BAILII [Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Bestfort Developments LLP & Ors v Ras Al Khaimah Investment Authority & Ors [2016] EWCA Civ 1099 (08 November 2016)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2016/1099.html
Cite as: [2016] EWCA Civ 1099

[New search] [Context] [View without highlighting] [Printable RTF version] [Help]


Neutral Citation Number: [2016] EWCA Civ 1099
Case No: A3/2015/3642

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice David Richards
CH/2015/0494


Royal Courts of Justice
Strand, London, WC2A 2LL
08/11/2016

B e f o r e :

LADY JUSTICE BLACK
LADY JUSTICE GLOSTER
and
LORD JUSTICE BRIGGS

____________________

Between:
BESTFORT DEVELOPMENTS LLP AND OTHERS
Appellants
- and -

RAS AL KHAIMAH INVESTMENT AUTHORITY AND OTHERS
Respondents

____________________

Philip Marshall QC, Ruth den Besten and James Mather (instructed by Peters and Peters Solicitors LLP) for the Appellants
Richard Millett QC and Andrew Holden (instructed by Dechert LLP) for the Respondents

Further submissions received 23 June 2016 and 11 July 2016
Hearing date: 9 February 2016

____________________

HTML VERSION OF JUDGMENT APPROVED
____________________

Crown Copyright ©

    Lady Justice Gloster:

    Introduction

  1. There is one appeal and one application for security for costs before the court.
  2. The appeal, in Case No: A 3/2015/3642 ("the security appeal"), is a second appeal by the 1st to 6th, 8th and 10th to 14th Defendants ("the appellants" or "the appellants/defendants"), against the order of David Richards J dated 5 November 2015 dismissing the appellants' appeal against the order of Master Bowles dated 16 October 2015 whereby he refused to require the claimants, Ras Al Khaimah Investment Authority and others ("the respondents" or "the respondents/claimants"), all of which are incorporated and resident outside the jurisdiction and the EU, and whose only assets are in Ras Al-Khaimah (in the United Arab Emirates) and in Georgia, to provide security for the appellants' costs of proceedings brought by the respondents/claimants against them and others under section 25 of the Civil Jurisdiction and Judgments Act 1982 ("the section 25 proceedings").
  3. Permission to appeal was granted by Patten LJ on 9 November 2015 on the basis that the security appeal raised an issue of principle suitable for a second appeal.
  4. That issue of principle was said to be the correct evidential threshold for the grant of an order for security for costs under CPR r 23.13(2)(a). That provision permits an order for security to be made where the claimant is resident out of the jurisdiction but "not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982" ("a non-Convention state"). The issue is said to be whether an applicant for security must prove that it is more likely than not (i.e. on the balance of probabilities) that it will be difficult or impossible to enforce an English costs order against such a respondent or merely that there is a real risk that this will be the case.
  5. It was common ground that the determination of that issue would involve consideration inter alia of this court's decision in Nasser v United Bank of Kuwait [2002] 1 WLR 1868. That was a case where the court held that, in order to comply with Articles 6 and 14 of the European Convention on Human Rights ("the ECHR") (preventing discrimination on the grounds of national origin with respect to access to the courts), the English court may only exercise its discretion to order security for costs in a manner that is not discriminatory.
  6. Both the Master and David Richards J held that the appropriate test is one of likelihood, rather than some lower standard based on risk or possibility. They decided that, for an order for security to be granted, it was not sufficient that there was a real risk that enforcement of any costs order made in the appellants' favour would prove impossible or impracticable or difficult in the relevant foreign jurisdictions.
  7. The second matter before the court is an application by the appellants/defendants to this Court issued on 3 February 2016 under Case No: A3/2015/4051A, for an order requiring the respondents/claimants to provide security in the sum of £208,014.56 for the appellants/defendants' costs of the respondents/claimants' appeal against an order of Rose J dated 30 November 2015 dismissing the section 25 proceedings "or otherwise for a like order under CPR r 52.9 that such security be provided as a condition of allowing [the respondents/claimants'] appeal to proceed" ("the security for costs application").
  8. In this court Mr Philip Marshall QC, Miss Ruth den Besten and Mr James Mather appeared for the appellants/defendants; Mr Richard Millett QC and Mr Andrew Holden appeared for the respondents/claimants.
  9. The procedural background to the security appeal and the security for costs application

  10. It is necessary for the purposes of this judgment to summarise the procedural background in some detail.
  11. As David Richards J summarised in paragraphs 2 to 4 of his judgment, the section 25 proceedings were originally brought by the respondents/claimants under section 25 of the Civil Jurisdiction and Judgments Act 1982 for a worldwide freezing order and associated disclosure orders against the appellants/defendants and others and for the appointment of receivers ("proceedings"). These orders were sought in support of pending or intended proceedings by the respondents against a Mr Mikadze in Georgia and in Ras Al Khaimah in the United Arab Emirates. The respondents/claimants are entities associated with the government of Ras Al Khaimah and the claims are said to arise out of dealings between them and Mr Mikadze, a citizen of Georgia, in respect of property developments in Georgia. It is alleged that Mr Mikadze misappropriated large sums and the claim against him is said to be for US $42 million. The allegations are strongly denied. The respondents/claimants allege, among other things, that the appellants/defendants are beneficially owned or controlled by Mr Mikadze, and that it will be possible to enforce a judgment against Mr Mikadze against the appellants/defendants' assets. This allegation is denied by the appellants/defendants. The detail of the claims made or to be made in the foreign proceedings and in the present proceedings are not relevant for present purposes.
  12. The section 25 proceedings were issued on 1 May 2015 and evidence of both fact and Georgian law was filed. At the time of the hearing before the judge, the application had been set down and was due to be heard in the Chancery Division with an estimate of three days starting on 9 November 2015.
  13. The application for security for costs was made by all the defendants, except the 7th and 9th defendants who were not represented in the proceedings, by an application notice issued on 21 August 2015. Evidence of fact and expert evidence of Georgian law was filed on the application which was heard by Master Bowles on 7 October 2015. Towards the end of the hearing he invited further written submissions on a particular topic and submissions were supplied to him between 8 and 12 October 2015. The Master gave judgment on 16 October 2015 dismissing the application. He held that the court needed to be satisfied that there was likely to be an obstacle or burden to enforcement, purportedly basing himself on the terms of the judgment of Mance LJ in Nasser and on a subsequent decision by Hamblen J in Dumrul v Standard Chartered Bank [2010] EWHC 26 25 (Comm). In effect the Master proceeded on the basis that "likely" meant "more likely than not" or "likely on the balance of probabilities".
  14. The Master dealt with the issue in his judgment as follows:
  15. "
    25. I turn therefore to the question of whether such grounds exist, and to the question as to the burden to be satisfied by an applicant for security where security is sought upon such grounds. As to the latter I find myself in complete agreement with Hamblen J in Dumrul v Standard Chartered Bank [2010] EWHC, 2625 (Comm); namely that, as a matter of both principle and authority (the authority being Nasser) the court needs to be satisfied that there is likely to be an obstacle, or burden, to enforcement, by which is meant, in accord with paragraph 62 of Nasser, that there is likely to be a substantial obstacle, or burden, to enforcement, and that a real possibility that such an obstacle or burden might exist is insufficient. The point of principle identified by Hamblen J. that a mere, or real, possibility that there might be a substantial obstacle or burden in respect of enforcement should not be sufficient to justify different treatment being applied to a resident outside the UK, EEA or EU, as compared with a person resident within those jurisdictions.
    49. However, in my judgment, that is not sufficient to enable a court to conclude in reliance on, or in respect of, Article 68(2)(e) that it is likely that there may be substantial difficulties in recognition or enforcement arising from the lack of a bilateral arrangement. It is undoubtedly possible, but not, on the evidence as I see it, likely."
  16. Thus, whilst the Master held that there was a real possibility that such an obstacle or burden might exist, he decided that he was not satisfied on the evidence before him that there was likely to be a substantial obstacle, or burden, in respect of enforcement.
  17. The appellants/defendants then applied for permission to appeal against the dismissal of their application for security for their costs of the section 25 proceedings and, if permission were granted, for the order below to be set aside and for an order for security for costs to be made in their favour. The main ground on which they sought to appeal the Master's order was the threshold test of the standard to which the court must be satisfied that there will be potential difficulties or burdens of enforcement in the relevant non-Convention state.
  18. The hearing before David Richards J proceeded on the basis that, if he gave permission, he would also determine the appeal. Accordingly, he heard full argument from both sides on the substance of the appeal. On 5 November 2015 he gave judgment granting permission to appeal but dismissing the appeal itself, thereby refusing to require the respondents/claimants to give security for the costs of the section 25 proceedings. His judgment is available at [2015] EWHC 3197 (Ch). In effect he upheld the approach adopted by the Master.
  19. The appellants/defendants duly paid the total sum of £76,000 in respect of the respondents/claimants' costs of the former's failed application for security.
  20. As I have already said, on 9 November 2015 Patten LJ granted the appellants/defendants permission to appeal David Richards J's decision. On that date he also adjourned the section 25 proceedings pending hearing of the security appeal. However, on 10 November 2015, the respondents/claimants applied to vary that order for an adjournment on the basis that their solicitors, Dechert LLP, gave an undertaking ("the Dechert undertaking") to the court in the following terms:
  21. "to pay any order for costs made against the respondents [i.e. the respondents/claimants] in relation to the Hearing [i.e. the hearing defined in the order as that "before Rose J listed to commence with a reading day on 9 November 2015 and a hearing from 10 November 2015"] to a maximum sum of £500,000, being the amount sought by the Appellants [i.e. the appellants/defendants] by way of security."

    That undertaking was provided on a voluntary basis and without any admission of liability.

