Peters & Peters

Peters & Peters Secure Landmark Court of Appeal Ruling in Ras Al Khaimah Investment Authority & Ors -v- Bestfort Development LLP & Ors

Peters & Peters acts for a number of English LLP respondents to an action brought under section 25 of the Civil Jurisdiction and Judgments Act 1982 by a number of entities owned and controlled by the Emirate State of Ras Al Khaimah (“RAK”).

In the course of those proceedings, it was established that the RAK entities only had assets located within the Republic of Georgia or RAK. As such, the respondent LLPs applied for security for their costs of defending the action. The LLPs argued that they needed to (and could) demonstrate to the Court that there was a real risk of substantial obstacles or burdens to enforcement in the relevant jurisdictions. The RAK entities argued, on the contrary, that the correct evidential threshold to be established by the LLPs was that there was a likelihood (i.e. on the balance of probabilities) of substantial obstacles or burdens to enforcement, being a higher threshold and therefore one which would justify the Court making a discriminatory order against non-EU claimants in prima facie contravention of ECHR Article 14.

The security application was dismissed at first instance by a Master and again on appeal to a single High Court Judge, both holding that the correct evidential threshold was that of likelihood. However Lady Justice Gloster, giving the leading judgment of the Court of Appeal, held to the contrary that the correct test  was one of real risk, stating:

“I do not accept there is any need for the evidence to demonstrate “very cogent evidence of substantial difficulty in enforcing a judgment ” either in the non-Convention state where a claimant is resident, or where his assets are located. Nor do I accept that the ECHR jurisprudence in relation to discrimination, or indeed this Court’s decision in Nasser, predicate an evidential test which requires satisfaction “on the balance of probabilities”… that there will be, or are, obstacles or burdens to enforcement…

In my judgment, it is sufficient for an applicant for security for costs simply to adduce evidence to show that “on objectively justified grounds relating to obstacles to or the burden of enforcement” , there is a real risk that it will not be in a position to enforce an order for costs against the claimant/appellant and that, in all the circumstances, it is just to make an order for security…  A test of real risk of enforceability provides rational and objective justification for discrimination against non-Convention state residents…

It follows that I would allow the security appeal and, subject to any further argument from counsel, order that the appellants should have their costs of the proceedings before both the Master and the judge. This is a case where in my view it was obvious on the evidence that an order for security was justified.”

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