UK: High Court Orders Russian Claimant To Provide Security For Costs Despite Evidence Of Assets In Switzerland And Cyprus

Last Updated: 25 July 2019
Article by Anna Pertoldi, Maura McIntosh and Jan O'Neill

The High Court has granted an order for security for costs against a Russian claimant, on the basis that there was a real risk that any costs order against it would have to be enforced in Russia, where the court said there was a real risk of substantial obstacles to enforcement – even though there was evidence that the claimant also had assets in Switzerland and Cyprus, where there was no such risk: PJSC Tatneft v Bogolyubov [2019] EWHC 1400 (Comm).

The decision is of interest in illustrating the court's approach to an application for security for costs against a claimant resident in a non-convention country (ie one that is not bound by the various regimes for mutual enforcement of English judgments, namely the recast Brussels Regulation or the Brussels, Lugano or Hague Conventions), but where there is evidence that the claimant has assets in a convention country. The decision suggests that the court will look at whether, despite that evidence, there is a real risk of having to attempt enforcement in a jurisdiction where there is a real risk of non-enforcement. The court may conclude that there is such a risk despite there being no evidence of a lack of probity on the part of the claimant.

Where a claimant is considering an offer of undertakings to prevent an order for security for costs, the decision suggests that this will only be effective if the undertakings "clearly and satisfactorily eliminate the risk" of non-enforcement.


The claimant is an oil company incorporated in Tatarstan, one of the constituent members of the Russian Federation. It brought claims against four Ukrainian individual defendants in respect of their alleged involvement in a dishonest scheme to siphon off funds payable to the claimant for oil shipments.

The defendants applied for security for costs on the basis that the claimant is resident outside the jurisdiction and not resident in a convention country. This is one of the situations in which the court may grant an order for security for costs (under CPR 25.13(2)(a)) and there was no dispute that the condition was satisfied in this case. However, under CPR 25.13(1)(a), the court may only make an order for security for costs if it is "satisfied, having regard to all the circumstances of the case, that it is just to make such an order".

As established by the Court of Appeal decision in Nasser v United Bank of Kuwait [2002] 1 WLR 1868, the court's discretion to award security for costs against a claimant resident in a non-convention country must be exercised in a manner which is not discriminatory for the purposes of Articles 6 and 14 of the European Convention on Human Rights.

In Bestfort Developments LLP v Ras Al Khaimah Investment Authority [2016] EWCA Civ 1099 (considered here) the Court of Appeal held that the relevant test is whether there is a "real risk" of substantial obstacles to enforcement of an English costs order in the jurisdiction in question (or of an additional burden in terms of cost or delay, in which case security will usually be ordered by reference to that extra burden). It is not a balance of probabilities test.


The High Court (Butcher J) ordered the claimant to provide security for costs.

The main issue for the court to consider was whether the defendants had shown a real risk of substantial obstacles to enforcement due to the claimant's country of residence or the location of its assets (ie whether the Nasser condition was met). That involved two aspects:

  1. whether there were substantial obstacles to enforcement in Russia, where the claimant was resident and where the vast majority of its assets were located; and
  2. even if there were such obstacles, whether it was nonetheless inappropriate to order security because the claimant had assets in Switzerland and Cyprus that could be enforced against.

If the Nasser condition was met, the court still had to consider whether it was just to make an order for security.

Enforcement of a costs order in Russia

The defendants argued that the court could conclude without any difficulty that there was a real risk of substantial obstacles to enforcement of a costs order in Russia because the English courts had recently held that there was such a risk, in particular in Danilina v Chernukhin [2018] EWHC 39 (Comm) (considered here). The claimant contended that the English court's previous decisions, on different evidence, were not relevant.