  22. In those circumstances, on 10 November 2015 Patten LJ set aside his previous order dated 9 November 2015 adjourning the section 25 hearing and ordered that the section 25 proceedings should proceed as listed on 10 November 2015.
  23. The section 25 proceedings were heard by Rose J on 10, 11 and 12 November 2015. She gave judgment on 24 November 2015 dismissing the respondents/claimants' application and refusing them permission to appeal. After receiving further submissions on costs, on 30 November 2015 she ordered the respondents to pay the appellants/defendants' costs of the application on the standard basis in relation to the period prior to 6 November 2015, and on the indemnity basis thereafter, together with interest. She also required the respondents to make an interim payment on account of the appellants' costs of the section 25 proceedings (claimed by the appellants at that stage to be £708,000) in the sum of £475,000 within 28 days. Her judgment is available at [2015] EWHC 3383 (Ch). I refer to her order as "the Rose order".
  24. On 4 December 2015 the respondents/claimants filed an appellant's notice seeking permission to appeal against the Rose order dismissing the section 25 proceedings, for a stay of execution pending appeal and for continuation of certain injunctive relief pending appeal. That notice was supported by the 8th witness statement of David Hughes, a partner in the firm of Dechert LLP, the respondents/claimants' solicitors. On 18 December 2015, Patten LJ adjourned that application for permission to appeal to an oral hearing before a single Lord/Lady Justice of Appeal. He also ordered expedition of that application and stay of execution of the Rose order until after judgment on the application for permission to appeal. He also made an order for interim relief against the appellants/defendants in the terms of undertakings given by them in a previous order dated 18 June 2015, likewise until after judgment in the application for permission to appeal.
  25. On 13 January 2016, the respondents/claimants issued an application in Case No: A 3/2015/3642A for security for costs in the sum of £90,000 in respect of the respondents' costs of defending the security appeal, i.e. the appellants/defendants' appeal against the order of David Richards J. That application was supported by the 9th witness statement of Mr Hughes. On 28 January 2016, Lewison LJ refused that application on the papers on the grounds that it was made very late in relation to an appeal listed for hearing in under a fortnight and that, in any event, the respondents/claimants could set off their costs of the security appeal against their liability to pay costs under the Rose order, in the event that the appellants/defendants' security appeal failed, that there has been no oral renewal of that application to this court.
  26. Pursuant to the order of Patten LJ dated 18 December 2015, the respondents/claimants' application for permission to appeal against Rose J's dismissal of their section 25 proceedings (Case No: A 3/2015/4051), for a stay of execution pending appeal and for continuation of certain injunctive relief pending appeal, was heard before McCombe LJ on 1 February 2016.
  27. Paragraph 23 of Mr Hughes' 8th witness statement, in relation to the application for a stay, referred to the fact that security had effectively already been provided by means of the Dechert undertaking "such that for all intents and purposes the interim payment has effectively been paid into court".
  28. In addition, McCombe LJ had before him the 6th witness statement of Richard Clayman, an assistant solicitor employed by Peters & Peters, solicitors for the appellants/defendants, dated 22 December 2015, in opposition to the application for the stay of the interim payment of £475,000 and for the continuation of further injunctive relief. That witness statement stated that it was made in response to Mr Hughes' 8th witness statement and also made:
  29. "3. …in support of the cross-application by the [appellants/defendants] for security for costs of the appeal and for certain conditions to be imposed if any permission to appeal were granted by the Court of Appeal to the [respondents/claimants]. |The condition is that further security be provided in respect of currently unsecured costs of the proceedings below."
  30. In response to paragraph 23 of Mr Hughes' 8th witness statement, Mr Clayman commented at paragraph 12 of his 6th witness statement that "a solicitors' undertaking cannot be invested and there is no provision for interest to be added to the sums subject to such undertaking", and that, accordingly the appellants/defendants would be prejudiced whilst actual payment was withheld. Further, at paragraphs 16 and 21, he said:
  31. "16. ……the respondents [i.e. the appellants/defendants] do not accept that there is any basis for a stay of the payment on account ordered by Mrs Justice Rose. Alternatively, and only if required by the Court of Appeal, the respondents are prepared to accede to an arrangement under which the sum of £475,000 is held in an interest bearing account by my firm, pending the outcome of the Applicants' [i.e. the respondents/claimants] permission application (and any subsequent appeal if permission is granted).
    ……
    21... As described above, security for the respondents' costs and the amount of £500,000 was provided in the form of an undertaking to the Court to pay any costs order up to that. It would be inconsistent now for the Applicants to resist providing further security in respect of their intended appeal. This is even more so where the Applicants' above application for a stay of payment on account was sought partly on the basis that they have provided security in respect of the costs below."
  32. Although Mr Marshall QC was present at the hearing, the application was dealt with on the customary ex parte basis and he was not invited to address the court on behalf of the appellants/defendants. By his order of that date, McCombe LJ gave the respondents/claimants permission to appeal on grounds 1-6 and ground 9 of their grounds of appeal. He adjourned the application to appeal in respect of grounds 7 and 8 to the hearing of the actual appeal ("the section 25 appeal"), with the appeal on those two grounds to follow if permission were granted. He also continued the injunctions against the appellants/defendants made by Patten LJ in the terms of undertakings given by them in the previous order dated 18 June 2015 until the conclusion of the section 25 appeal, or further order in the meantime, with liberty to the appellants/defendants to apply to vary or discharge. Further, McCombe LJ ordered that the respondents/claimants should pay forthwith the sum of £475,000 into court, or alternatively into an interest bearing account in the joint names of the parties' solicitors:
  33. "as security in respect of the costs of the respondents [i.e. the appellants/defendants], such sum to be held subject to the court's further directions."

    However, he did not continue the stay of execution granted by Patten LJ. Before us Mr Millett contended that this was an error and that the order should have so provided. (Subsequently McCombe LJ varied that order to provide for a stay of execution – see below.) That substantive appeal against Rose J's dismissal of the section 25 proceedings remains listed to be heard in this court with a time estimate of two days. It was not before us.

  34. After the hearing before us (and as a result of inquiry from the Court), we were informed that, following the hearing on 1 February 2016, Dechert LLP wrote to Messrs Peters & Peters LLP recording that they would, pursuant to the order of McCombe LJ, proceed to place the security which they had been holding for the previous Dechert undertaking given on 10 November 2015 for the appellants/defendants' costs of the hearing before Rose J., up to an amount of £475,000, into an interest bearing account in the joint names of Dechert LLP and Peters & Peters LLP, and requesting details of three partners at Peters & Peters LLP who would sign the mandate.
  35. As I have already mentioned in paragraph 7 above, on 3 February 2016 the appellants/defendants then made a further application for security for their prospective costs of the respondents/claimants' section 25 appeal (i.e. what I have referred to above as the security for costs application) by application notice under Case No: A3/2015/4051A, supported by Mr Clayman's 9th witness statement and, further, by Mr Clayman's previous 6th witness statement. That application sought a further sum by way of security in an amount of £208,014.56 as security for the appellants/defendants' prospective costs of resisting the respondents/claimants' section 25 appeal or otherwise for a like order under CPR r52.9 that such security be provided as a condition of allowing that appeal to proceed. It was made on the assumption (which after the hearing before us the Court was informed was an agreed assumption) that the sum of £475,000 required by the order of McCombe LJ dated 1 February 2016 to be paid into court (but which was not in fact so paid) was pro tanto in satisfaction, or in place, of the undertaking given by Dechert on 10 November 2015 in relation to the costs of the section 25 proceedings before Rose J.
  36. After the hearing before us (and as a result of inquiry from the Court), we were informed that, on 9 February 2016, Dechert LLP wrote to Peters & Peters explaining that the formalities required to set up a joint account would take 2-3 weeks and therefore agreement was reached to the effect that the £475,000 which was to be paid into court or into a joint account pursuant to the order of McCombe LJ would instead be held by Dechert "to the joint order of both Dechert LLP and Peters & Peters Solicitors LLP until deposit of such monies into the joint deposit account pursuant to the [order of McCombe LJ] or further order of the Court". In the event, that interim undertaking ("the second Dechert undertaking") remains in place because attempts to open an account with HSBC in the joint name of the parties' solicitors proved difficult (owing to matters internal to HSBC).
  37. On 6 February 2016, I gave directions that the appellants/defendants' security for costs application in Case No: A3/2015/4051A should be heard together with the appellants/defendants' security appeal in Case No: A 3/2015/3642.
  38. The position before this Court at, and after, the hearing of the security appeal and the security for costs application

  39. At the start of the hearing, I raised with Mr Marshall my concerns that the security appeal itself was moot, given that, in the event, security had indeed been provided by the respondents/claimants (by means of the Dechert undertaking) and the section 25 proceedings had consequently gone ahead. The position, as Mr Marshall informed the court, was that, although he accepted that that was indeed the case, nonetheless:
  40. i) the security appeal remained live in relation to the costs of the hearings before the Master and David Richards J below; (from the evidence that appeared to involve the sum of approximately £76,000 which the appellants/defendants had duly paid to the respondents/claimants; one can assume that the former's costs would have been similar;)
    ii) the same legal issues as those raised by the security appeal were raised by the appellants/defendants' security for costs application in relation to their potential costs of the respondents/claimants' section 25 appeal;

    see pages 5-9 of the transcript for 10 February 2016. Mr Millett QC did not demur from this position. Accordingly, on that basis, the court proceeded with the hearing of the appeal over 2 days.

  41. After the hearing before us, and in response to inquiries from the Court as to the current status and extent of the Dechert undertaking, and as to whether it had been pro tanto replaced or satisfied by payment of the £475,000 into court or into a joint deposit account pursuant to the order of McCombe LJ, on 23 June 2016 the parties lodged further submissions informing the court that, by agreement between the parties, the Dechert undertaking given on 10 November 2015 had effectively been pro tanto replaced (to the extent of £475,000) by the subsequent undertaking by Dechert to hold that sum to the joint order of both Dechert and Peters & Peters.
  42. Likewise, after the hearing, by letter dated 18 February 2016, Peters & Peters informed the Court that, on the basis of a revised schedule of the appellants/defendants' prospective costs in relation to the section 25 appeal (estimated by them at the hearing to be in the region of £208,014.56), the appellants/defendants were now looking for security for costs in the reduced sum of £192,062.52.
  43. Thus, in the event, the appellants/defendants' position as to security for their costs is that:
  44. i) they are secured in relation to their first instance costs of the section 25 proceedings before Rose J in the sum of £500,000, pursuant to:

    a) as to £475,000, the second Dechert undertaking;

    b) as to £25,000, the (original) Dechert undertaking;

    ii) they remain unsecured in relation to:

    a) the balance of their first instance costs of the section 25 proceedings before Rose J in the sum of £208,889.40;

    b) their costs incurred before the Master, David Richards J. and this Court in respect of their original security for costs application and the security appeal, which, if they win the security appeal, they are likely (subject to any order of this Court) to be entitled to recover; and

    iii) they are currently unsecured in respect of their prospective costs of the section 25 appeal in the sum of £192,062.52, in relation to which they make the security for costs application to this Court.

    The judgment of David Richards J

  45. Subject to one aspect, the judge correctly set out the statutory context, agreed factual background and principal ground of the defendants' appeal at paragraphs 5 to 10 of his judgment. I adopt his summary of the position with the caveat that that part of the sentence which I have emphasised in bold below is the subject of dispute between the parties:
  46. "5. CPR 25.12 entitles a defendant to any claim to apply for security for its costs of the proceedings but the court may make an order for security for costs under CPR 25.13 only if (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order, and (so far as relevant to the present application) one or more of the conditions in CPR 25.13(2) applies. The application was made only by reference to the condition specified in paragraph (2)(a) of CPR 25.13:
    "the claimant is –
    (i) resident out of the jurisdiction; but
    (ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982."
    6. It is common ground that none of the claimants is either resident within the jurisdiction or resident in any of the states referred in paragraph (2)(a)(ii) (Convention states). It is not said that the claimants lack the means to meet an order for costs against them, but it is common ground that none of them has any assets in the UK or in any Convention state.
    7. It is also common ground that an application for security for costs against a claimant falling within paragraph 2(a) engages articles 6 and 14 of the European Convention on Human Rights. An order for security for costs against a claimant resident outside the United Kingdom or a Convention state is capable of amounting to discrimination under article 14 in the entitlement to effective access to the courts under article 6, on grounds of national origin where such an order could not be made against a person who was resident either in the United Kingdom or in a Convention state.[1] This was established by the decision of the Court of Appeal in Nasser v United Bank of Kuwait [2001] EWCA Civ 556, [2002] 1 WLR 1868.
    8. There will be no breach of article 14 if the making of an order for security for costs is objectively justified. Potential difficulties or burdens of enforcement in the relevant state, which would not be encountered in enforcement in the United Kingdom or a Convention state, are capable of providing objective justification for these purposes. If that condition is met, the issue for the court is whether, having regard to all the circumstances of the case, it is satisfied that it would be just to make an order for security for costs.
    9. The first and principal ground of appeal is that the Master applied too high a test in determining whether the defendants would face potential difficulties or burdens in enforcing an order for costs against the claimants. The Master held that the court must be satisfied that the defendants would be likely to face such difficulties or burdens of enforcement, whereas the defendants submit that the test is the lower test of showing that there is a real, as opposed to a fanciful, risk of such difficulties or burdens. If the defendants are correct, the Master made an error of law. The defendants submit that, if the right test were applied, the evidence showed that they would face a real risk of being unable to enforce an order for costs. A further ground of appeal is that, in any event, the Master erred in failing to take account of relevant matters or took into account irrelevant matters.
    10. Some of the claimants are incorporated in Ras Al Khaimah while the others are incorporated in Georgia. Without conceding the point, the claimants did not seriously challenge before the Master the defendants' case that there would be difficulties of enforcement in Ras Al Khaimah. Their case before the Master, and before me, is that they have assets in Georgia and the defendants could not show that there would be such difficulties of enforcement in Georgia as would justify the making of an order for security of costs."
  47. The judge then went on to explain how the Master reached his conclusion "that the court needs to be satisfied that there is likely to be an obstacle or burden to enforcement" and was entitled to reject the appellants' further submissions in relation to the "threshold test". The judge went on to conclude, however, that the threshold test point was an issue that could be raised on the appeal. Having considered the judgment of Mance LJ in Nasser v United Bank of Kuwait [2002] 1 WLR 1868 the judge concluded that the former was adopting a likelihood test, as opposed to a real risk test. He said:
  48. "22. Reading the judgment of Mance LJ as a whole, and in particular in the light of the passages cited above, it is clear to me that he was setting the bar at likelihood, rather than a lower test of a real risk. It is, however, fair to make these points. First, it does not appear from the judgment to have been the subject of argument between the parties. Secondly, the word "likely" will not necessarily mean more likely than not. Its meaning will depend on its context: see In Re Harris Simons Construction Ltd [1989] 1 WLR 368."
  49. The judge then went on to reject Mr Marshall's submissions to the contrary, based on this Court's decision in De Beer v Kanaar, [2003]1 WLR 38 and other authorities, that a real risk test was the correct approach. He said:
  50. "23. As earlier indicated, the lynchpin of the submissions on behalf of the defendants is the decision of the Court of Appeal in De Beer v Kanaar. Mr Marshall QC, who appeared as counsel in that case, submits that it makes clear that the relevant test for these purposes is one of a real risk. On analysis, I do not consider that the judgment of the court (Jonathan Parker LJ and Rimer J) will bear the weight placed on it by Mr Marshall."

