Choudhary & Ors v Bhatter & Ors

Foreign residence and impecuniosity do not, without more, justify security for costs against an appellant. The relevant question is whether impecuniosity creates a practical risk that enforcement abroad will be hindered, burdened or avoided, consistently with Nasser v Bank of Kuwait [2001] EWCA Civ 556. The court must also guard against discrimination against foreign appellants. Even where jurisdiction to order security exists, it may be inappropriate to exercise the discretion where the dispute has only a remote connection with England and the appeal is genuine. The choice to litigate in England does not necessarily justify requiring a foreign appellant to provide costs security upfront.

The respondents sought security for the costs of an appeal by Mr Bhatter, who was resident in India and was subject to an injunction concerning the management of an English company carrying on business in India.

The High Court, Chancery Division, had restrained Mr Bhatter from taking specified steps concerning the company. It had held that the claimants were entitled to issue and serve proceedings pursuant to article 22 of the relevant EC Regulation. Stanley Burnton LJ granted permission to appeal. The issue before Lord Justice Longmore was whether security for the costs of that appeal should be ordered.

Application refused. Lord Justice Longmore accepted that the court might have jurisdiction to order security for costs against Mr Bhatter, but declined to exercise that jurisdiction.

1. Enforcement abroad. The court applied the approach in Nasser v Bank of Kuwait [2001] EWCA Civ 556. Impecuniosity is relevant not merely because an appellant may lack apparent means to satisfy a costs order. It is relevant where its effect may preclude, hinder or add to the burden of enforcement abroad, or make avoidance or hindrance of enforcement more likely.
2. Evidence and discrimination. The evidence did not justify an inference that Mr Bhatter would hinder or prevent enforcement. An order based on that evidence would risk discriminating against him as a foreign appellant compared with an English appellant. The court also considered that any relevant costs order would be comparatively easy to enforce in India under the Foreign Judgments (Reciprocal Enforcement) Act 1933.
3. Discretion. The dispute had only a remote connection with England, although the company was registered there and its members’ register was kept there. The appeal was genuine, as permission had been granted. In those circumstances, requiring Mr Bhatter to provide money upfront for the appeal would be unjust. The fact that the claimants were entitled to invoke English jurisdiction did not require the court to exercise its separate discretion to order security.
4. Jurisdiction and convenience. The court assumed for present purposes that jurisdiction existed under article 22. Convenience was irrelevant to whether jurisdiction could be invoked under the Regulation, but the remote connection with England was relevant to the discretionary security application.

The application for security for costs was refused.

• Court of Appeal (Civil Division): Refused the respondents’ application for security for the costs of Mr Bhatter’s appeal.
• High Court of Justice, Chancery Division: Mr David Donaldson QC made an injunction restraining Mr Bhatter from specified acts concerning the management, meetings, board composition and shareholdings of the company. The court held that the claimants were entitled to issue and serve proceedings pursuant to article 22 of the relevant EC Regulation. Permission to appeal was granted by Stanley Burnton LJ.