JSC BTA Bank v Ablyazov & Ors

On an application for security for costs, the court must consider whether an order is just having regard to all the circumstances. Relevant considerations include the claimant’s ability to meet a costs order, the enforceability of such an order, the scale and conduct of the litigation, and the parties’ conduct.

Suggested security must be capable of enforcement in a simple and straightforward way. Complex arrangements involving corporate structures, disputed governing law, uncertain undertakings or disputed charges will generally be inadequate. A defendant’s own alleged wrongdoing does not justify refusing security where liability remains contested. However, continuing alleged breaches of court orders may make it inappropriate to grant security before related contempt proceedings are determined.

The defendants applied for security for their costs in five actions brought by the claimant. The court’s jurisdiction to order security was accepted. The issue was whether, under CPR 25.12, it was just to make the order having regard to all the circumstances.

The claimant relied on alleged wrongdoing and breaches of freezing and disclosure orders by Mr Ablyazov. It also argued that existing payments into court, costs orders and assets held through companies supplied de facto security. Mr Solodchenko was not alleged to have disobeyed court orders. The central issues were the adequacy of the proposed forms of security and the effect of the defendants’ conduct.

1. Applicable discretion. The court accepted that the statutory and procedural jurisdiction existed and considered whether security was just under CPR 25.12. There were real, though small, risks that the claimant might be unable to pay a costs order and that enforcement outside the jurisdiction would be difficult. The scale and complexity of the litigation also supported security.
2. Adequacy of proposed security. The sum paid into court to fortify freezing and receivership undertakings should not be diluted by treating it as security for costs. Existing costs orders were insufficient. Security based on debts owed by companies controlled by a defendant, a proposed undertaking, a possible lifting of the corporate veil, or a disputed charge under foreign law was too uncertain. Applying the guidance in Ali Aoun v Hassan Bahri [2002] EWCA Civ 1390 and AP (UK) v West Midlands Fire and Civil Defence Authority [2001] EWCA Civ 1917, security should be capable of realisation with relative ease.
3. Alleged wrongdoing. The court could not assume before trial that the defendants had committed the alleged fraud or caused the claimant’s financial difficulties. Those disputed matters did not justify refusing security.
4. Mr Ablyazov. Earlier breaches and lack of candour were serious, but did not alone justify refusal. The continuing allegations that he had breached the freezing order, and the pending contempt application, made it inappropriate in principle to order security before the contempt hearing was resolved.
5. Mr Solodchenko. No disobedience or contempt application was alleged against him. Security was therefore ordered in principle, with quantum to be agreed or determined at a further hearing.