[2025] EWHC 1930 (Comm)

Pinsent Masons’ statement in its letter of 13 March 2025 that I have recited above was not, as Cedar II submitted it was, an undertaking sufficient to neutralise the application of the Crabtree principle. In its reply evidence of 21 May 2025 (Gardiner 3, at [7]) Cedar II indicated that if security was ordered and not provided such that Cedar Mundi’s claim was stayed or struck out, Cedar would be content for its own claim to be stayed. That was, in essence, repeated in its skeleton argument. On 7 July 2025, the day before the hearing, Pinsent Masons (on behalf not only of Cedar II but all the Defendants, despite the latter not being original claimants and having made no relevant counterclaim) made a formal offer to the effect that if the court ordered security for costs which Cedar Mundi did not then put up, it undertook to consent to or procure an order for:

“if the claimant’s claim is stayed, the stay of the defendants’ counterclaims and if the claimant’s claim is dismissed, the dismissal of the defendants’ counterclaims.”

In Explosive Learning Mr McDonald Eggers KC said that a Dumrul undertaking would “sweep away any concerns entertained by the court in allowing the application”. That formulation should not be misunderstood as a hard-edged rule. We are here in the field of discretion, and so in any given case the terms of the undertaking proffered by the applicant for security for costs must meet the court’s “concerns” based on the application of the Crabtree principle that would otherwise lead it to refuse an order for security. Leaving aside the question of whether that should have been provided earlier, the question is whether what the Defendants have offered is an effective Dumrul undertaking in the circumstances of this case.

In this case the Crabtree concerns are that Cedar II would have a good commercial reason to continue with its counterclaim regardless of whether Cedar Mundi chose to pursue its own claim to invalidate the SPA. Those concerns are in my judgment met by the undertaking now proffered by Cedar II. As at the time of Dumrul, it remains the practice in the Commercial Court not to stay proceedings pending the provision of security for costs, but to dismiss them following a second stage hearing: see The Commercial Court Guide, 11^th Edition (2022), Appendix 10, para 6. That gives the claimant an opportunity to elect whether to provide the security and pursue the claim or have it dismissed. The gist of Hamblen J’s decision in Dumrul (at [19]) is that the court would make the order for security if the applicant made clear in advance that its counterclaim would be dismissed once and for all if the claimant elected not to put up the security and would have its claim dismissed. The underlying purpose of an effective Dumrul undertaking is certainty at the point that the order for security is made.

Although Cedar II’s undertaking still holds out the prospect of a stay as well as dismissal, that may simply reflect Cedar II’s desire to preserve something of the earlier offers of undertakings (perhaps for costs reasons), which did not extend to outright dismissal. However, the offer of outright dismissal made on 7July 2025 was both sufficient and necessary, and the fact that it also provided for a stay does not detract from that.

Accordingly, in my judgment the potential for injustice of an order in favour of Cedar II by reason of the application of the Crabtree principles is eliminated by the Dumrul undertaking now offered by Cedar II.

The outcome is that, unless displaced by the discretionary factors to which I turn next, Cedar II should have security for the costs of its defence.