Knowledge

Introduction

In its costs judgment in Re KES Power Limited between Al Jomaih Power Limited and Denham Investment Ltd v IGCF SPV 21 Limited [2026] CICA (Civ) 9, the Cayman Islands Court of Appeal (the "CICA") has given a decision concerning the recoverability of foreign lawyers' fees incurred in cases before the courts in the Cayman Islands ("Cayman"). The CICA held that, where costs are awarded to a party which are to be taxed on the standard basis, the Cayman courts have no jurisdiction to dispense with the requirements of Grand Court Rules Order 62, rule 18 (the "Order"), which states that work done by foreign lawyers may only be recovered on taxation provided that the lawyer has been temporarily admitted and the work was done after the admission.

A number of earlier Grand Court decisions had proceeded on the assumption that a dispensation power of the court existed in regard to the strict application of the Order. The CICA held that those earlier decisions do not constitute good authority for such a dispensation power vested in the Cayman courts and should not be followed.

Decision

The Order provides (amongst other matters related to costs of the work of and with foreign lawyers) that work done by foreign lawyers may be recovered in a taxation on the standard basis provided that the lawyer has been temporarily admitted and the work was done after admission.

The Appellants in these proceedings contended that the court retained a discretion to dispense with the temporary admission requirement, relying on a line of Grand Court decisions which were said to recognise such a discretion. The CICA rejected that contention.

The CICA held that there is no jurisdiction to dispense with the requirements of the Order when costs are awarded to be taxed on the standard basis. In reaching that conclusion, the CICA reviewed the authorities relied upon by the Appellants and held that they did not provide a sound basis for a dispensation discretion because none of them identified a legitimate source of a power enabling the court to override the express wording of the Order.

Firstly, the CICA held that where dispensations had been granted, they were often derived from or supported by authority concerned with indemnity costs (where foreign lawyers' costs may be recovered), in which circumstances the Order (a rule dealing with standard costs orders only) does not apply at all. Those cases, therefore, could not justify a power to dispense with the Order where costs are awarded on the standard basis. Secondly, some decisions asserted the existence of a dispensing power without analysis, assuming rather than demonstrating that such a jurisdiction existed. In those cases, the CICA noted that the reasoning did not engage with the text of the Order or explain how a discretion could be reconciled with its mandatory language. Thirdly, other authorities simply did not address the question of jurisdiction at all, having allowed recovery of foreign lawyers' fees taxed on a standard costs basis without examining whether the court was entitled to do so under the Order.

Taken together, the CICA found that these decisions reflect judicial assumption and outcome driven reasoning, rather than principled authority. In the absence of any statutory provision or rule expressly conferring a power to dispense with the Order, the CICA in these proceedings concluded that no such jurisdiction exists, notwithstanding prior decisions of the Grand Court.

Having found that no dispensing jurisdiction exists in regard to the Order, the CICA held that the Appellants were not entitled to recover any costs in respect of work done by foreign lawyers prior to their temporary admission and therefore disallowed the costs of both foreign solicitors and junior counsel who were not temporarily admitted and of Senior Counsel for all pre admission work, regardless of the scale, complexity, or international character of the litigation.

Impact

The immediate consequence of this decision is a potentially significant gap between costs incurred by a successful party and the costs recoverable from the losing party on taxation. In complex Cayman litigation, Senior Counsel are frequently engaged at an early stage to advise on both Cayman and foreign law issues, parallel proceedings, strategy and evidence. Such work, even if necessary, reasonable and not duplicative of the Cayman attorneys' work, will be irrecoverable if undertaken before temporary admission of the Senior Counsel where costs are awarded to be taxed on a standard basis.

Parties may now feel it prudent to seek temporary admission of Senior Counsel at an early stage of the Cayman court proceedings to try to ensure costs recoverability if successful, thereby prompting procedural applications as an opportunity to have Senior Counsel temporarily admitted. 

This judgment will also probably prompt successful parties to seek more orders for taxation of costs on an indemnity basis, and losing parties to resist them vigorously, given that a taxation of costs on a standard basis order now carries with it a materially more restrictive recovery regime for foreign lawyers' fees. The usual costs order for a successful party is for costs to be taxed on the standard basis. An order for costs to be taxed on the indemnity basis has been described as "exceptional", and involves the existence of some feature of the case which takes the matter "outside the ordinary and reasonable conduct of litigation". This is a high bar.

Remaining issues

The CICA does not appear to have considered the potential relevance of Grand Court Rules  O.62, r.17(1), which expressly confers a broad discretion on the court to direct that any item of work be allowed, disallowed, restricted or qualified on taxation. That provision may be said to provide a possible basis for the existence of a discretion of the court for permitting recovery of foreign lawyers' fees, notwithstanding the strict wording of the Order, by allowing the court to control the treatment of specific items on taxation.  It will therefore be open to parties in future cases to argue that O.62, r.17(1) preserves a residual discretion capable of operating alongside the Order, and which may, in appropriate cases, mitigate the rigidity of the CICA's interpretation. 

There is also potential for an issue on recoverability of costs of foreign lawyers by liquidators of Cayman companies. The Companies Winding Up Rules O.25, r.1 allows liquidators to retain foreign attorneys even if not temporarily admitted and the Order applies to costs incurred by liquidators in Cayman court proceedings. However, if the foreign lawyer's work is for Cayman court proceedings and the foreign lawyer has not been admitted, then even if the liquidators are successful in those court proceedings the liquidation estate will pay the foreign lawyer's costs and not the losing party in the proceedings.
 
There appears to be one exception to the inability to recover foreign lawyers' costs when costs are taxed on a standard basis and the foreign lawyer has not been admitted, based on the Grand Court Practice Directions (2024 Consolidation) Practice Direction No. 1 of 2001 at 6.4 (made under Grand Court Rules O.62, r.16(3)). Legal fees paid to foreign lawyers can be claimed as disbursements if the foreign lawyer is engaged to give an opinion on a point of foreign law which is in issue in the proceedings, but not otherwise.

Where are we now?

Further clarity on the application of the Order and the court's ability to dispense with it will only occur when the CICA has had the opportunity to consider this issue again. In the meantime, the Grand Court is bound by this CICA decision.

Accordingly, until greater clarity is reached, parties will need to proceed on the basis that recovery of foreign lawyers' fees on a standard basis of taxation is strictly limited and, at minimum, look for appropriate early opportunities to have Senior Counsel temporarily admitted, while remaining alert to the possibility that the scope of the court's discretion in regard to the Order may be further tested in future cases.

If you wish to discuss how best to ensure foreign lawyers' costs are recoverable for a successful litigant in the Cayman courts, or if you would like any further information, please get in touch with one of the Bedell Cristin contacts listed.