    He referred with approval to the decision of Hamblen J in Dumrul v Standard Chartered Bank [2010] EWHC 2625, who concluded, after full argument on the relevant test and consideration of Mance LJ's judgment in Nasser, that:

    "25. In my judgment as a matter of both principle and authority the court needs to be satisfied that there is likely to be an obstacle or burden. A mere possibility of this should not justify treating a party resident outside a Brussels or Lugano state differently. This is particularly so given that all that needs to be shown is an "obstacle" to enforcement. This is also supported by a number of passages in Mance LJ's judgment."
  51. The judge then rejected Mr Marshall's submission that reliance should not be placed on the judgment of Hamblen J in Dumrul or certain other authorities of this Court, apparently to similar effect (namely Allen v Bloomsbury Publishing Ltd [2011] EWCA Civ 943 and Star Reefers Pool Inc v JFC Group [2011] EWCA Civ 1065), on the grounds that in none of those cases did it appear that the decision of the Court of Appeal in De Beer v Kanaar was cited. The judge concluded in relation to the first ground of appeal before him:
  52. "42. …… Having regard to the view which I have formed of the judgment in that case, as explained above, I do not consider that the lack of citation of De Beer affects the authority of the judgments and observations in those three cases.
    43. The position is therefore that the judgment of Mance LJ in Nasser is expressed in terms which, in my judgment, provide for a threshold test of likelihood. That was the view taken by Hamblen J after argument in Dumrul. I should follow that decision unless I am convinced that it is wrong. I am far from convinced that it is wrong. On the contrary, it is in my judgment entirely consistent with the judgment of Mance LJ in Nasser. The judgment of Hamblen J in Dumrul has been approved and applied by Tomlinson LJ in Star Reefers.
    44. In those circumstances I am clear that I should follow the judgment of Hamblen J and reject the submission made on behalf of the defendants in the present case that the Master applied the wrong threshold test."
  53. The judge went on to reject the other arguments presented by Mr Marshall in relation to factual matters which Mr Marshall submitted the Master had failed to take into account or had wrongly taken into account. Accordingly, the judge dismissed the appeal, thereby refusing to grant security to the appellants/defendants. Having decided that the Master had applied the correct threshold test, he himself did not consider the evidence in any detail.
  54. The appellants' arguments before this Court

  55. In summary, in support of his contention that the relevant test was whether there was a real risk that it would be difficult or impossible to enforce an English cost order against a respondent, Mr Marshall, on behalf of the appellants/defendants, submitted that:
  56. i) the existence of a real risk of an unenforceable costs order against the respondents/claimants as residents in a non-Convention state was sufficient to distinguish such claimants from a claimant resident in a Convention state and that accordingly there was no discrimination for the purposes of Article 14 of the ECHR because the two categories of claimants were not in analogous situations;

    ii) indeed, if the two categories of claimants were indeed in different positions, and account were not properly taken of their different positions, that in itself could amount to a breach of the appellants/defendants' Article 14 rights because of the failure to recognise the difference;

    iii) alternatively, if the two categories of claimants were in an analogous situation, and accordingly there was prima facie discrimination against the litigants who were residents in a non-Convention state, then the existence of that real risk of unenforceability provided a rational and sufficient justification for the respondents/claimants being treated differently for the purposes of Article 14;

    iv) the respondents/claimants were wrong to suggest that CPR r 25.13(2)(a) was prima facie discriminatory on grounds of nationality and, as a result, "very weighty reasons" were required to justify any discrimination; the relevant criterion prescribed by CPR r 25.13(2)(a) was residence, not nationality; the covert or indirect discrimination doctrine applicable under EU law did not exist under ECHR law; accordingly, discrimination on grounds of residence did not engage discrimination on grounds of nationality where a higher threshold might apply; accordingly, such discrimination, if any, as arose, was on grounds of "or other status" within Article 14, with the result that a less stringent test applied; that supported the appellants/defendants' contention that the relevant test was one of a real risk of unenforceability, which provided a rational and sufficient justification for different treatment of the respondents/claimants from that of a litigant resident in a Convention state;

    v) as to the decision of Hamblen J in Dumrul (to the effect that the existence of a risk of possible unenforceability would not be sufficient to prevent discrimination contrary to Article 14 and it had to be proved that it was likely that a costs order would be unenforceable abroad), if by the use of the word "likely", one meant more likely than not, so that the civil trial standard of proof (i.e. balance of probabilities) was engaged, that would be wrong in principle; it would be inconsistent with the approach taken in a number of other cases, and would cause very significant practical difficulties, especially where the position abroad, as in this case, was highly uncertain; in fact in Dumrul Hamblen J did not need to come to any conclusion as to whether the relevant test was one of a real risk of enforceability or whether it was one which required satisfying some civil trial type of threshold of balance of probabilities, because, whichever test was applied to the facts in Dumrul, there was not sufficient evidence of any obstacle to enforcement;

    vi) thus the approach adopted by Hamblen J in Dumrul was wrong in principle and resulted from an inappropriate semantic exercise carried out by reference to certain words used by Mance LJ in Nasser without regard to what was actually argued and the relevant context; Hamblen J's approach was adopted without having considered the relevant authorities including De Beer v Kanaar, Aim Asset Management Sdn. Bhd & Anor v Kazakhstan Investment Fund Ltd (unreported, 22 May 2002) and Texuna International Ltd v Cairn Energy Plc. [2004] EWHC 1102 (Comm);

    vii) in the alternative, even if "likely" were the correct expression to use, it did not follow that one had to apply a balance of probabilities test or trial standard of proof; the word "likely" had different meanings depending upon its context; that was clear from cases such as: Re Harris Simons Construction Limited [1989] 1 WLR 368 at 370; Three Rivers District Council v Bank of England (No 4) [2002] EWCA Civ 1182 per Chadwick LJ at [20]-[33] and Cream Holdings Ltd v Banerjee [2005] 1 AC 253; likelihood was a flexible concept as the judge himself noted; a real risk would be sufficient to fit within the concept of "likely", if that word were flexibly construed;

    viii) the appellants/defendants' test of a real risk of unenforceability was also supported by a number of factors;

    a) first, the test was a practical one to apply; it was the type of threshold which was commonly used by the court in interlocutory proceedings, the most obvious comparator being a "real risk of dissipation" in the context of an application for a freezing order; it recognised the reality that the court was inherently dealing with an uncertain situation and a future risk; in those circumstances it might well be difficult for the court to come to a clear assessment in advance;
    b) second, it was also a flexible test which allowed the court to tailor the level of security to the size of the risk and take into account the prejudice to each side;
    c) third, as Gross J pointed out in Texuna, if the court had to be satisfied on the balance of probabilities, that could give rise to heavy satellite litigation at an interlocutory stage, with potentially cross-examination of experts on foreign law and procedure; that was undesirable in principle;
    d) fourth, authority showed that the test was perfectly workable in practice; see for example De Beer v Kanaar, Aims and Texuna where such a test was applied;
    e) fifth, in general where the court is dealing with what is a discretionary power to be exercised at an interlocutory stage the court is reluctant to impose a high threshold to the court's jurisdiction.
  57. Mr Marshall submitted that, in applying the relevant test as articulated above, the evidence demonstrated the existence of a real risk, or, alternatively likelihood, that any costs order against the respondents/claimants as residents of Ras Al Khaimah and/or Georgia would be unenforceable. Accordingly, he submitted that security for the section 25 appeal should be provided and that the appellants should have their costs of the proceedings below.
  58. The respondents' arguments before this Court

  59. Mr Millett, on behalf of the respondents/claimants, submitted as follows:
  60. i) the test for the exercise of the jurisdiction to award security for costs to a defendant under CPR r 25.13.2(a) was one of likelihood of significant obstacles to, or burdens of, enforcement; "likelihood" in this context meant a balance of probabilities test; whilst it was accepted that, in an interlocutory context, finality of proof could not be established, nonetheless an applicant for security had to demonstrate that it had "much the better of the argument" that there were significant obstacles to, or burdens of, enforcement; in other words, that meant that an applicant had to show, on the material before the court, that there was more than a 50% probability of there being such significant obstacles; or, to use the words of Sir Thomas Bingham in Fitzgerald v Williams [1996] QB 657 at 675, "very cogent evidence of substantial difficulty in enforcing a judgment in that other" state, as adopted by Mance LJ in Nasser at [54];

    ii) Nasser was authority for the proposition that, in its present form, rule 25.13(2)(a) did indeed discriminate on grounds of nationality, and not only residence, for the purposes of Article 14 of the ECHR;

    iii) Nasser (in particular at [58], [61-62]) established, as a jurisdictional precondition to the condition under rule 25.13.2(a) being satisfied, a test of likelihood, namely that it was more likely than not that there would be substantial obstacles to, or burdens of, enforcement in the relevant non-Convention country;

    iv) a test of that level was required because very weighty reasons were needed to justify what would otherwise be indirect discrimination on the grounds of nationality; a test of real risk, however one shaded it, did not provide such reasons; it was a disproportionately low test, which was satisfied on one side of the evidence only;

    v) the test of likelihood (viz. that there would be substantial obstacles to, or burdens of, enforcement in the relevant non-Convention country) was specifically considered by Hamblen J in Dumrul and applied by the Court of Appeal in Star Reefers Pool Inc v JFC Group [2011] EWCA Civ 1065, in which the court endorsed the Dumrul decision as "helpful and useful"; it had been used regularly by first instance judges: there was no suggestion anywhere in the authorities that that test was difficult or unfair in its application;

    vi) this court must, or at least should, follow Nasser; the appellants' arguments required this court to depart from Nasser: there were four errors in that approach:

    a) first, it was wrong to say (as Mr Marshall submitted) that there was no discrimination here because the distinction was between claimants against whom there was a real risk of difficulty of enforcement, as opposed to where there was not; that was not where the line was drawn by Nasser; that case made clear that the key driver of the risk of discrimination was national origin; moreover, in PLP v Lord Chancellor [2015] EWCA Civ 1193 it was accepted by this Court that a residence test was discriminatory within the meaning of Article 14;

    b) second, Mr Marshall was wrong to contend that the equation between residence and nationality in the EU cases did not apply outside the EU, where the only consideration was the ECHR; that was also contrary to the decision in Nasser;

    c) third, Mr Marshall was wrong to submit that there was no such thing as indirect discrimination under the ECHR;

    d) fourth, Mr Marshall was wrong to submit, in the light of Nasser, that residence per se could never be a suspect category, and therefore never deserved severe scrutiny, regardless of its context;

    vii) four points were to be made about what the English cases showed:

    a) first, rule 25.13 (2)(a) was a rule of jurisdiction, in the sense that it was a precondition of the exercise of the jurisdiction; the court could not exercise the jurisdiction to order security for costs unless it was satisfied that there were likely to be substantial obstacles to enforcement;

    b) the second point was that the court simply had no power to order security for costs against an EU resident at all;

    c) third, the court had the jurisdiction to order security for costs against a non-EU resident, but since the exercise of that jurisdiction tends to discriminate indirectly on grounds of nationality, the court could only exercise the jurisdiction in a way which was proportionate and justified a legitimate aim;

    d) fourth, although the class of persons within the rule was expressly denoted by residence, residence in this context was a personal characteristic and was to be equated with nationality; see Nasser;

    viii) the subsequent ECHR cases, such as Runkee v United Kingdom [2007] ECHR 42989/98 and Carson v United Kingdom (2010) 51 EHRR 13, had not changed the position as described in Nasser, i.e. that discrimination on grounds of residence involved indirect discrimination on grounds of nationality in the context of the rule.

