Nasser v United Bank of Kuwait

Foreign residence outside the Brussels and Lugano states creates a discretion to order security for an appeal, but does not justify an order automatically. The applicant must establish an objectively justified risk of substantial obstacles or an extra burden in enforcing a costs order abroad. Impecuniosity matters only where it may increase that enforcement burden or facilitate avoidance.

The discretion must be exercised without discrimination and consistently with access to justice under articles 6 and 14. Security should be tailored to the probable additional costs and delay of foreign enforcement. The court must also consider whether the order would stifle an appeal having a real prospect of success.

The claimant appealed against an order of Ian Kennedy J striking out her long-running claim against the defendant bank for want of prosecution. After permission to appeal had been granted, Judge LJ ordered her to provide £17,500 as security for the bank’s appeal costs. The order was made in her absence and provided that default would dismiss the substantive appeal.

The claimant applied to relist the security application, revoke or vary the order, and restore the substantive appeal. The principal questions were whether the court could revisit the order, how the revised Civil Procedure Rules governing appeal security should be interpreted consistently with articles 6 and 14 of the European Convention on Human Rights, and what security, if any, was justified by her residence in the United States.

1. Appeal allowed unanimously. Mance LJ delivered the leading judgment, with which Simon Brown LJ agreed. Judge LJ’s order for £17,500 security was set aside. The substantive appeal was reinstated subject to the claimant providing £5,000 security within five weeks.

2. Per Mance LJ, Civil Procedure Rules Parts 3.1(7) and 23.11 conferred powers wide enough to revoke the earlier order and relist the application after the claimant’s non-attendance. Those powers should be exercised cautiously where appropriate notice had been given. Reconsideration was nevertheless justified because relevant evidence and the legal effect of the revised rules and the newly incorporated Convention had not been addressed before Judge LJ.

3. Under Parts 25.15(1) and 25.13, impecuniosity was no longer, by itself, a ground for requiring an individual appellant to provide security. Residence outside the Brussels and Lugano states supplied a jurisdictional condition, not a presumption in favour of security. The distinction between residents within and outside those states was objectively justified as a means of identifying cases in which enforcement difficulties might arise.

4. The discretion itself had to be exercised without discrimination and consistently with articles 6 and 14 of the European Convention on Human Rights. The applicant must show a proper basis for anticipating substantial obstacles or an appreciable additional burden in enforcing a costs order abroad. The absence of reciprocal enforcement arrangements did not alone establish such difficulty. Impecuniosity was relevant only where it would hinder enforcement against existing foreign assets, increase the enforcement burden, or make evasion more likely.

5. Any security ordered should be tailored to the identified enforcement risk. It should not protect against the ordinary risk that an impecunious appellant will lack assets. The court must also consider whether security would stifle an appeal with a real prospect of success. The circumstances differed materially from Tolstoy Miloslavsky v United Kingdom (1995) 20 EHRR 442, because the claimant had received neither a trial nor a hearing of her substantive appeal.

6. Enforcement in the United States was not shown to face any legal obstacle. It would, however, probably require a separate action, investigation of the claimant’s means, additional expenditure and delay. Those burdens justified limited security of £5,000, which the claimant was likely to be able to raise. The appellant’s solicitors were ordered to pay £3,000 plus any eligible VAT to the respondent; the appellant’s £4,000 costs liability was postponed until determination of the substantive appeal.

• Court of Appeal: In Nasser v United Bank of Kuwait [2001] EWCA Civ 556, the court unanimously set aside the £17,500 security order, substituted security of £5,000 and reinstated the substantive appeal.
• Court of Appeal (Judge LJ): On 10 October 2000, Judge LJ refused an adjournment and ordered £17,500 security. Default caused the substantive appeal to stand dismissed. The present court revoked that order under Parts 3.1(7) and 23.11 of the Civil Procedure Rules.
• High Court (Ian Kennedy J): On 26 October 1999, the claimant’s action was struck out for want of prosecution. Latham LJ granted permission to appeal on 4 May 2000.