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Analysing Practice Direction No. 1 of 2025: A New Paradigm for Access to Justice
Effective 9 October 2025, the DIFC Courts implemented Practice Direction (PD) No. 1 of 2025, titled Access to Justice in Employment Disputes.
This directive signals a fundamental shift in the DIFC’s approach to labour litigation, specifically targeting the procedural and financial barriers that have historically insulated employers fromlow-to-mid-value claims.
For our corporate clients, this reform necessitates a review of internal grievance procedures, as the "deterrent effect" of high legal costs for claimants has been significantly diminished.
1. Redefining the Financial Barriers: Fee Waivers and Reductions
Historically, the cost of filing a claim in the Court of First Instance (CFI) served as a gatekeeper. Under the new PD, the Registrar has been granted broad discretionary powers to mitigate these costs.
Discretionary Remissions: Filing fees may be waived or reduced based on a claimant’s financial standing, the merits of the case, and the "interests of justice.
Fiscal Flexibility: The Court may now impose a maximum fee cap or permit instalment payments for claimants demonstrating financial hardship
Strategic Impact: By removing the financial "buy-in" required to initiate litigation, the DIFC Courts anticipatea significant increase in the volume of claims, particularly from former employees whose liquid assets are constrained following termination
2. A Departure from Common Law: The New Costs Regime
Perhaps the most radical feature of PD 1 of 2025 is the pivot away from the traditional common law principle that "costs follow the event" (where the loser pays the winner’s legal fees).
The "No-Costs" Default
In employment disputes, the new default position is that each party bears its own legal costs, regardless of the outcome.
Protective Shield for Employees: This eliminates the risk of an "adverse cost order" against an employee, which previously deterred many from pursuing legitimate grievances due to the fear of bankruptcy upon losing
Exceptions for Misconduct: The Court retains the right to award costs only if a party acts unreasonably, vexatiously, or in bad faith
Employer Consideration: For businesses, this means that even a successful defense may result in unrecoverable legal fees. This shifts the economic incentive toward early-stage mediation and settlement rather than protracted litigation
3. Privacy and Procedural Integrity
To balance the increased accessibility with the sensitivenature of corporate reputations, the PD reinforces strict confidentiality protocols for employment proceedings.
Private Hearings: Proceedings are conducted in private as a default to protect the interests of both the individual and thecorporate entity
Anonymised Judgments: While the DIFC Courts value transparency, final judgments will typically be published in an anonymised form to prevent reputational contagion, unless public accountability dictates otherwise
Abuse of Proces: The Court may lift these privacy protections if it determines a party is attempting to use confidentiality as a cloak for bad-faith conduct
4. Strategic Implications for Dransfield Partners Clients
The introduction of PD 1 of 2025 rebalances the "inequality of arms" that previously favoured the employer. We advise our clients to consider the following:
Settlement Strategy: With the removal of adverse cost risks for employees, "nuisance" claims may become more common. Reviewing settlement rangesat the Small Claims Tribunal (SCT) stage is now more critical than ever
Documentary Rigour: Since the "loser pays" deterrent is gone, employers must ensure impeccable HR documentation to secure swift dismissals of meritless claims and potentially trigger the "unreasonable conduct" cost exception
Audit of Employment Contracts: Ensure that internaldispute resolution clauses are updated to reflect the current DIFC Court procedures and timelines
Conclusion: A Pro-Claimant Trajectory
Practice Direction No. 1 of 2025 is a landmark initiative that aligns the DIFC with global best practices in labour justice. It effectively democratises the High Court, making it a viable venue for a broader spectrum of the DIFC workforce.
