Chancery Division gives guidance on security for costs applications under CPR 25.13(2)(a) where claimant is resident out of the jurisdiction

27/05/22

Mr Justice Michael Green has today handed down judgment in relation to a series of applications by the Defendants against the Counterclaimant, Mr Azima, in Mr Azima’s counterclaims against the Ras Al Khaimah Investment Authority (“RAKIA”), Neil Gerrard and Dechert LLP, and James Buchanan.

The Defendants applied for orders for security for costs under CPR 25.13(2)(a) on the basis that Mr Azima was resident out of the jurisdiction in Missouri. In defending the application, Mr Azima declined to give details of his assets in Missouri or elsewhere in the world, and argued that to be required to do so would infringe the non-discrimination principles in Nasser v United Bank of Kuwait [2002] 1 WLR 1868 since there was no requirement on a domestic claimant to provide such details of his assets.

The Court rejected that argument, holding at [21] that, “It seems to me that, if that was the law, it would be virtually impossible for security for costs applications to succeed to the full extent if the respondent adopted that approach. I consider that a respondent needs to provide some evidence from which the court can assess whether a future costs order will be able to be enforced against the non-resident respondent, wherever their assets are located. If such a respondent decides not to disclose any details about their assets, and there is no other evidence as to the value, nature and location of their assets, the court is entitled to infer that there is a real risk of there being substantial obstacles in the way of enforcing a future costs order.”

The Judge also addressed what he described as “an interesting debate on the doctrine of precedent” in relation to two apparently conflicting first instance decisions about whether the court is properly concerned with obstacles to the execution of a judgment as opposed to the enforcement of it. Hamblen J (as he then was) in Dumrul v Standard Chartered Bank [2010] EWHC 2625 (Comm) considered that the Nasser principles were only applicable to “enforcement” not “execution”; whereas Mr David Donaldson QC, sitting as a High Court Judge in Cody v Murray [2013] EWHC 3448 (Ch) thought that Hamblen J had misinterpreted Nasser. Mr Justice Michael Green held at [29] that he did not need to decide the point, but was more attracted to the Cody v Murray approach as he did not consider that the Court of Appeal in Nasser intended to distinguish “execution” from “enforcement” and that the latter generally incorporates the former.

The judgment is available here.