DQ acts in the first ever reported costs order granted by the Isle of Man Financial Services Tribunal against the Isle of Man Financial Services Authority

The recently published judgment of the Isle of Man Financial Services Tribunal (the Tribunal) in AAO Technologies Limited v The Isle of Man Financial Services Authority (FST 2022/03 and 04) marks the first ever reported costs order of the Tribunal made against the Isle of Man Financial Services Authority (the FSA). 

The decisions appealed to the Tribunal

On 29 September 2022 AAO Technologies Limited (the Appellant) filed two appeals to the Tribunal against two decisions of the FSA (together, the Decisions), which were heard together:

  • Firstly, against a decision of the FSA to reject an application (the Application) by the Appellant seeking a designated business registration to be granted, pursuant to the Designated Businesses (Registration and Oversight) Act 2015. The Appellant’s principle remedy was to seek an order from the Tribunal to vary the decision of the FSA so that the Application was to be granted and the Appellant sought urgent case management directions for determination of the same.
  • Secondly, the Appellant sought a quashing order against a separate decision from the FSA that an expedited public statement be issued adversely against the Appellant and other connected individuals. In the interim, the Appellant applied for, and successfully obtained on 30 September 2022, an urgent order from the Tribunal staying publication of the expedited public statement until at least after the final determination of the appeals.

Revocation of the Decisions by the FSA

Following receipt of the Appellant’s two Grounds of Appeal, by email dated 24 October 2022 the FSA wrote to the Tribunal stating that it had formally “withdrawn and revoked, in their entirety, each of the decisions of the [FSA] that are subject of the appeals” (the Revocation). No reasons were given for the Revocation, but the FSA outlined that it would re-consider the Application in due course and resist any application for costs made by the Appellant to the Tribunal.

The Appellant’s application for costs and response to the same by the FSA

Following the Revocation the Appellant pursued an application to the Tribunal for a costs order against the FSA of, and incidental to, the appeals. The relevant rule concerning costs is contained at Rules 27(2) and 27(3) of the Financial Services Tribunals Rules 2015 (the Rules):

“(2) The Tribunal or Chairman must not make a costs order in any proceedings unless paragraph (3), (4), (5) or (6) applies.

(3) The Tribunal or Chairman may make a costs order if in its or his opinion — (a) in bringing the proceedings, that party, or (b) in conducting the proceedings, that party or that party’s representative, has acted vexatiously, abusively, disruptively or otherwise unreasonably.”


In support of its application for costs, and by way of a very brief summary, the Appellant averred that the Revocation had deprived the Appellant of its principle remedy, namely a variation by the Tribunal of the FSA’s decision to reject the Application so that the same was granted. The Appellant also submitted that the Revocation would now cause severe delay, which it had sought to avoid. For these reasons, the Appellant submitted that the Revocation by the FSA was in itself vexatious, abusive, disruptive and/or otherwise unreasonable. The Appellant further suggested that a costs order in circumstances where in its view a revocation had been used inappropriately by the FSA would act as a deterrent and further the overriding objective.

In contrast, the FSA averred that it had not acted vexatiously, abusively, disruptively and/or otherwise unreasonably by virtue of the Revocation. The FSA argued that the Tribunal had no jurisdiction to make any costs order and that the prompt revocation was illustrative of it taking a “reasonable and pragmatic approach”. The FSA outlined in its submissions to the Tribunal that a costs order might have a “chilling effect” on the exercise of its regulatory and statutory obligations as a result of fear of exposure by it to undue financial prejudice, to the public disadvantage.

The costs order

In determining the application for costs, the Tribunal referred to its last and only other previously reported public decision of In the Appeal of Pritesh Ramesh Desai & Ots (judgment dated 10 January 2013). This confirms that “once an Appeal against a decision of the [FSA] has been made to the Tribunal that decision, although remaining in force pending the outcome of the Appeal, owes its continuing existence to the Tribunal. The Tribunal is not reviewing the decision making process of the [FSA]. The Tribunal is part of the decision making process of the [FSA]”. The Tribunal in its decision in AAO Technologies outlined that this proposition was supported by Rule 11(4)(j), which states that the Tribunal may suspend the effect of any original decision of the FSA pending an appeal to the Tribunal.

Noting the above, the Tribunal outlined in AAO Technologies that throughout any appeals process before the Tribunal authority to confirm, vary, revoke or suspend any decision lies with the Tribunal, and not with the FSA. The Tribunal highlighted in its view that if the FSA were permitted to revoke decisions which were subject to appeal, then this would fundamentally undermine the appeals jurisdiction of the Tribunal. The Tribunal also expressed concern that the Revocation in AAO Technologies did not have the effect of granting the relief sought by the Appellant, namely, the granting of the Application.

The Tribunal concluded that in revoking the Decisions after the appeals process had begun this had both the effect of depriving the Appellant of its principle remedy and the effect of seeking to deprive the Tribunal of its jurisdiction to determine the appeals. As such, the Revocation meant that the FSA had exceeded its powers and acted unreasonably and the Tribunal therefore granted a costs order adversely against the FSA pursuant to Rule 27(3)(b).

To read the full judgment see: https://www.courts.im/media/3141/fst-costs-order-2022-03-04.pdf


The judgment in AAO Technologies is a timely reminder that the FSA is accountable to the Tribunal, which plays a key role in independently reviewing certain regulatory decisions made by the FSA which are appealable to the Tribunal. As illustrated in AAO Technologies, the Tribunal is an important statutory body, with the power to issue adverse costs orders where appropriate.

DQ’s Mark Emery (Director, Dispute Resolution) and Jack Igglesden (Associate) acted for AAO Technologies in the appeals, with invaluable support provided by DQ’s leading Regulatory & Compliance team (led by Sinead O’Connor, Head of Regulatory & Compliance, with support from Regulatory & Compliance Advisors Kathryn Sharman and Chris Jennings). DQ’s unique placement in the market with two leading teams in these areas means that it is able to provide a first-class, tailored and forward-thinking approach towards supporting clients with regulatory issues/action and/or appeals to the Tribunal.



The information and/or opinions contained in this article is necessarily brief and general in nature and does not constitute legal or taxation advice. Appropriate legal or other professional advice should be sought for any specific matter.  Any reliance on such information and/or opinions is therefore solely at the user’s own risk and DQ Advocates Limited (and its associates and subsidiaries) is not responsible for, and does not accept any responsibility or liability in connection with any action taken or reliance placed upon such content.