A summary of recent developments in insurance, reinsurance and
This Week's Caselaw
Bestfort Developments v Ras Al Khaimah: Court of
Appeal holds that test for security for costs where claimant is
resident outside the EU/EEA is a "real risk" that
enforcement will be difficult or impossible
CPR r25.13(2)(a) provides that a security for costs order can be
made where the claimant company is resident out of the
jurisdiction, but not in the EU or EEA, and there is reason to
believe that it will be unable to pay the defendant's costs if
ordered to do so. The issue in this case was the standard of proof
which the applicant must meet. At first instance, and on appeal, it
was held that the test is one of likelihood, rather than a lower
test, such as merely that there is a "real risk" that it
will be difficult or impossible to enforce a costs order. The Court
of Appeal has now allowed the appeal from that conclusion, holding
(1) It has been held by the Court of Appeal in Nasser v
United Bank of Kuwait  that in order to comply with the
European Convention on Human Rights, the English court may only
exercise its discretion to order security in a manner that is not
discriminatory. Although condition (a) was prima facie
discriminatory against non-EU/EEA claimants, only "some
rational justification" for the discrimination was required
because it was based on residence, not nationality. Such
justification does exist (for example, there are likely to be
substantial obstacles to or a substantial extra burden (e.g. of
costs or delay) in enforcing an English judgment, significantly
greater than there would be as regards a party resident in England
or the EU/EEA).
(2) It is sufficient for an applicant simply to adduce evidence
to show that there is a "real risk" that it will not be
in a position to enforce a costs order and that, in all the
circumstances, it is just to make an order for security: "In
other words, I consider that the judge was wrong to uphold the
Master's approach that the appropriate test was one of
"likelihood", which involved demonstrating that it was
"more likely than not" (i.e. an over 50% likelihood), or
"likely on the balance of probabilities", that there
would be substantial obstacles to enforcement, rather than some
lower standard based on risk or possibility. A test of real risk of
enforceability provides rational and objective justification for
discrimination against non-Convention state residents".
Accordingly, whilst the "mere possibility" of
obstacles to enforcement would be insufficient to justify a
security order, a "real risk" will usually, but not
invariably, suffice (depending on the evidence).
COMMENT: This decision will therefore make it easier for
defendants to satisfy the court that a security for costs order
against a company resident outside of the EU/EEA is justified.
Vilca v Xstrata: Whether permission to call expert
should be given and scheduling issues for trial
The underlying dispute in this case relates to alleged police
brutality at certain protests. The claimants sought to call, as
their expert, someone who had been instrumental in the initiative
to produce the Voluntary Principles on Security and Human Rights
(which were of issue in this case).
Foskett J refused permission to call him. Citing earlier
caselaw, he held that expert evidence is admissible only if there
exists a recognised expertise governed by recognised standards
and/or rules of conduct (set by, for example, a regulatory body).
Here, although there might be an emerging consensus about what
represents good practice in the kind of situation which arose, it
was impossible to conclude that there was an "established
consensus" against which the defendants' behaviour could
Furthermore, it was not necessary to have this evidence in order
for the court to reach a conclusion on the issue. The court was
able to decide whether the defendants had followed the Voluntary
Principles and, if not, whether that amounted to a breach of duty
under the relevant law.
One further issue regarding the scheduling of the trial was also
mentioned by the judge: "Purely from the point of view of the
efficient deployment of judicial resources, my preference, as Judge
in Charge of the Queen's Bench Civil List, is not to list a
substantial trial of the nature involved here (involving, as it may
do, witnesses from Peru giving evidence via video link) during
effectively the last few weeks of the Summer Term. It is better
from the court's point of view to list such a trial in the
Michaelmas Term. I have indicated that to the parties and they
should liaise with each other (and with the QB Listing Office) over
a suitable window for the trial in the Michaelmas Term".
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Settling contentious claims without prejudice to liability is an everyday occurrence for most Insurers. The vast majority of claims which are subject to litigation are settled at some point in the course of the proceedings, and the settlement is usually expressed to be without admission of liability.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).