It is a widely recognised principle in common law
jurisdictions that an award for security for costs may be made
against an impecunious plaintiff in certain circumstances in order
to avoid injustice being caused to a party defending litigation
proceedings with no prospect of recovering its costs, even if
ultimately successful. Further, in the context of winding-up
proceedings, established authority provides that whenever a person
resident abroad comes forward as an actor in a winding-up, whether
voluntary, or under supervision, or by the Court, the ordinary rule
as to security for costs applies.
Following the introduction of the Companies Winding Up Rules 2008 (the 'CWR') in March 2009 and two subsequent first instance decisions of the Grand Court of the Cayman Islands, there appeared to be some uncertainty regarding the scope and applicability of the security for costs rule in Cayman Islands' winding up proceedings. However, two recent decisions of the Cayman Islands' Court of Appeal have provided useful clarification of the availability of such relief in winding up proceedings, as well as affirming the court's ability to look to the practice and procedures of other jurisdictions for the purpose of invoking an inherent jurisdiction to make an order for security for costs.
This article first appeared in the Chase Cambria International Corporate Rescue newsletter Vol 12. Issue 4 (August 2015). Please click on the link to read the full article.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.