High Court Provides Guidance On Ordering Security For Costs Against A Non-Resident Claimant

• Published date: 13 July 2022
• Subject Matter: Litigation, Mediation & Arbitration, Criminal Law, Trials & Appeals & Compensation, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Debevoise & Plimpton
• Author: Patrick Swain, Christopher Boyne and Luke Duggan

In determining whether to make an order for security against a non-resident Respondent, the court:

• can infer that there is a real risk of substantial obstacles being in the way of enforcing a future costs order if a Respondent elects not to disclose evidence as to its assets and their location, and there is no evidence available about the non-resident Respondent's assets;
• will consider the location of all the Respondent's assets not just those in its place of residence; and
• can take into account the Respondent's character and any adverse judicial findings made against the Respondent.

In Ras Al Khaimah Investment Authority v Azima [2022] EWHC 1295 (Ch), the High Court provided helpful guidance about when it will exercise its discretion under the CPR to order security for costs against a non-resident claimant (the "Respondent" to the security for costs application), particularly one refusing to disclose the nature and location of its assets. It also made a rare order for Model E disclosure on the train of inquiry basis.

A Respondent's failure to engage in providing information as to its asset position enhances the risk that the court will order the provision of full security as opposed to enforcement security (a lesser amount to meet the additional costs of enforcing a costs order abroad).

Background. The Ras Al Khaimah Investment Authority ("RAKIA") sued Mr Azima, who had had various dealings with RAKIA, for fraudulent misrepresentation and conspiracy. Mr Azima counterclaimed, alleging that his email accounts had been unlawfully hacked by RAKIA and his data used against him in the case (the "Counterclaim"). The judge at first instance found in favour of RAKIA on its claims as to fraudulent misrepresentation and conspiracy and dismissed the Counterclaim (at [2020] EWHC 1327 (Ch)). The Court of Appeal dismissed Mr Azima's appeal against RAKIA's claims but remitted the Counterclaim to be retried by a different judge of the Chancery Division on the basis that new evidence had come to light (at [2021] EWCA Civ 349). The judge on the remitter, Green J, subsequently gave permission to Mr Azima to join four additional Defendants to the Counterclaim. The present judgment dealt with two matters: (1) applications by all the Defendants to the Counterclaim for Mr Azima to provide security for their costs of defending the Counterclaim; and (2) certain disputed issues concerning the draft List of Issues for Disclosure under CPR PD 51U (the Disclosure Pilot).

SECURITY...