Introduction

The case of Kuwait Oil Company v. Al-Tarkait ([2020] EWCA Civ 1752) presents a pivotal examination of the jurisdictional boundaries concerning the awarding of costs within Employment Tribunal proceedings. This case centered on whether an Employment Tribunal possesses the authority under the relevant rules to impose a cap on potential costs awards exceeding £20,000, which necessitates a detailed assessment. The appellant, Kuwait Oil Company, challenged the tribunal’s decision to cap the costs, arguing that such a limitation exceeded the tribunal’s jurisdiction as delineated by the Employment Tribunal Rules of Procedure.

The primary stakeholders in this case were Kuwait Oil Company (the appellant) and Dr. Al-Tarkait (the respondent), with the latter having pursued claims of disability discrimination, wrongful dismissal, and unfair dismissal. While Dr. Al-Tarkait's first two claims were unsuccessful, his unfair dismissal claim succeeded, leading to a complex interplay of costs awards that ultimately prompted this appellate challenge.

Summary of the Judgment

The England and Wales Court of Appeal upheld the decisions of both the Employment Tribunal and the Employment Appeal Tribunal, thereby rejecting Kuwait Oil Company's appeal. The crux of the matter was whether the Employment Tribunal could lawfully impose a cap on costs awards exceeding £20,000 under rule 78(1)(b) of the Employment Tribunal Rules of Procedure 2013 and rule 84 concerning the ability to pay.

The Employment Tribunal had awarded Dr. Al-Tarkait £79,724.20 in compensation, with costs awards on both sides. Dr. Al-Tarkait received £4,900 for costs related to the non-disclosure of documents, while Kuwait Oil Company was awarded costs related to dealing with historical allegations, capped by the tribunal to prevent Dr. Al-Tarkait from being financially disadvantaged.

Kuwait Oil Company contended that the tribunal lacked the jurisdiction to impose such a cap, arguing that costs exceeding £20,000 should undergo detailed assessment without pre-imposed limitations. The Court of Appeal dismissed these arguments, affirming that the tribunal could indeed impose a cap while still adhering to the rules governing costs assessments.

Analysis

Precedents Cited

The judgment extensively referenced previous cases to substantiate the tribunal’s authority to cap costs. Notably, Jilley v Birmingham and Solihull Mental Health NHS Trust [2007] UKEAT/0584/06/DA was cited, wherein the tribunal was affirmed the ability to consider a party’s ability to pay when deciding to cap costs, even when a detailed assessment was ordered. Additionally, Swissport Ltd v Exley & Ors [2017] UKEAT/0007/16/JOJ was referenced to illustrate instances where caps were necessary to uphold principles such as indemnity, thereby preventing tribunals from breaching fundamental cost principles.

These precedents collectively underscored that tribunals possess discretionary power to impose limits on costs awards, ensuring that financial judgments remain equitable and considerate of the parties' financial capacities.

Legal Reasoning

The core legal argument revolved around the interpretation of rule 78(1)(b) and rule 84 of the Employment Tribunal Rules of Procedure 2013. The appellant argued that rule 78(1)(b) strictly confines the tribunal to order a detailed assessment without the authority to cap costs beforehand. They contended that any attempt to set such a limit constituted an overreach of judicial power.

However, both the Employment Appeal Tribunal and the Court of Appeal refuted this interpretation. They maintained that rule 78(1)(b), when read in conjunction with rule 84, affords tribunals the discretion to not only mandate detailed assessments for costs exceeding £20,000 but also to impose a cap based on the paying party’s ability to pay. This dual consideration ensures that costs awards remain fair and proportionate, preventing financially overburdened parties from facing untenable financial obligations.

The judges emphasized that a cap does not determine the exact amount to be paid but merely sets an upper limit within which the detailed assessment must operate. This nuanced understanding preserves the assessor's role in determining the precise costs while allowing the tribunal to guide the maximum liability based on broader equitable considerations.

Impact

This judgment has significant implications for the administration of costs in Employment Tribunal proceedings. By affirming the tribunal’s authority to impose caps on costs awards, even those exceeding £20,000, the decision ensures that financial burdens on respondents are mitigated, particularly when they have limited means. It reinforces the tribunals’ role in maintaining proportionality and fairness in cost management, preventing scenarios where large costs awards could potentially be ruinous.

Additionally, the case clarifies the interplay between detailed costs assessments and caps, providing a clearer framework for tribunals to follow. This ensures consistency in how costs are managed across similar cases, promoting predictability and equity within the employment law landscape.

Complex Concepts Simplified

Employment Tribunal Rules of Procedure

The Employment Tribunal Rules of Procedure govern how Employment Tribunals conduct their proceedings, including how costs are awarded. Key rules in this case include:

• Rule 78(1)(b): Allows tribunals to order the paying party to cover the receiving party's costs, either wholly or partially, with the exact amount to be established through a detailed assessment.
• Rule 84: Grants tribunals the discretion to consider a party's ability to pay when deciding whether to make a costs order and determining the amount.

Costs Assessment

A costs assessment is a detailed evaluation of the expenses incurred by a party during legal proceedings. When costs exceed £20,000, they must undergo this thorough scrutiny to ensure they are reasonable and justified. The tribunal can impose a cap to limit these expenses based on the paying party's financial capacity.

Ability to Pay

Ability to pay refers to the financial capacity of the party required to cover the costs. Rule 84 allows tribunals to consider this factor to prevent excessive financial strain, ensuring that costs awards are fair and manageable.

Conclusion

The decision in Kuwait Oil Company v. Al-Tarkait serves as a crucial precedent in delineating the scope of Employment Tribunals' authority over costs awards. By affirming that tribunals can impose caps on costs exceeding £20,000 while still adhering to detailed assessments, the Court of Appeal has reinforced the principles of fairness and proportionality within employment litigation.

This judgment underscores the importance of balancing rigorous cost assessments with equitable financial considerations, ensuring that tribunals can administer justice without imposing undue financial burdens on parties. As a result, the case provides clearer guidance for future proceedings, promoting consistency and fairness in the management of costs within the Employment Tribunal system.