  61. Mr Millett accepted, on behalf of the respondents/claimants, that if the threshold test was one based on risk prospect or possibility, then, on the basis of the Master's own assessment of the evidence, the threshold had been crossed. That was because the Master held that the evidence established that the existence of additional obstacles or burdens to enforcement was possible but not, on the evidence as he saw it, likely.
  62. The evidence

  63. The relevant evidence relating to the difficulties of enforcement in Ras Al Khaimah and Georgia of any order of the English court in relation to costs may be summarised by reference to the account set out in the appellants' skeleton argument in this court from which Mr Millett did not demur. There was, not surprisingly, given the interlocutory nature of the application, no cross-examination of the experts on what were relatively short reports.
  64. i) The Master found (without substantial opposition from the respondents) that there would be significant obstacles to enforcement in Ras Al Khaimah. That remained the position on appeal.

    ii) So far as enforcement of any costs order in Georgia was concerned, the appellants/defendants' evidence, supported by their Georgian law expert, Professor Kereselidze, was to the effect that there was a real risk that the appellants would not be able to obtain recognition in Georgia of any costs order made in their favour in these proceedings, due to the terms of Article 68 of the Law of Georgia on International Private Law (the "IPL") which provided the basis upon which Georgian courts may recognise a foreign decision. That showed that a foreign judgment may not be enforced in Georgia:

    a) under Article 68(2)(e), where the foreign country does not recognise court decisions of Georgia;

    b) under Article 68(2)(f) if "proceedings are pending in Georgia between the same parties on the same issue and on the same basis"; and

    c) under Article 68(2)(g) if "the decision contradicts the basic legal principles of Georgia".

    iii) As regards Article 68(2)(e), Professor Kereselidze opined that, given that there are no multilateral or bilateral enforcement treaties in place between Georgia and England, there was a real risk that an English judgment for costs would not be enforced in Georgia. Professor Kereselidze drew attention to two decisions of the Georgian Courts where money or property judgments had not been recognised given the absence of any international agreement, and, consequently, the absence of any obligation on the foreign state to recognise Georgian court decisions: the first (Ruling No. A-2046-SH-57-2010 of 20 December 2010), a decision in respect of a judgment of the courts of Israel, and the second, an application to recognise a foreign judgment dealing with the distribution of matrimonial property.

    iv) In response, the respondents' Georgian law expert, Professor Ninidze, opined that the view expressed by Professor Kereselidze that a Georgian court would not recognise an order made in a foreign country due to the absence of a bilateral or multilateral treaty was outdated and no longer followed by the Supreme Court of Georgia. He expressed the view that more recent authority demonstrated that the Georgian court was very willing and prepared to recognise legally effective foreign judgments, unless there was positive proof that Georgian judgments would not be recognised in that jurisdiction. Accordingly, he said that the lack of a bilateral or multilateral convention did not prevent recognition of a foreign judgment. In support of this view he exhibited four matrimonial cases in which the Georgian courts had recognised foreign divorces; two German and two Greek.

    v) In reply Professor Kereselidze expressed the view that family law cases (such as recognition of a marriage or divorce) were cases which arose in a completely different context and were not relevant for present purposes. He expressed the view that family cases were treated differently from cases concerning commercial law or property, and that in a family law context the Georgian courts had a greater expectation that their judgments would be enforced abroad and, as such, were more willing to enforce foreign family law judgments in Georgia, which usually involved recognition but did not require enforcement. However, he went on to say that outside the family law context, the position was uncertain. He said:

    "One line of authority…… states that absence of bilateral or multilateral treaties is about recognition. It is true that there is a different line of authority, even outside family law cases, which appears to acknowledge that foreign court decisions may be recognised despite the absence of multilateral bilateral treaties (see for example cases ..). However it is not correct to say, as Professor Ninidze does, that the decision of A-2046-SH-57-2010 is "outdated and "no longer followed". The reality is that there is no discernible consistency in the approach of the Georgian Courts, and as such it is very difficult to predict the outcome in any particular case (See for example case of #a-1369-sh-30-2012 where a foreign court decision was again not recognised). The decisions of the Georgian Courts do not always contain a fully reasoned judgment and so this further increases the difficulty in deducing their approach to this issue with any certainty."

    vi) So far as Article 68(2)(f) of the IPL was concerned, Professor Kereselidze's evidence was that recognition might be refused on this basis, on the grounds that the section 25 proceedings in England and the claims brought by the respondents currently pending in the Georgian courts were arguably "between the same parties on the same issue and on the same basis". In his response, Professor Ninidze rejected that view, stating that that was "simply incorrect" since the English proceedings were proceedings for worldwide freezing orders and for the appointment of receivers and, as such, there could "never be proceedings on the same issues and on the same basis" in Georgia. In response, Professor Kereselidze disagreed, stating that in circumstances where the English section 25 proceedings were ancillary proceedings commenced by the respondents/claimants in support of their Georgian claims, it was at least arguable that the Georgian courts would consider it appropriate to refuse recognition on the basis of Article 68.2(f), at least until such time as the Georgian claims were resolved in Georgia.

  65. As I have already said, the Master held that the evidence established that the existence of additional obstacles or burdens to enforcement in Georgia was possible but not, on the evidence as he saw it, likely.
  66. I should further note that there was no suggestion whatsoever that the provision of security would in any way stifle the section 25 proceedings or the appeal against their dismissal. The respondents were well able to afford the amount required as security and indeed provided £500,000 in the form of a solicitors' undertaking without any apparent difficulty.
  67. Discussion and determination

    Approach

  68. At times during the course of this two-day hearing, during which extensive European and English authority was cited to support every facet of counsel's arguments, it appeared to me that the court was being asked to dance on a semantic pinhead and apply an unnecessarily restricted approach to what should have been a simple question for any master or judge hearing an application for security on what, necessarily and proportionately, will be limited evidence. My concern was underlined by what, in the context of this litigation, was the relatively small amount of money involved. So I approach the question raised by this appeal on the basis that the principles and approach should be simple and clear and that any application should not be over-burdened by technical and semantic arguments relating to the construction of the "threshold" test for the making of an order or its application.
  69. For convenience I set out the relevant provisions of Article 14 (as set out in schedule 1 to the Human Rights Act 1998) and CPR r 25.13 in their current form:
  70. "Article 14
    The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status."
    "CPR r 25.13
    Conditions to be satisfied
    25.13
    (1) The court may make an order for security for costs under rule 25.12 if –
    (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and
    (b)
    (i) one or more of the conditions in paragraph (2) applies, or
    (ii) an enactment permits the court to require security for costs.
    (2) The conditions are –
    (a) the claimant is –
    (i) resident out of the jurisdiction; but
    (ii) not resident in a Brussels Contracting State, a State bound by the Lugano Convention, a State bound by the 2005 Hague Convention or a Regulation State, as defined in section 1(3) of the Civil Jurisdiction and Judgments Act 1982[2]; ……
    (c) the claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant's costs if ordered to do so;
    (d) the claimant has changed his address since the claim was commenced with a view to evading the consequences of the litigation;
    (e) the claimant failed to give his address in the claim form, or gave an incorrect address in that form;
    (f) the claimant is acting as a nominal claimant, other than as a representative claimant under Part 19, and there is reason to believe that he will be unable to pay the defendant's costs if ordered to do so;
    (g) the claimant has taken steps in relation to his assets that would make it difficult to enforce an order for costs against him.
    (Rule 3.4 allows the court to strike out a statement of case and Part 24 for it to give summary judgment)."
  71. The first point to make is that, in my judgment, there was no doubt that, on the agreed evidence, one or more of the jurisdictional conditions set out in rule 25.13 (2) was satisfied; as per sub-paragraph (2)(a) the respondents/claimants were resident out of the jurisdiction, but not resident in a Convention state. Contrary to Mr Millett's submission, the issue as to whether the rule is being applied in a discriminatory fashion, so as to fall foul of Article 14, does not arise at the stage of consideration as to whether one of the jurisdictional conditions in rule 25.13 (2) has been satisfied; it arises at the stage when the court comes to exercise its discretion under paragraph (1) (a) of rule 25.13, namely when it comes to address the question whether it is satisfied, having regard to all the circumstances of the case, that it is just to make an order for security.
  72. That is not only obvious from the structure of CPR r 25.13 itself, but also from paragraphs 58 and 61-63 of Mance LJ's judgment in Nasser. In order for the court to be satisfied that it is exercising its discretion in a just manner - i.e. a manner which is not discriminatory for the purposes of Article 14 - it has to conclude that it is doing so on "objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned"; see paragraph 61 of Nasser. That is part of the exercise of the discretion under paragraph (1) (a) of rule 25.13; it has nothing to do with determining whether one of the conditions stipulated in sub-paragraph (2)(a) applies to the claimant. Accordingly, I reject Mr Millett's submissions under this head.
  73. The second point to make is that, as was common ground, where an order for security for costs is sought against a claimant resident in a non-Convention state, the issue is whether such an order is capable of amounting to discrimination in relation to the enjoyment of its rights under Article 6 to effective access to the courts.
  74. Is the rule prima facie discriminatory?

  75. The next issue is whether potentially the circumstances give rise to any discrimination at all. Contrary to Mr Marshall's submission under this head, in my view CPR r 25.13(2)(a) is prima facie discriminatory against claimants or potential claimants who are not resident in the UK or in another Convention state. It appears to me to be a circular argument to say, as Mr Marshall submitted, that there was no discrimination for the purposes of Article 14 as the two categories of claimants were not in an analogous situation - because the existence of a real risk of an unenforceable costs order against the respondents/claimants as residents in a non-Convention state was sufficient to distinguish such claimants from a claimant resident in a Convention state.
  76. In my judgment Mr Marshall gets no support for such an argument either from the House of Lords' decision in R. (on the application of Carson) v Secretary of State for Work and Pensions [2006] 1 AC 173 or from the decision of the European Court of Human Rights ("ECHR") in the same case - Carson v United Kingdom (2010) 51 EHRR 13. In Carson, the ECHR held that UK pensioners resident abroad, who complained of being treated differently from UK resident pensioners, were not in a relevantly similar situation to those resident at home. The court noted, among other things, that, given that the pension system was primarily designed to serve the needs of those resident in the UK, it was hard to draw any genuine comparison with the position of pensioners living elsewhere, because of the range of economic and social variables which varied from country to country. In particular, it referred to the fact that, as non-residents, the applicants did not contribute to the UK economy and in particular paid no UK tax to offset the cost of any increase in the pension. But the factual scenario in Carson was very different from that in the present case.
  77. In contrast, a litigant resident in a non-Convention state, who wishes to bring proceedings in England and Wales, is clearly in a comparable position to a claimant resident in the UK or a Convention state. A non-resident claimant who chooses to litigate here has to engage with the court system as fully as a resident claimant; the former is subject to the same obligations as the resident - for example it has to pay court fees and give disclosure; likewise, it is entitled to the same remedies as the resident claimant – for example, where the circumstances justify it, worldwide freezing orders and other interlocutory relief. I see no reason to disagree with the statement of Mance LJ at paragraph 58 of Nasser to the effect that he considered "that all personal claimants (or appellants) before the English courts must be regarded as the relevant class" either as a matter of analysis or in the light of the subsequent case of Carson (or indeed any of the other authorities to which Mr Marshall referred in this context). Whilst Mance LJ referred to "personal" claimants (no doubt because the claimant in that case was an individual) that is an immaterial distinction for present purposes.
  78. Accordingly, given that the two categories of claimants are in an analogous situation, sub-paragraph (2)(a) of rule 25.13 gives rise to prima facie discrimination against claimants or appellants who are residents in a non-Convention state, in the enjoyment of their Article 6 rights.
  79. What is the basis of such prima facie discrimination in the context of CPR r 25.13 (2) (a)?

