High Court Orders Russian Claimant To Provide Security For Costs Despite Evidence Of Assets In Switzerland And Cyprus

The High Court has granted an order for security for costs against a Russian claimant, on the basis that there was a real risk that any costs order against it would have to be enforced in Russia, where the court said there was a real risk of substantial obstacles to enforcement - even though there was evidence that the claimant also had assets in Switzerland and Cyprus, where there was no such risk: PJSC Tatneft v Bogolyubov [2019] EWHC 1400 (Comm).

The decision is of interest in illustrating the court's approach to an application for security for costs against a claimant resident in a non-convention country (ie one that is not bound by the various regimes for mutual enforcement of English judgments, namely the recast Brussels Regulation or the Brussels, Lugano or Hague Conventions), but where there is evidence that the claimant has assets in a convention country. The decision suggests that the court will look at whether, despite that evidence, there is a real risk of having to attempt enforcement in a jurisdiction where there is a real risk of non-enforcement. The court may conclude that there is such a risk despite there being no evidence of a lack of probity on the part of the claimant.

Where a claimant is considering an offer of undertakings to prevent an order for security for costs, the decision suggests that this will only be effective if the undertakings "clearly and satisfactorily eliminate the risk" of non-enforcement.

Background

The claimant is an oil company incorporated in Tatarstan, one of the constituent members of the Russian Federation. It brought claims against four Ukrainian individual defendants in respect of their alleged involvement in a dishonest scheme to siphon off funds payable to the claimant for oil shipments.

The defendants applied for security for costs on the basis that the claimant is resident outside the jurisdiction and not resident in a convention country. This is one of the situations in which the court may grant an order for security for costs (under CPR 25.13(2)(a)) and there was no dispute that the condition was satisfied in this case. However, under CPR 25.13(1)(a), the court may only make an order for security for costs if it is "satisfied, having regard to all the circumstances of the case, that it is just to make such an order".

As established by the Court of Appeal decision in Nasser v United Bank of Kuwait [2002] 1 WLR 1868, the court's discretion to award security for costs against a claimant...