From Nominal Awards to Full Recovery: Cassation Court Clarifies Legal Fee Claims in UAE Litigation

The Dubai Court of Cassation has recently delivered a landmark ruling (Case No. 503/2025) addressing the long-debated issue of recovering legal fees in UAE onshore litigation. At first glance, the judgment appears to signal a departure from the traditionally restrictive approach of UAE courts.

 

The Established Practice

Historically, successful litigants in UAE onshore courts have been awarded only nominal sums for legal representation -- typically between Dh1,000 and Dh2,000 per stage of proceedings. This practice has remained consistent regardless of the actual fees incurred by a party, reflecting the view that legal fee arrangements between a client and its lawyer do not bind the opposing party.

 

Facts of the Case

The dispute arose out of a commercial loan agreement. When the borrower defaulted, the lender filed proceedings seeking:

 

• Recovery of the outstanding principal,

• Contractual interest, and

• Legal costs under a clause requiring the borrower to cover all legal fees in the event of default.

 

The Court of First Instance and the Court of Appeal both ruled in the lender’s favour on the debt and interest claims but awarded only a nominal amount for legal fees, following established practice.

 

The Cassation Court’s Intervention

On appeal, the Dubai Court of Cassation departed from the restrictive approach and held that:

 

• Contractual provisions entitling a party to recover legal fees are valid and enforceable.

• Recovery is conditional upon the claimant producing clear and persuasive evidence of actual legal costs incurred and proving that such costs were directly connected to the dispute.

 

The Court emphasised that where proper documentation—such as invoices and proof of payment -- is furnished, full recovery of legal fees may be granted. In the absence of such evidence, however, the prevailing practice of awarding only modest, fixed amounts will continue.

 

The case has been remitted to the Court of Appeal for reconsideration before a different bench, with the expectation that the appellate court will apply the Cassation Court’s reasoning and, unless facts dictate otherwise, award full recovery of the lender’s legal costs.

 

Practical Implications

While the ruling confirms that full recovery of legal fees will remain exceptional, it provides crucial guidance for contracting parties and litigants. To maximise the likelihood of recovering legal costs, parties should:

 

1. Incorporate explicit provisions on legal fees in contracts; and

2. Maintain comprehensive documentation—including detailed invoices and proof of payment—clearly linking the legal costs to the dispute.

 

Conclusion

This judgment is significant as it indicates a potential shift in judicial treatment of legal fee recovery in UAE onshore litigation. Although it does not replace the established practice, it establishes a clear pathway for parties to claim substantial legal costs -- provided that entitlement is contractually stipulated and supported by robust evidence.

 

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