  80. It therefore becomes necessary to consider, as the next issue, whether such prima facie discrimination in CPR r 25.13 (2) (a) is based on grounds of nationality (as Mr Millett contends), or on grounds of residence (as Mr Marshall contends). The ground of the discrimination is relevant as it predicates, according to English and European authority, whether "very weighty reasons" are required to justify the discrimination (the requirement in cases of discrimination on grounds of race, gender, illegitimacy, religion, nationality and sexual orientation etc[3]), or whether merely "some rational justification" (or the even less stringent test of "manifestly without reasonable foundation") for the discrimination can be shown (the tests applied in cases of discrimination on less serious grounds). The relevance of the appropriate criterion is that both counsel submitted that the level of the justification informed the issue as to what was the correct threshold test the court should apply for deciding whether a case for security had been made out on the evidence.
  81. It would appear that Mance LJ in Nasser approached the issue - as to what was required to entitle a defendant (or respondent to an appeal) to an order for security for costs - on the basis that the absence of sufficient justification would be discriminatory on the grounds of nationality, rather than residence; see for example paragraphs 55, 58 and 61 of his judgment. He did so, in effect, by reference to Community jurisprudence in relation to indirect discrimination on grounds of nationality, as articulated in Mund & Fester v Hatrex International Transport [1994] ECR-I 467 and applied in Fitzgerald v Williams [1996] QB 657. However, Mance LJ did not have the benefit of the subsequent and developing ECHR jurisprudence to which I refer below. Nor did the point appear to be an issue before him. As Mr Marshall submitted, there is a distinction to be drawn between discrimination in the context of article 6 of the EC Treaty (which is concerned with the operation of the single market and which has been addressed by the express exclusion of persons resident in Brussels Convention and EU Judgments Regulation States), and discrimination on human rights grounds in the context of the ECHR. It is the latter with which both Nasser and this case are concerned and the relevant jurisprudence is that contained in the ECHR authorities, as applied by the English court. For these reasons I do not consider that this court is bound to follow Mance LJ's view that CPR r 25.13 (2) (a) is prima facie discriminatory on grounds of nationality.
  82. Despite the views expressed in Nasser and the line of authority culminating in Fitzgerald v Williams[4], I have no doubt that, as submitted by Mr Marshall, any inherent discrimination in CPR r 25.13 (2) (a) is on the grounds of residence, not of nationality. The threshold condition under sub-paragraph (2)(a) for the exercise of the discretion conferred by paragraph (1)(a) is expressly stated to be residence in a non-Convention state. Thus a British national resident in the United States would meet the condition, but a US national resident in the UK would not. Moreover, in this day and age, where, certainly in the context of Commercial Court litigation, more litigants are of foreign than of UK nationality, it seems unreal to characterise the provision as one discriminating in favour of UK/EU nationals and against non-Convention state nationals. Likewise, in the modern globalised market place, where companies may be resident in many jurisdictions, the notion that residence is somehow a proxy for "nationality" seems outdated. The distinction in CPR r 25.13 (2) (a) is based on the amenity of the relevant claimant to the court's jurisdiction, by reference to his residence. Thus, in my judgment, no question of covert or indirect discrimination on the grounds of nationality arises, even if such a doctrine were available in the context of ECHR jurisprudence, which seems unlikely[5]. I thus reject Mr Millett's suggestion that the residence requirement in sub-paragraph (2)(a) is somehow a proxy for discrimination on grounds of nationality.
  83. Obviously, whether a statute directly or indirectly discriminates on grounds of nationality, even though residence is said to be the qualifying condition, is an issue which has to be determined in its context. This approach is supported by the ECHR's decision in LB v Austria, no. 39802/98, judgment of 18 April 2002, where the court rejected a complaint on the basis of Article 14 made by an Austrian national of Hungarian origin (and previously of Hungarian citizenship), who complained that in refusing to allow him to pay social security contributions for the time that he had been in school and studied in Hungary the Austrian legislation discriminated against him on grounds of nationality. The ECHR rejected the argument that his differential treatment was based on nationality, noting that nationality was not the criterion mentioned by the relevant Austrian legislation. Moreover, to give differential treatment based on differences of residence was, in the particular circumstances, neither unreasonable nor arbitrary. The court said:
  84. "As regards compliance with Article 14, the Court recalls that a difference in treatment is discriminatory for the purposes of this provision if it "has no objective and reasonable justification", that is if it does not pursue a "legitimate aim" or if there is not a "reasonable relationship of proportionality between the means employed and the aim sought to be realised" (Petrovic v. Austria judgment of 27 March 1998, Reports 1998-II, § 30). Moreover the Contracting States enjoy a certain margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify different treatment (Gaygusuz v. Austria judgment of 16 September 1996, Reports 1996-IV, § 42).
    The Court is not persuaded by the applicant's argument that the difference in treatment at issue is based on his national origin. In the first place the criterion mentioned in Section 227 § 1 of the Social Security Act is not the nationality of the person seeking to make voluntary payments (see, however, the above quoted Gaygusus v. Austria judgment, op. cit., § 50). Moreover, to make participation in the scheme dependent on employment in a specific country and to accept payments for alternative periods only on the basis that these periods are passed in the same country does not appear unreasonable or arbitrary (No. 14128, R.W. v. Austria, Dec. 12.2.1990, unpublished)."

    What is the criterion by which the discrimination involved may be justified in the exercise of a discretion under CPR r 25.13 case?

  85. In R. (on the application of Carson) v Secretary of State for Work and Pensions [2006] 1 AC 173 the House of Lords held, applying ECHR jurisprudence, that a distinction was to be drawn between, on the one hand, grounds of discrimination under article 14, which prima facie appeared to offend respect due to the individual, as in the case of sex or race, where severe scrutiny was called for as to whether the discrimination was justified; and, on the other hand, those grounds which merely required some rational justification. Importantly for present purposes, the House of Lords also held that discrimination on the grounds of residence fell into the latter category, where only some rational justification (as opposed to severe scrutiny) was required. Lord Hoffmann, with whom Lord Nicholls and Lord Rogers expressly agreed[6], said as follows:
  86. "What is discrimination?
    14.   There is no doubt that Ms Carson is being treated differently from a pensioner who has the same contribution record but lives in the United Kingdom or a treaty country. But that is not enough to amount to discrimination. Discrimination means a failure to treat like cases alike. There is obviously no discrimination when the cases are relevantly different. Indeed, it may be a breach of article 14 not to recognise the difference: see Thlimmenos v Greece (2001) 31 EHRR 411. There is discrimination only if the cases are not sufficiently different to justify the difference in treatment. The Strasbourg court sometimes expresses this by saying that the two cases must be in an "analogous situation": see Van der Mussele v Belgium (1983) 6 EHRR 163, 179-180, para 46.
    15.   Whether cases are sufficiently different is partly a matter of values and partly a question of rationality. Article 14 expresses the Enlightenment value that every human being is entitled to equal respect and to be treated as an end and not a means. Characteristics such as race, caste, noble birth, membership of a political party and (here a change in values since the Enlightenment) gender, are seldom, if ever, acceptable grounds for differences in treatment. In some constitutions, the prohibition on discrimination is confined to grounds of this kind and I rather suspect that article 14 was also intended to be so limited. But the Strasbourg court has given it a wide interpretation, approaching that of the 14th Amendment, and it is therefore necessary, as in the United States, to distinguish between those grounds of discrimination which prima facie appear to offend our notions of the respect due to the individual and those which merely require some rational justificationMassachusetts Board of Retirement v Murgia (1976) 438 US 285.
    16.   There are two important consequences of making this distinction. First, discrimination in the first category cannot be justified merely on utilitarian grounds, eg that it is rational to prefer to employ men rather than women because more women than men give up employment to look after children. That offends the notion that everyone is entitled to be treated as an individual and not a statistical unit. On the other hand, differences in treatment in the second category (eg on grounds of ability, education, wealth, occupation) usually depend upon considerations of the general public interest. Secondly, while the courts, as guardians of the right of the individual to equal respect, will carefully examine the reasons offered for any discrimination in the first category, decisions about the general public interest which underpin differences in treatment in the second category are very much a matter for the democratically elected branches of government.[7]
    17. There may be borderline cases in which it is not easy to allocate the ground of discrimination to one category or the other hand, as I have observed, there are shifts in the values of society on these matters. Ghaidan v Godin-Mendoza [2004] 2 AC 557 recognised that discrimination on grounds of sexual orientation was now firmly in the first category. Discrimination on grounds of old age may be a contemporary example of a borderline case. But there is usually no difficulty about deciding whether one is dealing with a case in which the right to respect for the individuality of a human being is at stake or merely a question of general social policy. In the present case, the answer seems to me to be clear."
  87. To similar effect, Lord Walker, with whom likewise Lord Nicholls and Lord Rodger agreed, said as follows:
  88. " 'Suspect' grounds of discrimination
    55.   The proposition that not all possible grounds of discrimination are equally potent is not very clearly spelled out in the jurisprudence of the Strasbourg Court. It appears much more clearly in the jurisprudence of the United States Supreme Court, which in applying the equal protection clause of the 14th Amendment has developed a doctrine of "suspect" grounds of discrimination which the court will subject to particularly severe scrutiny. They are personal characteristics (including sex, race and sexual orientation) which an individual cannot change (apart from the wholly exceptional case of transsexual gender reassignment) and which, if used as a ground for discrimination, are recognised as particularly demeaning for the victim.
    56.   The United States Supreme Court described the concept of a "suspect class" in San Antonio School District v Rodriguez (1973) 411 US 1, 29 as a class:
    "saddled with such disabilities, or subjected to such a history of purposeful unequal treatment, or relegated to such a position of political powerlessness as to command extraordinary protection from the majoritarian political process."
     Under the law of Massachusetts uniformed state police officers had to retire at the age of 50. This was challenged in Massachusetts Board of Retirement v Murgia (1976) 427 US 307. The Supreme Court held that in the circumstances of the case the appropriate test for equal protection of the laws was not strict scrutiny. The only issue was whether the mandatory retirement age had a rational basis, which it did: maintenance of a police force fit enough to carry out arduous and demanding duties. The majority opinion observed (at p 314):
    "This inquiry employs a relatively relaxed standard reflecting the court's awareness that the drawing of lines which create distinctions is peculiarly a legislative task and an unavoidable one. Perfection in making the necessary classifications is neither possible nor necessary."
    57.   As I have said, these distinctions are not so clearly signalled in the jurisprudence of the European Court of Human Rights. But Mr Howell QC (for the respondent Secretary of State) submitted, in my opinion correctly, that the equivalent doctrine is to be found there. Where there is an allegation that article 14 has been infringed by discrimination on one of the most sensitive grounds, severe scrutiny is called for. As my noble and learned friend, Lord Nicholls of Birkenhead put it in Ghaidan v Godin-Mendoza [2004] 2 AC 557, 568, para 19:
    ". . .where the alleged violation comprises differential treatment based on grounds such as race or sex or sexual orientation the court will scrutinise with intensity any reasons said to constitute justification. The reasons must be cogent if such differential treatment is to be justified."
    58.   In its judgments the European Court of Human Rights often refers to "very weighty reasons" being required to justify discrimination on these particularly sensitive grounds. This appears, for instance (in relation to cases of discrimination on the ground of sex) in Abdulaziz, Cabales and Balkandali v United Kingdom (1985) 7 EHRR 471, 501, para 78; Schmidt v Germany (1994) 18 EHRR 513, 527, para 24; Van Raalte v Netherlands (1997) 24 EHRR 503, 518-519, para 39. When Harris, O'Boyle and Warbrick's valuable work, Law of the European Convention on Human Rights, was published in 1995, the authors recognised that the Strasbourg Court had its own suspect categories, identifying them as discrimination on the grounds of race, gender or illegitimacy. Since then religion, nationality and sexual orientation have, it seems, been added: see Jacobs and White, European Law of Human Rights, 3rd ed (2002), pp 355-6, citing Hoffmann v Austria (1994) 17 EHRR 293, 316, para 36; Gaygusuz v Austria (1997) 23 EHRR 364, 381, para 42 and Salgueiro da Silva Mouta v Portugal (2001) 31 EHRR 1055, 1071, para 36. Where an individual lives is in principle a matter of choice. So although it can be regarded as a personal characteristic it is not immutable. Nor is there anything intrinsically demeaning about an individual's place of residence. Social or business practices which amount to what is sometimes called a "postcode lottery" might, if devoid of any rational basis, constitute discrimination. But that is not this case.
    59.   Mr Blake QC (for Mrs Carson) submitted that the category of suspect grounds is not yet closed, and that discrimination on the ground of residence is at least half-way to admission to the suspect category. Mr Manjit Gill QC (for Ms Reynolds) made a similar submission in relation to age. Attractively though counsel made these submissions, I would not accept them."
  89. Similarly, in Carson v United Kingdom (2010) 51 EHRR 13, the ECHR held that, in the circumstances of that case, ordinary residence was to be seen as an aspect of personal status (i.e. included in the phrase "other status" in article 14) and that place of residence, applied as a criterion for the differential treatment of citizens in the grant of state pensions, was a ground falling within the scope of article 14. However, in that case, the ECHR concluded that there had been no violation at all because the two groups of pensioners (i.e. those residing in the UK and those residing abroad) were not in relevantly similar positions.
  90. The approach of the English courts to cases where discrimination under article 14 is alleged in relation to the right to access to justice under article 6 is instructive. Thus, for example, in Public Law Project v Lord Chancellor [2015] EWCA Civ 1193, the Court of Appeal had to consider a statutory instrument introducing a proposed residence test which would qualify the provision of civil legal aid in the ordinary course. The Divisional Court had declared the relevant order unlawful on the grounds inter alia that it was unjustifiably discriminatory under article 14. In the Court of Appeal, Laws LJ (with whom Kitchin and Christopher Clarke LJJ agreed) rejected an argument that, in the context of access to justice, the provision was discriminatory. Laws LJ held that, in the context of the expenditure of state funds on civil legal aid, the appropriate test for justification of the alleged discrimination was whether it was "manifestly without reasonable foundation". In allowing the appeal, he said:
  91. "31. It is common ground that the residence test is discriminatory within the meaning of ECHR Article 14 read with Article 6. I need not set out these provisions; the only question on this part of the case is whether the residence test, being discriminatory, can be justified as a proportionate measure for the achievement of a legitimate aim. The relevant aim is the saving of public expenditure; that is plainly legitimate. But it is necessary to decide by what criterion or criteria the issue of justification should be determined.

