The Dubai Court of Cassation provides clarity on the recovery of legal fees in a recent judgment
The Dubai Court of Cassation has recently issued a notable judgment (No. 503/2025) that appears, at first glance, to depart from the established approach of the UAE onshore courts towards the recovery of legal fees. Traditionally, successful litigants before the UAE local courts are awarded only modest, fixed amounts for legal representation often in the range of AED 1,000 to AED 2,000 per stage regardless of the actual costs incurred. In this case, however, the Court of Cassation signaled a willingness to award the full amount of proven legal fees, which in this instance totaled approximately AED 150,000.
The dispute arose from a commercial loan agreement under which the borrower defaulted on repayment. The lender commenced proceedings before the UAE courts, seeking recovery of the outstanding principal, contractual interest, and legal costs, relying on a contractual clause requiring the borrower to bear all legal fees in the event of default.
The Court of First Instance and Court of Appeal found in favour of the lender on the debt principal owed and interest but awarded only a nominal sum for legal fees. The lender appealed, arguing that the contractual provision entitled it to full reimbursement. The Court of Appeal rejected this, holding that the fees agreed between a party and its own lawyer do not bind the opposing party (i.e., the borrower in this case).
On further appeal, the Court of Cassation disagreed. It upheld the validity of the contractual clause in the loan agreement which entitled the lender to recover legal fees from the borrower in the event of default, provided such fees were proven and attributable to the proceedings. It held that where a party seeks recovery of legal fees, it must present clear and persuasive evidence of the actual costs incurred and demonstrate that these were directly related to the proceedings. In the absence of such proof, the court will continue its practice of awarding modest, fixed sums. However, where the evidence is compelling, the UAE courts may grant full recovery.
The Court of Cassation remitted the case to the Court of Appeal (as the court of substance) for reconsideration before a different bench. The expectation is that the Court of Appeal will follow the Court of Cassation’s ruling and award the lender’s legal fees in full — unless it finds grounds, based on overlooked material facts, to maintain its earlier stance.
This judgment reaffirms that full recovery of legal fees in UAE onshore litigation remains the exception rather than the rule. Parties wishing to maximise their prospects should:
- Include express contractual provisions on recovery of legal fees; and
- Maintain comprehensive documentary evidence — including invoices and proof of payment — linking the fees directly to the dispute.
We will continue to monitor this matter and provide updates on further developments