In addition, each party relied on expert evidence of Russian law as to whether or not there were substantial obstacles to enforcement of a costs order in Russia, and whether the identity of the parties would lead to a "politically influenced result" in attempting to enforce such an order in favour of the defendants. The judge said that, in approaching this area of dispute, it was important to bear in mind that the test was whether there was a "real risk", which was meant to establish a "simple and clear approach". In circumstances where the experts had not been cross-examined, in most cases the court was unlikely to be able to decide between the experts' views on disputed issues (save where it was plain that one or other expert lacked qualifications or reliability, or there was no room for serious argument). That might itself lead the court to conclude there was a real risk of substantial obstacles to enforcement, because the expert who said there was such a risk might be correct.

The judge concluded that the defendants had shown a real risk in this case. He outlined a number of reasons for his conclusion:

  1. Evidence of falling enforcement rates in Russia of decisions involving Ukrainian applicants or from Ukrainian courts, and of judgments of English courts or arbitral tribunals.
  2. The fact that there is no relevant mutual enforcement treaty between the UK and Russia.
  3. A risk that it may be necessary to establish reciprocity before the Russian courts (ie that the English courts recognise and enforce Russian judgments) on a case by case basis, and a risk that reciprocity might not be found to be established given that the parties had not identified a case in which an English court had enforced a Russian costs-only judgment.
  4. A risk that a costs order might not be enforced if it was not accompanied by any final judgment on the merits, eg if the claimant discontinued the action.
  5. A risk that a Russian court might refuse to enforce a costs order in favour of the defendants, applying an expansive concept of public policy, in light of the political tensions between Russia and the Ukraine and the fact that some of the defendants were subject to Russian sanctions.
  6. A risk that a Russian court might refuse enforcement due to the sanctions imposed against certain of the defendants and, even if a costs order were enforced, any funds credited to the relevant defendants might be indefinitely frozen within Russia so that they could not be used by the defendants.

The judge regarded points 3 to 6 as each representing a real risk of substantial obstacles to enforcement in Russia. Taken together, and in light of points 1 and 2, he regarded the position as clear. He also noted that his conclusion was consistent with the court's finding in Danilina, which provided "additional support" for his conclusion.

Enforcement in Switzerland and Cyprus

The claimant argued that, because it had assets within a convention country, it was inappropriate or unnecessary to order security. The assets the claimant claimed to have were: (i) 99% of the shares in a Swiss-incorporated company (TOAG) worth CHF 453,273,431, which were held in bearer form in a safe deposit box in Switzerland; and (ii) 100% of the shares in a Cypriot company (Tatneft Finance) which had current assets of about US$9 million and non-current assets of about US$170 million.

The court considered that, nonetheless, there was a real risk that such assets would not be available, or not in sufficient amounts, if it became necessary to enforce a costs order against the claimant. The shareholding arrangements within the claimant group were "neither fully transparent, nor fully explained", and the assets relied on might readily cease to be available for legitimate reasons. Moreover, this was very hard-fought litigation and there was no good reason to think that the claimant would not take any available course of conduct to diminish the assets available to the defendants to enforce against.

The court rejected the suggestion that there was any rule that, if a resident of a non-convention country had assets within a convention country, security would not be ordered unless a lack of probity was shown. The court endorsed the approach in Texuna International Ltd v Cairn Energy plc [2004] EWHC 1102 (Comm), in which the court focused on whether there was a real risk of having to attempt enforcement in a jurisdiction where there was a real risk of substantial obstacles, despite there being evidence of assets in a jurisdiction where there were no such obstacles. A lack of probity on the part of the claimant would be highly relevant, but the existence of such a risk could arise from other factors.

Although the claimant offered to provide undertakings, if the court were minded to order security, the court concluded that these did not "clearly and satisfactorily eliminate the risk". Accordingly the Nasser condition was satisfied.

Was it just to order security?

The judge recognised that satisfaction of the Nasser condition did not of itself mean it was just to make the order, but said it was a strong consideration of favour of doing so. Factors pointing the opposite way included that the claimant was a reputable and solvent organisation with no recording of defaulting on its obligations. The judge concluded:

"Overall, in circumstances where the Nasser condition is met, where [the claimant] is able to put up security and has not pointed to any other specific prejudice it will suffer if ordered to do so, and where the Defendants will potentially be prejudiced if security is not put up, I consider that it is just to order security for costs."

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions