Deutsche Bank AG v Sebastian Holdings Inc

A pending application to the European Court of Human Rights does not ordinarily justify staying enforcement of a domestic judgment. The domestic judgment remains binding unless there is a real prospect that the Strasbourg decision will produce legislation or another domestic process capable of changing it.

Where liability has already been determined, a later order implementing that liability is ordinarily part of enforcement rather than a fresh determination of the merits. A stay is discretionary and normally requires solid grounds, including a real risk of irremediable prejudice. The court must balance the parties’ competing risks, while giving substantial weight to finality and enforcement where the judgment creditor faces a realistic risk of asset dissipation.

Deutsche Bank AG obtained judgment against Sebastian Holdings Inc for approximately US$243 million and an order for 85% of its costs on an indemnity basis. The bank subsequently obtained a non-party costs order against Mr Alexander Vik, SHI’s sole director and shareholder, under section 51 of the Senior Courts Act 1981. The Court of Appeal dismissed Mr Vik’s appeal, reported at [2016] 4 WLR 17, and the Supreme Court refused permission to appeal.

After the domestic appeals were exhausted, Mr Vik applied to set aside or stay an order requiring him to pay SHI’s outstanding costs and to participate in their detailed assessment. He relied on a pending Article 6 claim before the European Court of Human Rights. The central issues were whether the order represented a fresh determination capable of being adjourned, whether the ECHR claim justified a stay, and whether the costs order should be varied.

1. Primary application dismissed. Paragraphs 1 and 2 of the order were not genuinely new determinations. Cooke J’s judgment and the Court of Appeal’s decision had already established that Mr Vik was liable for all costs payable by SHI. The later order merely gave effect to that liability and necessarily required detailed assessment. Paragraph 3, concerning credit for the interim payment, was consequential. The earlier judgments could be deprived of binding force only if reversed.
2. A successful ECHR claim would not ordinarily reverse or suspend the domestic judgment. The ECHR is not a further court of appeal. Unless there were a real prospect of legislation or another domestic process directly affecting the judgment, a Strasbourg decision would not alter the underlying liability. Sparks v Harland [1997] 1 WLR 143 was distinguishable because the contemplated Strasbourg outcome there could lead to retrospective legislation changing the limitation position.
3. The threshold for reopening an appeal under CPR 52.30 is strict. It requires exceptional circumstances and reopening to be necessary to avoid real injustice. As explained in Lawal v Circle 33 [2014] EWCA Civ 1514, an alleged wrong result, fresh evidence, substantial sums or general importance is insufficient without a fundamental corruption of the litigation process. There was no realistic prospect that the Court of Appeal would reopen its decision even if the ECHR claim succeeded.
4. Stay of detailed assessment refused. A stay pending appeal is not automatic under CPR 52.16. The usual inquiry is whether enforcement risks irremediable harm and whether the balance of injustice favours a stay. The principles summarised in Otkritie International Investment Management Ltd v Urumov [2014] EWHC 755 (Comm) and Hammond Suddard Solicitors v Agrichem International Holdings Ltd [2001] EWCA Civ 2065 were applicable. Mr Vik could be repaid if successful, whereas delay created a realistic risk of further dissipation of assets and prejudice to DB. Finality also weighed strongly against a stay.
5. Paragraph 4 was varied. Mr Vik’s liability for assessment costs was made subject to any further order and limited to costs also ordered against SHI.

Paragraphs 1 to 3 were neither set aside nor stayed. The alternative application was dismissed.

• High Court, Commercial Court: Cooke J gave judgment for DB on 8 November 2013 and awarded it 85% of its costs on an indemnity basis.
• High Court, Commercial Court: Cooke J made a non-party costs order against Mr Vik on 24 June 2014, followed by an order dated 2 July 2014 under section 51 of the Senior Courts Act 1981.
• Court of Appeal: Mr Vik’s appeal was dismissed on 21 January 2016: [2016] 4 WLR 17.
• Supreme Court: Permission to appeal was refused on 19 July 2016.
• High Court, Commercial Court: The present application to set aside or stay the later order was dismissed, save that paragraph 4 was varied.