors Courts Consider When Awarding Costs.

The authors were unable to find any provision in UAE law regulating the award of costs, that explicitly mentions that any agreement by the parties to a dispute to the costs of litigation will prevail.

However, the general rules of the UAE Civil Transaction Code no.5 of 1985 (Civil Transaction Code) provide that the contract must be performed in accordance with its content and is binding on its parties. The general rule under the civil law of the UAE is that that contract is the governing law of the parties. Article 246 of the Civil Transaction Code states that:

1 – The contract must be performed in accordance with its contents, and in a manner consistent with the requirements of good faith.

2 – The contract shall not be only restricted to an obligation upon the contracting party to do that which is (expressly) contained in it, but shall also embrace that which is appurtenant to it by virtue of the law, custom, and the nature of the transaction.”

Article 257 of the Civil Transaction Code provides that the basic principles of contracts are the consent of the contracting parties and the obligations they have agreed to (as set out in the contract). Therefore, it appears that courts in the UAE will apply parties’ agreements in relation to litigation costs provided they are clear and not disputed. If parties consented to contractual costs and the terms of the contract are clear and not disputed, it will have an impact on the court’s power to award costs.

Factors Courts Consider When Awarding Costs

The courts in the UAE have absolute discretionary power in relation to costs awards, which are provided at the end of each judgment. Article 133.2 of CPC stipulates that the unsuccessful party generally bears the litigation costs. However, Articles 134 to 136 of the CPC provide some exceptions to Article 133.2, granting judges more flexibility in determining which party pays litigation costs.

The courts may decide to order the successful party to pay all or some of the expenses provided that the successful party’s conduct in the claim has resulted in unnecessary expenses or left their opponent in ignorance of the documents they possess (Article 134, CPC).

When both parties have failed or lost some of their claims in the original lawsuit. The court has discretion to oblige each party to pay the expenses of their claims or divide the expenses between them. The court may also oblige one party to pay all the costs. In other words, courts have absolute discretionary power when determining which party will bear the litigation costs based on the claim circumstances (see Determining Which Party Pays the Costs) (Article 135, CPC).

When one of the parties brings an action, claim, or defence in bad faith. The courts may award the other party compensation in lieu of the expenses incurred resulting from this action, claim, or defence. The authors have never seen this situation, where courts award compensation in lieu of an action brought in bad faith, in practice (Article 136, CPC).

As an alternative solution, the court may impose a monetary penalty on the party that makes an action, claim, or defence in bad faith. This fine should not be less than AED 1000 and not more than AED 10,000. The authors have seen this situation in practice, where courts impose a fine on one of the parties for submitting memos during one of the hearings, although it was the other parties’ turn for submission.

Recoverable Costs

♦ Court fees are an essential part of the case expenses which can be recovered as per the rules provided in the CPC and other applicable laws in the UAE (see Litigation Costs).

Court expenses and fees in the UAE, which are charged by the courts could be in the form of:

A fixed amount based on the type of claim or procedure.

A variable amount based on a percentage of the amount of the claim.

Fees incurred by a lawyer (legal fees) are part of the case expenses and are therefore recoverable (Article 133.2, CPC) (see Litigation Costs). Nevertheless, in practice, courts usually award the legal fees in an amount between AED 1000 and AED 2000. There are no precedents in the UAE where local courts have awarded legal fees based on a time-spent basis. The authors consider that the legal fees granted by the UAE courts often do not align with prevailing market rates, and this is predominantly due to procedural formalities adhered to by the judiciary.

♦ The authors have not come across any provisions in UAE law that stipulate the recovery of out of pocket expenses, neither have they seen this in practice. Clients are generally responsible for all out of pocket expenses that they incur prior to or during the course of litigation.

♦ If the court decides to appoint an expert and oblige one of the parties or both to pay the fees, the expert fees are considered part of the expenses and, therefore, can be recovered along with other case expenses as per the general rules of recovery of litigation costs. The same also applies to notification of the defendant in a particular claim, as this is done through the court.

Litigants can recover their own costs, which were incurred during the litigation, based on the general rules of recovery of costs (see Litigation Costs).

Determining What Amount Is to Be Paid

Court fees in the UAE can be:

♦ A fixed amount.

♦ A variable amount based on a percentage of the amount of the claim.

♦ (See Recoverable Costs.)

Each Emirate has its own law in relation to court fees. Within UAE therefore, the amounts and percentages of the court fees differs from one legislation to another. However, the change is not very different in substance.

The Dubai Courts of First Instance charge 6% of the total claim amount with a maximum of:

♦ AED 20,000 – if the claim amount does not exceed AED 500,000.

♦ AED 30,000 – if the claim amount is between AED 500,001 and AED 1,000,000.

♦ AED 40,000 – if the claim amount exceeds 1,000,000.