    "Manifestly Without Reasonable Foundation"

    32. In my view the question whether State funding of legal expenses in civil matters should (subject to exceptions) be limited to recipients resident in the United Kingdom is essentially a political question, concerned as it is with the strategic distribution of scarce public resources; and one upon which, as I have said, reasonable people may entertain contrary opinions. In those circumstances one would expect that the law, in setting the criterion by which the discrimination involved may be justified, will allow a very considerable margin of discretion to the elected arms of government. The decision of such questions is their particular responsibility, and it is an important muscle in our democracy that that should be so.

    …..

    Cases under the Law's Special Protection

    35. It is clear, however, that the "manifestly without reasonable foundation" test does not cover the whole field of government decisions challenged on grounds of discrimination (or other public law grounds impugning the decision's merits: I am not concerned here with claims of illegality or procedural impropriety, for which see CCSU v Minister for the Civil Service [1985] 1 AC 374, per Lord Diplock at 410F, 411A). The standard of review varies with the context of the case. At paragraph 16 in Humphreys Baroness Hale cited this passage from Stec (paragraph 52):

    "The scope of this margin will vary according to the circumstances, the subject-matter and the background. As a general rule, very weighty reasons would have to be put forward before the Court could regard a difference in treatment based exclusively on the ground of sex as compatible with the Convention. On the other hand, a wide margin is usually allowed to the State under the Convention when it comes to general measures of economic or social strategy."

    36. It is plain, then, that there are certain classes of case where our law will apply a more intrusive judgment to the justification of discrimination. In Carson v Secretary of State…..[and then Laws LJ cites paragraphs 15 and 16 of Lord Hoffmann's speech which I have already quoted above]

    37. Thus certain grounds for discrimination – race, sex and so forth – will be especially hard to justify, because they offend the Kantian principle that every individual is to be treated as an end and not a means (pace Lord Hoffmann, I think an appeal in this context to an entitlement to "equal respect" is apt to be unhelpful and misleading). The courts' approach to questions of justification in discrimination cases of that kind will be correspondingly muscular. But in my judgment the classes of case where the law will control discrimination with particular vigour are not exclusively defined by reference to the grounds of the discrimination in question. Some are defined by reference to the context in which it arises. These are areas under the special protection of the law, most notably the doing of justice and the presumption of individual liberty. If these constitutional fundamentals are undercut by the elected powers, the courts will defend their legal pre-eminence without inhibition: no less if the threat is by way of a discriminatory measure than if it is by action across the whole field.

    38. In light of all these considerations, the "manifestly without reasonable foundation" test for justification constitutes in my judgment the law's default position in any discrimination case where the subject-matter is one of broad, or strategic, economic and/or social policy. It will however be disapplied, and a more vigorous, intrusive approach adopted, where either the grounds of discrimination or the context of the case call for the law's special protection: the former because of the law's attribution of value to every individual, the latter because of the law's special responsibility in certain areas such as access to justice. And it is no coincidence that these two categories are specially protected. The common law's care for the value of the individual dictates both. The principle that every individual is to be treated as an end and not a means demands, if it is to mean anything in a society lively with dispute and confrontation (as most societies are), a justice system which presumes in favour of liberty and insists on high standards of fairness applicable in every case.

    This Case

    39. In my judgment it is clear that the respondent PLP cannot look to the courts to exercise an intrusive judgment by reference to the grounds of discrimination which are inherent in the Order under challenge. Place of residence – the ground in question– is not a characteristic, such as sex or race, which is specially protected by the law on the footing I have described. Is there a more promising line of argument based not on the grounds of discrimination but on the context of the case? Mr Fordham submits there is: the context is access to justice. ……

    43. Mr Fordham's case is that this case falls squarely within the protected space: it is about access to justice. He drew an imaginative, but I think in the end jesuitical, distinction between cases where State funding is provided to meet a need – health care is the obvious example – which arises independently of any decision made by the State, and cases where State funds are to be provided in order to make good a right which the State has itself conferred, such as a sound claim in law. But the need for services which have to be paid for arises in both cases. There is no moral or logical force in attributing a special status (when it comes to a court challenge) to the latter class of case merely on the ground that the source of the need is the law, rather than God or nature.

    44. Mr Fordham's better point is the simple one that the context of the case is access to justice. His difficulty, in my judgment, is that there is a profound difference between on the one hand the State's duty to ensure fair and impartial procedures and to avoid undue legal obstacles to access to the courts, and on the other a putative duty to fund legal representation. In Witham v The Lord Chancellor [1998] QB 575 in the Divisional Court, in a judgment with which Rose LJ agreed, I said at 586:

    "26. Mr Richards submitted that it was for the Lord Chancellor's discretion to decide what litigation should be supported by taxpayers' money and what should not. As regards the expenses of legal representation, I am sure that is right. Payment out of legal aid of lawyers' fees to conduct litigation is a subsidy by the State which in general is well within the power of the executive, subject to the relevant main legislation, to regulate. But the impost of court fees is, to my mind, subject to wholly different considerations. They are the cost of going to court at all, lawyers or no lawyers. They are not at the choice of the litigant, who may by contrast choose how much to spend on his lawyers."

    If I may say so that still seems to me to be correct and I am not aware that it has been contradicted.

    Conclusion on the Discrimination Issue

    46. For all these reasons, I would hold that the test for justification in this discrimination case is whether the residence test is "manifestly without reasonable foundation". Plainly, that test is not met. ……."

  92. Mr Millett pointed to paragraphs 39 and 44 of Laws LJ's judgment to support his argument that the relevant context in the present case was the State's duty to ensure fair and impartial procedures and to avoid undue legal obstacles to access to the courts, rather than residence or a putative duty to fund legal representation. He submitted that, accordingly, the highest level of scrutiny and justification for the exercise of the discretion under CPR r 25.13(2)(a) was required.
  93. I disagree with that submission. Of course the present context is not one, such as that in Public Law Project v Lord Chancellor, or indeed the pension cases, where the issue involves the decision of the State as to what it will, or will not, fund by way of public expenditure. But, as Baroness Hale said: "The scope of this margin will vary according to the circumstances, the subject-matter and the background". The imposition of conditions, such as the provision of security for costs, by reference to a residence test, which some non-resident claimants/appellants have to satisfy, in order to litigate here, necessarily involves the State conducting a balancing exercise between the former's interests in having access to the courts on the one hand, and the wider interests of defendants/respondents, on the other, who may be left out of pocket if a claimant/ appellant disengages with the process. It is for the State to strike that balance, which it has done with the enactment of CPR r 25.13(2)(a); and for the court, in exercising the discretion, to do so based on objectively justifiable reasons relating to difficulties of enforcement in the particular case.
  94. But, in an application for security for costs under CPR r 25.13, the court is not dealing with a case in which the right to respect for the individuality of a human being (or the nationality of a company or its shareholders) is at stake, and where, consequently "very weighty reasons" are required to justify the discrimination. Nor, on proper analysis, is it dealing with a provision that obviously discriminates against foreign (i.e. non-Convention state) incorporated companies. It is merely dealing with a question of general economic strategy impacting upon the "other status" (i.e. residence) of a person, whether individual or corporate, as described in article 14. It is a provision which balances the entitlement of non-resident claimants to have access to the English courts, against the interests of those litigants who may be defendants or respondents to such process (who, in turn, may well be non-resident themselves). In such circumstances, a wide margin of appreciation is allowed, reflecting the consideration that the national authority in principle is best placed to appreciate what is in the public interest on social or economic grounds: see e.g. Runkee v United Kingdom [2007] ECHR 42989/98 at paragraphs 35-36. What is required, as the ECHR made clear in Carson at paragraph 62, is some rational justification for the system which treats certain categories of litigants differently from others, in the sense of imposing conditions to which their access to justice is subject.
  95. There can be no doubt that there is indeed, objectively, a rational justification for a system, such as that contained in CPR r 25.13, which gives the court a discretionary power to require a non-Convention state resident claimant or appellant to provide security, whilst not making it mandatory for the court to make such an order to do so. Indeed, certain of the features are referred to by Mance LJ in paragraphs 62 and 64 of Nasser. Another rationale is the point which I have already mentioned, namely that a litigant who is resident in a non-Convention state is not, in the absence of assets within the jurisdiction, amenable to the UK court's powers, if, having started proceedings here, it subsequently decides to disengage from the UK process.
  96. But the existence of an objectively rational justification for the system obviously does not permit the court which comes to exercise the discretion to do so in what is, in fact, a discriminatory manner. The court, for example, is not entitled without more to assume, that just because a litigant is a company incorporated in a Caribbean island, but resident in Ruritania, that justifies the imposition of an order for security; that would be prima facie discriminatory on grounds of "other status". It has to exercise the discretion on objectively rational grounds by reference to the difficulties of enforcement or some other attribute of the litigant that objectively renders enforcement problematic. But, in my judgment, that exercise is not subject to the "severe scrutiny" justification. All that is required is some objectively justifiable rationale for the exercise of the jurisdiction. And that leads onto the next and - principal - issue which has to be addressed in this case, namely, what is the threshold test which the evidence has to satisfy, in order to prevent the exercise of the court's discretion falling foul of article 14? It is to this issue which I now turn.
  97. What is the threshold test which the evidence in support of an application for security under CPR r 25.13 (2)(a) has to satisfy, in order to prevent the exercise of the court's discretion falling foul of article 14?

