Pipia v BGEO Group Ltd

For security for costs, residence outside the jurisdiction may satisfy the gateway condition where the claimant is not resident in a specified convention or Regulation State. The court must then decide whether security is just in all the circumstances. A defendant need show a real risk, based on objectively justified grounds, that a costs order will face serious obstacles to enforcement. Likelihood or proof on the balance of probabilities is unnecessary. The evidence may be assessed flexibly on an interlocutory application and need not comply with the requirements for expert evidence under CPR Part 35. Once a real risk of non-enforcement is established, the starting point is security for the entirety of the recoverable costs, without discounting the amount by grading the risk.

The defendant applied for security for costs under CPR 25.12 and 25.13 in a claim by a claimant resident in Georgia, seeking nearly US$286.5 million in damages for an alleged delict under Georgian law. The claimant argued that the Association Agreement between the European Union, Euratom, their Member States and Georgia displaced the residence gateway or prevented a security order on non-discrimination grounds.

The claimant also challenged the admissibility and sufficiency of evidence concerning enforcement of an English costs order in Georgia. The central issues were whether the gateway condition applied, whether there was a real risk of non-enforcement, whether it was just to order security, and the proper amount of security.

1. Gateway condition. The claimant was resident outside the jurisdiction and in Georgia. The Association Agreement did not fall within the express terms of CPR 25.13(2)(a)(ii). Article 21 referred to developing judicial cooperation and the Hague Convention, but did not provide for enforcement of judgments. Articles 414 and 416 prohibited nationality discrimination, whereas the CPR provisions operated by reference to residence and applied equally to persons of any nationality resident in the relevant states.
2. Applicable threshold. Following and applying Bestfort Developments LLP v Ras Al Khaimah Investment Authority [2016] EWCA Civ 1099, the defendant had to show on objectively justified grounds a real risk that it would be unable to enforce a costs order. The test was risk-based rather than likelihood-based. The flexible approach was reinforced by Danilina v Chernukhin [2018] EWCA Civ 1802.
3. Evidence. The court could consider witness statements and memoranda concerning Georgian law without requiring compliance with CPR Part 35. The interlocutory nature of the application and the need for a proportionate assessment of future enforcement risk justified that approach. The totality of the evidence nevertheless had to establish the risk.
4. Application. The evidence demonstrated objectively justified uncertainty and obstacles in obtaining recognition and enforcement in Georgia. It established a real risk of non-enforcement. The Association Agreement did not alter that conclusion. The discretion was therefore justly exercised in favour of security, and no other factor outweighed the risk.
5. Quantum and order. Once the real risk was established, the defendant was entitled to security for the full amount of the costs, without a sliding-scale discount. The application was granted. The claimant was ordered to provide security for the full amount of costs until the close of pleadings, with the precise figure to be determined at a consequential hearing.