Federal Courts of First Instance, on the other hand (FCFI) charge 4% of any claim amounting to AED 100,000 or less. If the claim amount exceeds AED 100,000, FCFI charges 4% for the first AED 100,000 of the claim amount in addition to 5% for any additional amount with a maximum of AED 30,000 (see Annex Table of Fees of Federal Law No.13 of 2016).

In practice, FCFI charge only 5% of the claim amount for any claim that exceeds AED 100,000.

Court fees are fixed by law and recoverable. However, in practice, legal fees are usually awarded in nominal fees by the courts (between AED 1,000 and AED 2,000). Therefore, a major portion of legal fees are not recoverable.

In addition, courts do not award legal costs that are not paid through the court itself. For instance, if one of the parties hires an independent expert, the court would not take this expense into consideration when awarding legal costs. However, if the court appoints an expert to review the technical points of parties’ claims and issue a report accordingly, the unsuccessful party must pay the fees, subject to the rules explained in this Note.

Fixed Or Capped Amount

The amount of court fees is fixed under UAE Law. Courts usually charge a fixed fee of a percentage of the claim amount with a cap. Courts rarely award more than AED 2,000 in legal fees. It is not a capped amount or a fixed amount, as there is not a legislation or a case law precedent that specifies this amount. Therefore, it is merely a matter of practice.

Costs and Settlement

If the dispute is settled after being a live case in court, the court applies the parties’ agreement in relation to who bears the case expenses. In the absence of an agreement between the parties, the court usually obliges the plaintiff to pay all case expenses.

The court will reimburse or return half of the case expenses if the claim is settled prior to setting the date for judgment in a preliminary or final pleading. Nevertheless, the party that is claiming the recovery of half of the court fees, must submit a request for this claim within 60 days from the date of the last procedure in the case (Article 27.2.A, Federal Law No.13 of 2016 regarding the regulation of judicial fees of Federal Courts).

Similarly, Article 12 of Dubai Law No.21 of 2015 on Regulation of judicial fees of Dubai Courts provides that 50% of the court fees will be returned if the plaintiff drops or abandons the proceedings or settles the case in the first hearing and prior to the trial. This is applicable only if the case has not been presented before the Centre for the Amicable Settlement of Disputes before reaching the court.

In practice, parties include the court fees amount into their settlement agreement. If the parties have agreed that the defendant will pay the plaintiff a settlement amount of AED 100,000 and bear the case expenses amounting to AED 10,000, the total settlement amount that the defendant must pay to the plaintiff would be the sum of AED 110,000. If the parties agreed to split the court fees, the settlement amount that the defendant must pay to the plaintiff would be the sum of AED 105,000, since the plaintiff has already paid the court fees to the court.

The court does not get involved in any settlement negotiations if the parties decide to settle the ongoing dispute. The court may only adjourn the hearing for settlement on the parties’ request. If the parties are unable to agree on the case expenses, there will not be an agreement on the settlement in full and the case at court resumes.

Under Article 134 of the CPC, the court may oblige the successful party to pay part or all of the court fees if their conduct in the case has resulted in unnecessary expenses that could have been avoided, by rejecting a good settlement offer. However, the authors have not seen this in practice. See Determining Which Party Pays the Costs.

Other Matters Relevant to Recovery of Costs

Costs on Interim Relief Applications

The costs of an interim application are granted at the end of the proceedings with the final judgment that determines the final costs. Parties will recover the costs of the interim application along with the costs of the case through the normal execution procedures.

Costs on Appeals

Court of Appeal fees differ from one legislation to another, depending on the emirate where the court is located. For instance, the Dubai Courts of Appeal charge a fee of 50% of the fees charged before the Court of First Instance, while the Federal Courts charge 5% of the appeal amount, with a maximum of AED 10,000.

An appellant before the Dubai Courts of Appeal must also pay a security deposit of AED 1,000. This security deposit will be returned to an appellant if their appeal application is accepted and the dispute has ended due to their appeal. By contrast, if their appeal is rejected for any reason, the court will confiscate the security deposit.

The court of appeal may annul the court of first instance’s judgment in its entirety or modify the judgment in parts of the claims. This will require the court of appeal to amend the award on costs (which was determined by the court of first instance based on its judgment) on the basis of the principles explained in this Note.

Interest

There are no provisions in UAE law that stipulate awarding interest on costs. Neither have the authors seen local courts awarding interest on costs or expenses in practice.

Costs Provisions in Contracts

The general principle of the Civil Transaction Code is that the parties’ agreement prevails. Therefore, courts are bound by the agreement of the parties as to who bears the costs in the case of a dispute. There is no specific mandatory language that parties must follow, however, the wording in relation to who bears the costs should be clear and explicit.

Security for Costs

In the UAE, litigation costs are paid, in advance, by the plaintiff at the time of registering the case. Should the plaintiff fail to pay those costs, the registration will not take place.

