Clarity on Practice Direction No.1 of 2025 in employment law proceedings

Clarity on Practice Direction No.1 of 2025 in employment law proceedings

The case of Hallam v Natixis [CFI 016/2025] heard on 3 February 2026 brings some welcome clarity as to how the DIFC Court is likely to interpret the Practice Direction No.1 of 2025, which came into effect, without any prior notice or fanfare, on 1 October 2025 (the PD). The PD was intended to improve access to justice in employment disputes by introducing two general rules, namely, that: a) as a general principle the parties to an employment dispute should bear their own legal costs and b) that the default position on employment cases is that they should be heard in private. There has been considerable speculation as to how the PD will be applied and interpreted by the Courts and in one of the first cases dealing with the subject, Hallam v Natixis throws some helpful light on this and provides useful guidance for practitioners and litigants.

The Facts
Mr Hallam had pursued an employment claim in the CFI against his former employer, Natixis, and judgment was given for the Defendant on 19 September 2025, pre-dating the PD. In fact, the Claimant lost his case badly with 3 out of 4 of his claims being struck out and the fourth being dismissed subject to immediate judgment. Unsurprisingly, the Court ordered that Mr Hallam should pay Natixis’ costs, subject to costs submissions.

On 29 October 2025, Mr Hallam filed a No Costs Application which, inter alia, requested the Court to vary the order for costs so that no order for costs was substituted. Moreover, the Claimant sought anonymisation of the parties in public listings and removal of the case from public sources, including YouTube. Mr Hallam placed heavy reliance on the PD to support his application.

Natixis made three key submissions resisting the application: a) The PD did not apply (at the date of judgment and had no retrospective application) b) that the PD alone cannot overturn an issued costs order (and if Mr Hallam wanted to challenge this order it should have been appealed); and c) that even if the PD did apply the provisions allowing for costs to be awarded because of the unreasonable conduct of one of the parties should facilitate an adverse order for costs based on the poverty in the arguments run by Mr Hallam in his case.  

Decision
H.E. Deputy Chief Justice Ali Al Madhani decided that the application failed on its face for want of jurisdiction. The PD was not stated to have any retrospective effect and his judgment pre-dated the PD being introduced. He noted that there was nothing in the PD or the Rules of the DIFC Courts that would trigger retrospective power. The Judge noted that even if there was retrospective jurisdiction, a costs order could still be made based on the conditions specified in the PD (i.e. where there was unreasonable conduct, bad faith or vexatious behaviour or where it was otherwise in the interests of justice to do so). In wording that will be of real interest to practitioners, the Judge noted that:

“The purpose of the Practice Direction is to implement a general no-costs rule pursuant to the Overriding Objective, not immune parties to employment proceedings from paying costs altogether or limiting the Court’s case management powers. It acts to give a starting point not enforce a no-costs obligation.” 

The Judge also noted that the parties acted throughout the case with the understanding that costs would follow the event and that the Claimant had acknowledged he could be liable for costs, if he lost.

Notwithstanding the Defendant seeking AED 390,910 for its costs (on an indemnity basis), the Judge awarded only AED 70,000 citing proportionality and disagreeing that there had been misconduct in the Claimant bringing and proceeding with the case.

Anonymisation of case details
Nataxis had indicated it was agreeable to the judgment being anonymised and the removal of the case from YouTube but noted that, to a large extent, the horse had already bolted on this issue, with the case having aired publicly, so there was no great value in anonymising. The Judge concurred with this view and declined to accede to that part of the application.

Key Takeaways
The case provides some welcome guidance as to how the Court will approach the PD. The main points are:

• It seems to suggest that the PD will not be applied retrospectively, so cases that started prior to the PD with the usual rule that costs follow the event (RDC 38.8) may yet find that the Court will uphold that rule and may not apply the PD.
• Alternatively, it maybe that cases that were commenced prior to the PD and have endured to judgment after the PD, will be subject to split treatment with costs being awarded for the pre-PD period and no costs for the period after it took effect.
• That the PD does not “immune” the parties from an adverse costs order. The PD is to be regarded as a “starting point” and the factors that militate towards a costs award will be considered carefully by the Court.   

The decision will give succour to those parties who believe their claim or defence is likely to succeed at trial and there are good compelling reasons why costs should be awarded in their favour, whether based on the other party’s behaviour or prevailing reasons that are in the interests of justice for an award to be made. We anticipate that there will be many more arguments to come in respect of legal costs in the DIFC and the position on the PD and how it will be applied will become far clearer over time.

Nick Hurley is a Partner and Head of the International Employment Group and Tilly Whittingham is an Associate at Charles Russell Speechlys.