Ras Al Khaimah Investment Authority & Ors v Bestfort Development LLP & Ors

An order for security for costs under Civil Procedure Rules 1998 must be exercised consistently with the non-discrimination principle in Nasser v United Bank of Kuwait [2002] 1 WLR 1868. Residence outside the UK, EU or EEA is insufficient. The applicant must show a likely substantial obstacle or burden to enforcement of a costs order arising from that residence. A mere possibility, or real possibility, is inadequate. Merits may be relevant only where the claim is plainly very strong or plainly very weak. Even a weak claim does not justify discriminatory security without objectively justified enforcement difficulties. The court may order tailored security for additional enforcement costs, but only where the evidence supports it.

The claimants, entities connected with the government of Ras Al Khaimah and resident in Ras Al Khaimah or Georgia, sought worldwide freezing injunctions and receivers in support of proceedings in Georgia and anticipated proceedings in the UAE. The defendants, English registered LLPs, applied under CPR 25.12 and CPR 25.13(2)(a) for £500,000 security for costs and dismissal or striking out if security was not provided.

The gateway condition was satisfied because the claimants did not reside in the UK, EU or EEA. The central issue was whether enforcement difficulties in Georgia or Ras Al Khaimah objectively justified treating the claimants differently from comparable UK, EU or EEA residents.

1. Application dismissed. The defendants did not establish grounds warranting full security for costs.
2. Following Nasser v United Bank of Kuwait [2002] 1 WLR 1868, the discretion under CPR 25.13(2)(a) must be exercised without discrimination. Any difference in treatment must rest on objectively justified grounds relating to likely enforcement difficulties.
3. The court adopted the approach in Dumrul v Standard Chartered Bank [2010] EWHC 2625 (Comm). The applicant must establish a likely substantial obstacle or burden to enforcement. A mere possibility or real possibility of such difficulty is insufficient.
4. The claimants’ merits were not to be adjudicated on this interlocutory application. Merits become relevant only where the claim is plainly very strong or plainly very weak. In either event, the merits cannot overcome the requirement for objectively justified differential treatment.
5. Although enforcement in Ras Al Khaimah was assumed likely to present serious difficulties, substantial assets existed in Georgia. The evidence did not establish that recognition or enforcement there was likely to encounter a substantial obstacle. The possibilities arising under Article 68 of the Georgian Civil Code were no more than arguable or possible.
6. A fraud-based challenge to recognition would not create a discriminatory enforcement difficulty because, on the facts, an equivalent issue could arise in the EU or EEA. The claimants’ undertakings to pay costs within 14 days and not oppose recognition could not simply be disregarded.
7. Tailored security was also refused. Any probable delay and expense in obtaining recognition in Georgia did not justify an order, particularly since enforcement in the EU or EEA also involves cost and delay.