A summary of recent developments in insurance, reinsurance and litigation law.
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
http://www.bailii.org/ew/cases/EWCA/Civ/2016/1099.html
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 as follows:
(1) It has been held by the Court of Appeal in Nasser v United Bank of Kuwait [2002] 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
http://www.bailii.org/ew/cases/EWHC/QB/2016/2757.html
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 be judged.
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".
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