  98. My starting point is the wide wording of CPR r 25.13 (1)(a), viz:
  99. "The court may make an order for security for costs under rule 25.12 if –
    (a) it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order."

    In other words, the discretion is very widely expressed and does not easily lend itself to the notion that it is to be circumscribed by inflexible semantic tests as to what the evidence has to show. Likewise, I do not consider that the requirement to demonstrate that there are rational and objectively justifiable reasons for treating a non-Convention state resident differently from a Convention state resident requires the application of a strict inflexible test.

  100. I accept Mr Marshall's submission that traditionally the purpose of ordering security for costs has always been regarded as to protect against the risk that a defendant may be unable to recover the costs of proceedings brought against him; see for example the notes at CPR r25.12.2:
  101. "Security For Costs
    25.12.2 The purpose of an order for security for costs is to protect a party in whose favour it is made against the risk of being unable to enforce any costs order they [sic] may later obtain. The order, if complied with, will provide the party in whose favour it is made with a fund normally held by the court against which he can enforce any award of costs they [sic] may later obtain."
  102. The tests propounded by the respective parties theoretically had two elements: first, what has to be shown by an applicant for security, i.e. real risk of an obstacle or burden to enforcement, or alternatively likelihood of such an obstacle or burden: and, second, the evidential standard by which real risk or likelihood had to be established to the satisfaction of the court. In practice, however, the two elements were understandably elided in counsel's submissions and we think that is the right approach.
  103. Contrary to Mr Millett's submissions, I do not accept there is any need for the evidence to demonstrate "very cogent evidence of substantial difficulty in enforcing a judgment"[8] either in the non-Convention state where a claimant is resident, or where his assets are located. Nor do I accept that the ECHR jurisprudence in relation to discrimination, or indeed this Court's decision in Nasser, predicate an evidential test which requires satisfaction "on the balance of probabilities", or demonstrating "a more than 50% likelihood", that there will be, or are, obstacles or burdens to enforcement. Such a high test as that propounded by Mr Millett derives from the mistaken assumption that the human rights jurisprudence requires the exercise of a discretion under a potentially discriminatory provision such as that contained in CPR r 25.13 (2) (a) to be justified by "very weighty reasons". As I have endeavoured to explain above, that is not the approach of the ECHR to discriminatory aspects of legislation which relate to non-sensitive, as opposed to sensitive, aspects of a person's status.
  104. I quite accept that, as Mance LJ stated in Nasser at paragraph 61, if the court is to exercise its discretion to order security it should be "on objectively justified grounds relating to obstacles to or the burden of enforcement", either as regards the country where enforcement is to take place or as regards the non-resident claimant. I also accept (see Nasser at paragraph 63) that, for the discretion to be exercised "there must be a proper basis for considering that such obstacles may exist or that enforcement may be encumbered by some extra burden". In most cases, no doubt, such difficulties will satisfy the description of "substantial". However, I do not consider that, properly analysed, any of the relevant passages in his judgment in Nasser can be read as mandating an applicant for security to prove a "likelihood" on the balance of probabilities, i.e. above 50%, that there will in fact be substantial obstacles to enforcement; or as excluding an applicant who merely establishes "real risk" of substantial obstacles to enforcement. Indeed, it is clear that in Nasser the Court of Appeal was not addressing arguments in relation to a threshold test (the point had not been argued), the focus being rather upon the point that there could be no presumption of unenforceability simply through residence abroad. Contrary to the view taken by Hamblen J in Dumrul[9], I do not consider that Mance LJ was suggesting, let alone deciding, that an applicant had to show hard-line likelihood, as opposed to real risk, of substantial obstacles to enforcement. He certainly was not suggesting an evidential threshold which required the demonstration of likelihood on the balance of probabilities.
  105. The relevant paragraphs of Mance LJ's judgment upon which the judge and Hamblen J in Dumrul appear to have relied in reaching their conclusions are the following:
  106. 61. Returning to Part 25.15(1) and 25.13(1) and (2)(a) and (b), if the discretion to order security is to be exercised, it should therefore be on objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned. The former principle was that, once the power to order security arose because of foreign residence, impecuniosity became one along with other material factors: see the case of Thune cited above. This principle cannot in my judgment survive, in an era which no longer permits discrimination in access to justice on grounds of national origin. Impecuniosity of an individual claimant resident within the jurisdiction or in a Brussels or Lugano state is not a basis for seeking security. Insolvent or impecunious companies present a different situation, since the power under CPR Part 25.13(2)(c) applies to companies wherever incorporated and resident, and is not discriminatory.

    62. The justification for the discretion under Part 25.13(2)(a) and (b) and 25.15(1) in relation to individuals and companies ordinarily resident abroad is that in some, it may well be many, cases 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 in a Brussels or Lugano state. In so far as impecuniosity may have a continuing relevance, it is not on the ground that the claimant lacks apparent means to satisfy any judgment, but on the ground (where this applies) that the effect of the impecuniosity would be either (i) to preclude or hinder or add to the burden of enforcement abroad against such assets as do exist abroad, or (ii) as a practical matter, to make it more likely that the claimant would take advantage of any available opportunity to avoid or hinder such enforcement abroad.

    63. It also follows, I consider, that there can be no inflexible assumption that there will in every case be substantial obstacles to enforcement against a foreign resident claimant in his or her (or in the case of a company its) country of foreign residence or wherever his, her or its assets may be. If the discretion under Part 25.13(2)(a) or (b) or 25.15(1) is to be exercised, there must be a proper basis for considering that such obstacles may exist, or that enforcement may be encumbered by some extra burden (such as costs or the burden of an irrecoverable contingency fee or simply delay).

    64. The courts may and should, however, take notice of obvious realities without formal evidence. There are some parts of the world where the natural assumption would be without more that there would not just be substantial obstacles but complete impossibility of enforcement; and there are many cases where the natural assumption would be that enforcement would be cumbersome and involve a substantial extra burden of costs or delay. But in other cases - particularly other common law countries which introduced in relation to English judgments legislation equivalent to Part I of the Foreign Judgments (Reciprocal Enforcement) Act 1933 (or Part II of the Administration of Justice Act 1920) - it may be incumbent on an applicant to show some basis for concluding that enforcement would face any substantial obstacle or extra burden, meriting the protection of an order for security for costs. Even then, it seems to me that the court should consider tailoring the order for security to the particular circumstances. If, for example, there is likely at the end of the day to be no obstacle to or difficulty about enforcement, but simply an extra burden in the form of costs (or an irrecoverable contingency fee) or moderate delay, the appropriate course could well be to limit the amount of the security ordered by reference to that potential burden.

    65. I also consider that the mere absence of reciprocal arrangements or legislation providing for enforcement of foreign judgments cannot of itself justify an inference that enforcement will not be possible. The present case illustrates this. It is a remarkable fact that no country has ever entered into any treaty providing for recognition and enforcement of judgments with the United States of America. But the reason is concern about the breadth of American jurisdiction, the corollary of which has been a willingness on the United States part to recognise and enforce foreign judgments by action on a similarly liberal and flexible basis: see e.g. Jurisdictional Salvation and the Hague Treaty, Kevin M. Clermont (1999) 85 Cornell Law Review 89, 97-98. I am not aware that anyone has ever suggested that access to justice or to the means of executing justice is an American problem. Certainly no evidence has been put before us to suggest that the defendants would, or even could, face any real obstacle or difficulty of legal principle in enforcing in the United States any English judgment for costs against this claimant.

    66. There is also no express suggestion in any evidence in this case that the defendants would face any extra burden in taking any such enforcement action against the claimant for costs. But we can, I think, infer without more that it would in the case of this particular claimant resident in Milwaukee. First, the respondents would have to bring an action on any English judgment for costs, before proceeding to any enforcement steps that United States law or the law of Wisconsin permits. Second, the claimant's impecuniosity has collateral relevance, in so far as it is likely that the respondents would have to investigate whether it is as real and great as she asserts, and this is likely to be more expensive to undertake abroad than it would be if she was resident in the United Kingdom or a Brussels/Lugano state. Third, the course of the present litigation to date suggests that the claimant is a determined litigant who can be relied upon by one means or another to take every conceivable step she can to defend what she asserts to be her rights, but whose very lack of means to fund the appropriate conduct of litigation appears prone to add to the difficulty faced by the defendants. Fourth, there would be likely to be delay in enforcement, by reason of each of the first three points. Viewing the matter both in the light of these factors and as a matter of general common-sense, I consider that it is open to us to infer that steps taken to enforce any English judgment for costs in the United States would thus be likely to involve a significantly greater burden in terms of costs and delay than enforcement of a costs order made against an unsuccessful domestic or Brussels/Lugano claimant or appellant. It is possible that an irrecoverable costs burden (or an irrecoverable contingency fee) would also be involved, even if the claimant proved to have sufficient assets to satisfy any judgment, but I do not think that this can be assumed without evidence.

    67. The risk against which the present defendants are entitled to protection is, thus, not that the claimant will not have the assets to pay the costs, and not that the law of her state of residence will not recognise and enforce any judgment against her for costs. It is that the steps taken to enforce any such judgment in the United States will involve an extra burden in terms of costs and delay, compared with any equivalent steps that could be taken here or in any other Brussels/Lugano state. Any order for security for costs in this case should be tailored in amount to reflect the nature and size of the risk against which it is designed to protect.

  107. In my judgment, none of the above paragraphs support the conclusion reached by Hamblen J at paragraphs 24 and 25 of Dumrul that it is not sufficient for an applicant to show a real risk of an obstacle or burden to enforcement, but rather "the court has to be satisfied that there is likely to be an obstacle or burden". Of course, in one sense, what such a test requires is dependent on what is meant by the word "likelihood" - a word which can have a different shade of meaning depending on its particular context; see Re Harris Simons Construction Limited [1989] 1 WLR 368 at 370. But, with respect to Hamblen J, if and to the extent that he was suggesting that his semantic analysis of Mance LJ's comments excluded a test based on risk, I cannot agree. For example:
  108. i) Paragraph 61 of Nasser, when it speaks of the exercise of the discretion on "objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned", is simply addressing the point that a justifiable rationale is required for the prima facie discrimination in the light of article 14. In other words, it is simply explaining why the assumption that a security order will be made in the case of a non-resident claimant, is no longer justifiable. It does not linguistically or otherwise support an evidential hurdle requiring the proven existence of substantial enforcement difficulties.

    ii) Likewise, insofar as Mance LJ did adopt the terminology of "likely" or "likelihood", or "will" or "would" (for example in paragraphs 64, 65 and 66), it is unrealistic, in my view, to construe those words in their particular context, or in the context of the judgment as a whole, as prescribing a mandatory threshold test which an applicant had to satisfy by his evidence as to the existence of an obstacle to enforcement. That to my mind is attaching far too much weight to the use of the particular words in question. It seems to me to be highly unlikely that, in the absence of any argument on the point, Mance LJ was intending to depart from earlier case law that identified protection against real risk of unenforceability as the purpose of the jurisdiction[10] and as the touchstone for justification for discrimination (as is evident from his own judgment at paragraph 67). His use of the word "likely", in context, was perfectly consistent with a test of real risk having regard to the different shades of meaning such a word can have in everyday use; see: e.g. Re Harris Simons Construction Limited, supra; and Cream Holdings Ltd v Banerjee [2005] 1 AC 253

    iii) Moreover, in paragraph 63 of his judgment (not referred to in Hamblen J's analysis), where Mance LJ expressly states what must be shown by way of evidence if the discretion is to be exercised, he formulates the test as follows: "there must be a proper basis for considering that such obstacles may exist or that enforcement may be encumbered by some extra burden…" (My emphasis). That articulation does not require evidence that such obstacles do indeed exist; on the contrary, it simply requires "a proper basis for considering that" they might exist.