Courts do not order parties to provide a bond or guarantee as a security for their opponent’s costs of litigation. However, parties themselves can submit a provisional attachment application (subject to satisfying the legal requirements) to the court to seize their opponent’s movables and assets as a guarantee for the recovery of their rights and claims (which includes the recovery of litigation costs). This request is considered a separate or stand-alone interim relief application which triggers separate non-refundable costs. The conditions and situations of provisional attachment are stipulated in Articles 247 to 251 of the CPC.

Payment of Costs

In principle, the court cannot order the payment of litigation costs in installments. Nevertheless, the award on costs is issued at the end of each judgment. These judgments (including the award of costs) can be enforced through normal execution procedures. The debtor may request the execution judge to allow them to clear the judgment amount (including the litigation cost amount) through instalments. The execution judge usually seeks the comment of the creditor on the instalment plan offered by the defendant. Once the instalment plan is approved by the judge, the debt amount (including the litigation costs) is paid through instalments.

Set-Off

The award on costs is issued at the end of the judgment and as part of it. The recovery of costs also happens through the same process as enforcement of the judgment. The successful party is required to open an execution file to enforce the judgment including the award on costs at the end of the judgment (see Obtaining a Costs Award).

Judicial set-off, in practice, happens between debts relating to original claims only. Set-off between the award on costs against another debt arising out of a claim of the other party is an unrealistic scenario. That is because the judge, when determining which party shall bear the costs, does not specify the exact amount of costs. Courts usually award costs by generic wording such as “the defendant shall be obliged to bear the expenses of the claim” or “each party shall be obliged to bear the costs of its own claim”. The authors have also not seen in practice any case where a set off occurred between costs and the debt arising from an original claim.

Staying a Costs Order

There are no provisions in UAE law which stipulate that the court may stay the payment of costs. Payment of litigation costs is obligatory on the plaintiff at the time of case registration, so it is paid in advance (see Security for Costs). Since costs are recovered along with the claim amount through the normal execution procedures, staying the payment of costs would be subject to staying the execution itself, which might happen for various reasons, such as court order.

Costs on Lawyers and Non-Parties

Courts have the power to impose a monetary penalty that is not less than AED 1,000 and not more than AED 10,000 on any party whose conduct has been improper during the case proceedings (Article 136, CPC). This applies to conduct which is a fictitious or frivolous action, such as the introduction of a claim with no basis for the purpose of extending the proceedings and inflicting damage on the other party. This penalty is imposed on the party itself not their lawyer (Article 136, CPC).

Foreign Currency Costs Order

Since the costs of the local courts are paid in local currency (UAE dirhams), they must be recovered in the same currency. Courts in the UAE only value claims in UAE Dirhams. Therefore, any claim for the valuation of legal costs of a lawyer must be brought in UAE dirhams, even if the lawyer has agreed with the client to receive their fees in a foreign currency. In this event, an amount equivalent to the foreign currency must be calculated in UAE dirhams at the time of claim registration, and the plaintiff requests the court to grant them the amount as per the exchange rate between UAE dirhams and the foreign currency at the time of execution.

Enforcement

Litigation costs are recovered through the normal enforcement of judgments procedures. Once a judgment obtains the effect of res judicata (final and binding), the party seeking enforcement may apply through the execution court, requesting the enforcement of the final judgment (including the award on costs). The statement of execution submitted by the party seeking enforcement would typically include the recovery of litigation costs as awarded in the judgment.

The party against which the judgment is being enforced is notified of the executive formula of the final judgment and is granted a grace period of seven days to clear the debt amount. If they fail to clear the debt within the grace period, execution procedures commence to seize their movables and assets in recovery of the debt, including the litigation costs.

Effectiveness of Legal Costs Regime

The UAE judicial system is very effective in terms of managing or reducing litigation costs. Some emirates in the UAE have created reconciliation judicial circuits that parties must go through before filing a claim before the court. The fees for these reconciliation circuits are less than the actual fees of the court. This would save parties some expenses if the dispute is settled before submitting a claim to court.

For instance, Law No. (18) of 2021 on Regulating Conciliation in the Emirate of Dubai (replacing Law No. (16) of 2009) under which the Centre for the Amicable Settlement of Disputes (CASD) has been established provides that the fees of the CASD must be refunded if the parties agree on conciliation (Article 30, Law No. (18) of 2021). It provides that certain type of claims including any claim that does not exceed an amount of AED 500,000 must be first filed before the CASD before they reach the Court of First Instance.

Recent Developments or Reforms

Although the CPC was recently amended and re-issued in 2022, the provisions regulating awards on costs have not been changed. The UAE has not announced any upcoming legislation that will address litigation costs.

Mohamed Abdelrehiem 

Partner – Dispute Resolution

mohamed.abdelrehiem@inp.legal

Mahmoud Hamed 

Associate- Dispute Resolution

mahmoud.hamed@inp.legal

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