ARTICLE
22 August 2019

Guidance From The Grand Court: Payments On Account Of Costs, Damages And Costs In Anti-Suit Cases

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Walkers

Contributor

Walkers is a leading international law firm which advises on the laws of Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, Ireland and Jersey. From our 10 offices, we provide legal, corporate and fiduciary services to global corporations, financial institutions, capital markets participants and investment fund managers.
The Grand Court of the Cayman Islands, per Kawaley J, has handed down an important decision in respect of the recovery of costs and damages pertaining to an anti-suit injunction
Cayman Islands Litigation, Mediation & Arbitration

The Grand Court of the Cayman Islands, per Kawaley J, has handed down an important decision in respect of the recovery of costs and damages pertaining to an anti-suit injunction, in the case of Riad Tawfiq Al Sadik v Investcorp Bank B.S.C & Ors. The judgment follows a protracted dispute in which Mr Al Sadik's claims were dismissed at every level up to and including the Privy Council. Whilst the final appeal was being determined by the Privy Council, proceedings based on the same subject matter were issued in Dubai, leading to a successful anti-suit application in the Grand Court.

Thereafter, Walkers successfully obtained an order for the costs of the anti-suit injunction on an indemnity basis, a payment on account of costs and an order for the assessment of damages resulting from the Dubai proceedings on an indemnity basis.

Kawaley J has provided welcome to guidance to practitioners of Cayman Islands law on these issues, as follows:

  1. Where a party has obtained an order restraining foreign proceedings on the basis that they are in breach of an exclusive jurisdiction clause, or are an abuse of process, the correct approach will normally be to award the successful party its costs on the indemnity basis.
  2. Damages measured by the costs of the improperly commenced foreign proceedings are appropriate as additional relief in respect of the breach of an exclusive jurisdiction clause. Such damages may include the costs of instructing counsel in the foreign proceedings, as well as counsel in other jurisdictions who are involved in preparing for such foreign proceedings.
  3. In considering whether to order a payment on account of costs to be taxed in due course, the starting point under GCR Order 62 rule 4 (7) is an "implicit starting assumption" that a payment on account of costs should be made. The Court is empowered summarily to assess an appropriate partial costs payment by reference to a draft bill of costs or a breakdown of the costs incurred. In doing so, the Court will adopt a conservative approach in awarding the successful party an amount to be immediately paid which will allow for the balance of costs to be the subject of taxation.

The judgment in respect of points one and two above reinforces the decision of Parker J in Re BDO [2018 (1) CILR 187], and in respect of point three is the first detailed judicial guidance on the payment on account of costs rule since its introduction into the GCR in 2016.

Following Kawaley J's decision, there is much less scope for debate on these points. Litigants who expose themselves to an anti-suit injunction is respect of improperly commenced foreign proceedings, do so at their peril.

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.

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