CA-2025-001045-A - [2025] EWCA Civ 1300

Stage 2: the justice of an order

I have little doubt that, insofar as reliance is placed on condition (ii), in relation to Phoenix, and condition (vi), in relation to all the appellants, it is just in all the circumstances of the case to order that security be provided for at least part of the Claimants’ anticipated costs of the appeal. The risk that the appellants would take steps to dissipate their assets so as to avoid paying a judgment against them has been established to the court’s satisfaction, in the context of the world-wide freezing order. That is not a ground for granting security for costs, but is a factor relevant to the exercise of discretion. Added to that, the appellants have a history of failing to provide full disclosure of their assets, and of paying prior costs orders in these actions late, and only when necessary to enable the actions to continue. The incentive to do so will, by definition, have fallen away in the event that the appeal is unsuccessful and they are facing a substantial judgment debt. These are all matters which justify awarding security for costs of the appeal. I note that there is no suggestion that ordering the appellants to pay security for costs would stifle the appeal.

Mr Jones submitted, in relation to condition (i) (residence abroad) that the Claimants were not entitled to any security or, at best, no more than security in the sum of CHF 10,000. To do otherwise, he submitted, would be discriminatory.

It is common ground that the Court must ensure, at the stage of exercising its discretion, that it is exercised in a non-discriminatory manner: Bestfort Developments LLP v Ras Al Khaimah Investment Authority [2016] EWCA Civ 1099, at §50-51. Gloster LJ said, at §51:

“In order for the court to be satisfied that it is exercising its discretion in a just manner – i.e. a manner which is not discriminatory for the purposes of Article 14 – it has to conclude that it is doing so on objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned.”

Gloster LJ returned to this point, at §69, saying that the Court must exercise its discretion “on objectively rational grounds by reference to the difficulties of enforcement or some other attribute of the litigant that objectively renders enforcement problematic.”

Where there is an objectively justified risk, not that the foreign state will not recognise a judgment for costs, nor that the claimant/appellant will not have the assets to pay the costs, but that there will be an additional burden in terms of cost and delay in enforcing abroad, then the order for security for costs is to be tailored in amount to reflect the nature and size of that risk: Bestfort (above) at §75, citing a passage in the judgment of Mance LJ in Nasser v Bank of Kuwait [2002] 1 WLR 1868 at §67.

For the reasons already given in relation to conditions (ii) and (vi), there are objectively justified grounds that there is a real risk that the Claimants will not be able to enforce an order for costs against the appellants.

Mr Jones submitted, however, that those grounds do not arise from the fact of foreign residence, but from other matters, such as the lack of assets – taking into account the presence of other major creditors in New York and Geneva respectively – and the risk that the appellants would take steps to prevent the Claimants successfully enforcing a costs order. It would, he said, be discriminatory to rely on these factors because they would not justify an order for security for costs against an appellant resident within the jurisdiction.

If it were necessary to decide this point, I consider that the grounds established in this case would justify an order for security in reliance on condition (i). Gloster J’s formulation in Bestfort is that the difficulties in enforcement must relate either to the “particular foreign claimant or country concerned”. The anticipated difficulties in this case relate to the circumstances of the appellants themselves: including a lack of available assets (taking into account that any equity in the real properties in New York and Geneva are vulnerable to enforcement action by local creditors), failures in disclosure of assets and the risk that the appellants will take steps to prevent any order being enforced. These provide (in the words of Gloster LJ at §77 of Bestfort) “rational and objective justification for discrimination against non-Convention state residents”.

In any event, an order for security in an amount that reflects the Claimants’ costs of the appeal, and not merely any additional costs arising from enforcement abroad, is justified on the basis of conditions (ii) and (vi), so it is not necessary to reach a concluded view in respect of condition (i).