  109. In my judgment, it is sufficient for an applicant for security for costs simply to adduce evidence to show that "on objectively justified grounds relating to obstacles to or the burden of enforcement"[11], there is a real risk that it will not be in a position to enforce an order for costs against the claimant/appellant and that, in all the circumstances, it is just to make an order for security. Obviously there must be "a proper basis for considering that such obstacles may exist or that enforcement may be encumbered by some extra burden"[12] but whether the evidence is sufficient in any particular case to satisfy the judge that there is a real risk of serious obstacles to enforcement, will depend on the circumstances of the case. 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, I reject Mr Millett's submission in this respect.
  110. In addition to the reasons which I have set out above (i.e. the approach of the ECHR to justification in respect of "non-sensitive" areas of discrimination, the width and purpose of the discretion contained in CPR r 25.13(1)(a), and the proper analysis of Nasser), I reach this conclusion for the following reasons.
  111. Necessarily, at an interlocutory stage, in the absence of cross-examination and full enquiry, it may well be that the court cannot be satisfied at that time that an applicant for security has demonstrated on the balance of probabilities, that there will be substantial obstacles to enforcement, or even, in some cases, that there is a real risk of such obstacles. The judge at that stage may well not be in a position to resolve disputed issues arising on the evidence. For that reason, I am against the articulation of any hard-line, inflexible test in relation to an evidential standard based on "likelihood". Moreover, as the arguments in this case demonstrated, "likelihood" is a protean word which takes its meaning from its context. That in itself can lead to uncertainty.
  112. An instructive discussion as to the difference between the evidence required at an interlocutory stage to assess risk and that required at the final stage of proceedings is that contained in the speech of Lord Nicholls[13] in In re H (Minors) (sexual abuse: standard of proof] [1996] AC 364, at 589. Lord Nicholls was contrasting the evidence required at an interlocutory stage of care proceedings to make an interim care order or an interim supervision order under section 38 of the Children Act 1989 (where the relevant test was "reasonable grounds for believing" that the relevant conditions set out in section 31(2) of the Act were satisfied), with that required at the final stage where the court, before making a care order, had to be satisfied as a threshold condition "that the child… is suffering , or is likely to suffer, significant harm". He said:
  113. "A conclusion based on facts

    85. The starting point here is that courts act on evidence. They reach their decisions on the basis of the evidence before them. When considering whether an applicant for a care order has shown that the child is suffering harm or is likely to do so, a court will have regard to the undisputed evidence. The judge will attach to that evidence such weight, or importance, as he considers appropriate. Likewise with regard to disputed evidence which the judge accepts as reliable. None of that is controversial. But the rejection of a disputed allegation as not proved on the balance of probability leaves scope for the possibility that the non-proven allegation may be true after all. There remains room for the judge to have doubts and suspicions on this score. This is the area of controversy.

    86. In my view these unresolved judicial doubts and suspicions can no more form the basis of a conclusion that the second threshold condition in section 31(2)(a) has been established than they can form the basis of a conclusion that the first has been established. My reasons are as follows.

    87. Evidence is the means whereby relevant facts are proved in court. What the evidence is required to establish depends upon the issue the court has to decide. At some interlocutory hearings, for instance, the issue will be whether the plaintiff has a good arguable case. The plaintiff may assert he is at risk of the defendant trespassing on his land or committing a breach of contract and that, in consequence, he will suffer serious damage. When deciding whether to grant an interlocutory injunction the court will not be concerned to resolve disputes raised by the parties' conflicting affidavit evidence.

    88. At trials, however, the court normally has to resolve disputed issues of relevant fact before it can reach its conclusion on the issue it has to decide. This is a commonplace exercise, carried out daily by courts and tribunals throughout the country. This exercise applies as much where the issue is whether an event may happen in the future as where the issue is whether an event did or did not happen in the past. To decide whether a car was being driven negligently, the court will have to decide what was happening immediately before the accident and how the car was being driven and why. Its findings on these facts form the essential basis for its conclusion on the issue of whether the car was being driven with reasonable care. Likewise, if the issue before the court concerns the possibility of something happening in the future, such as whether the name or get-up under which goods are being sold is likely to deceive future buyers. To decide that issue the court must identify and, when disputed, decide the relevant facts about the way the goods are being sold and to whom and in what circumstances. Then, but only then. can the court reach a conclusion on the crucial issue. A decision by a court on the likelihood of a future happening must be founded on a basis of present facts and the inferences fairly to be drawn therefrom.

    89. The same, familiar approach is applicable when a court is considering whether the threshold conditions in section 31(2)(a) are established. Here, as much as anywhere else, the court's conclusion must be founded on a factual base. The court must have before it facts on which its conclusion can properly be based. That is clearly so in the case of the first limb of section 31(2)(2). There must be facts, proved to the court's satisfaction if disputed, on which the court can properly conclude that the child is suffering harm. An alleged but non-proven fact is not a fact for this purpose. Similarly with the second limb: there must be facts from which the court can properly conclude there is a real possibility that the child will suffer harm in the future. Here also, if the facts are disputed, the court must resolve the dispute so far as necessary to reach a proper conclusion on the issue it has to decide.

    90. There are several indications in the Act that when considering the threshold conditions the court is to apply the ordinary approach, of founding its conclusion on facts, and that nothing less will do. The first pointer is the difference in the statutory language when dealing with earlier stages in the procedures which may culminate in a care order. Under Part V of the Act a local authority is under a duty to investigate where it has "reasonable cause to suspect" that a child is suffering or is likely to suffer harm. The court may make a child assessment order if satisfied that the applicant has "reasonable cause to suspect" that the child is suffering or is likely to suffer harm. The police may take steps to remove or prevent the removal of a child where a constable has "reasonable cause to believe" that the child would otherwise be likely to suffer harm. The court may make an emergency protection order only if satisfied there is "reasonable cause to believe" that the child is likely to suffer harm in certain eventualities. Under section 38 the court may make an interim care order or an interim supervision order if satisfied there are "reasonable grounds for believing" that the section 31(2) circumstances exist.

    91. In marked contrast is the wording of section 31(2). The earlier stages are concerned with preliminary or interim steps or orders. Reasonable cause to believe or suspect provides the test. At those stages, as in my example of an application for an interlocutory injunction, there will usually not have been a full court hearing. But when the stage is reached of making a care order, with the far-reaching consequences this may have for the child and the parents, Parliament prescribed a different and higher test: "a court may only make a care or supervision order if it is satisfied . . . that ... the child . . . is suffering, or is likely to suffer, significant harm ..." This is the language of proof, not suspicion. At this stage more is required than suspicion, however reasonably based."

  114. Two examples were referred to in the course of argument which underlined the difficulty which utilisation of Mr Millett's test of likelihood could lead: the first reflected the circumstances of this case: namely a situation where, on very limited evidence of the law of the foreign country, two experts disagreed as to whether any obstacles to enforcement existed at all; the second was a hypothetical scenario where the evidence showed that one in 20, or one in 100, foreign nationals ran the risk of kidnap, or ransom demands, if they attempted to enforce an English judgment. How, submitted the appellants, could it be said that in those circumstances they had established an over 50% likelihood that there were obstacles to enforcement? At best, all that could be shown was a "proper basis for considering that such obstacles may exist" - i.e. a real risk. The inherent uncertainty with which the court is having to deal in the context of an interlocutory application for security for costs - a future risk, or a potential difficulty - supports a risk-based, rather than a likelihood-based, approach.
  115. In my judgment, and as Mr Marshall submitted, an analogy can be drawn with the test applied by the court in the context of freezing injunctions. In that context the jurisdiction arises where:
  116. "the court concludes, on the whole of the evidence then before it, that the refusal of a Mareva injunction would involve a real risk that a judgment or award in favour of the plaintiffs would remain unsatisfied."

    see Ninemia Maritime Corp v Trave Schiffahrts GmbH & Co KG (The Niedersachsen) [1983] 1 WLR 1412, 1422E-H per Kerr LJ. A claimant has to adduce "solid evidence of risk of dissipation by the defendant" to support his assertion that there is a real risk that the judgment or award will go unsatisfied.[14] As the authors go on to state, "since each case depends on its own facts it is impossible to lay down any general guidelines on satisfying this evidential burden", although they then outline some of the factors which may be relevant. Likewise, in the context of an application for security for costs, I consider that a similar – and necessarily flexible - test is appropriate for the purposes of deciding whether an order for security should be made. The analogy with the freezing order jurisdiction is particularly apt, in my view, because it reflects the test which a claimant has to satisfy in order to obtain protection for satisfaction of any judgment which it might obtain against a defendant. An application by a defendant for an order for security for his costs is the converse side of the coin[15]. There should, it seems to me, be an appropriate symmetry between the two tests that respectively entitle a claimant to a freezing order to satisfy any judgment, and a defendant (or appellant) to security for its costs. There are further similarities. On the making of a freezing order, the court makes an interim finding on the merits (the existence of a good arguable case) which is later tested at trial; on the issue of risk of dissipation, however, it makes a determination on an issue that is never tested at trial, namely: is there, on the whole of the evidence then before the court, a real risk of dissipation? As Mr Marshall submitted, that approach reflects the perceived justice of protecting the applicant against the risk of his being unable to enforce any judgment he may later obtain because of unjustified dissipation, when a trial on the risk of dissipation is not practicable or proportionate. It is directly comparable to the security for costs jurisdiction which protects against "the risk of being unable to enforce any costs order they may later obtain". It follows that the tests should be similar.

  117. However, I am not persuaded by Mr Marshall's submissions that, had Hamblen J been referred to the Court of Appeal decision in De Beer v Kanaar, supra, when applying Nasser in Dumrul, it would have led to a different conclusion on his part as to the formulation of the relevant test. It seems to me that the relevant argument in De Beer v Kanaar was centred on what the evidence showed in relation to the seriousness of the risk, rather than on any distinction between a threshold test based on risk and one based on likelihood. But what De Beer does indeed show is the Court of Appeal, having considered Nasser in detail as well as the earlier authorities, applying a traditional test of real risk; see in particular the judgment at paragraphs 84 and 90. To that limited extent it supports Mr Marshall's arguments.
  118. Mr Marshall referred to other cases where the court ordered security in circumstances where there was a real risk of a costs order proving to be unenforceable but where it could not be shown that it was more likely than not that enforcement would prove impossible or difficult. None of these cases were considered by Hamblen J in Dumrul. Mr Marshall underlined two cases as being of particular importance. The first, Aim Asset Management Sdn. Bhd & Anor v Kazakhstan Investment Fund Ltd (unreported, 22 May 2002), was a decision of Mr Gabriel Moss QC sitting as a deputy judge of the Chancery Division. In that case, there was an absence of evidence about difficulties of enforcement in Kazakhstan where the claimant's assets were likely to be located. The position was unknown and there was an even chance of successful and unsuccessful enforcement. It could not be shown that it was more likely than not that enforcement would prove impossible or difficult. The court concluded in these circumstances that:
  119. "… in terms of the risk in relation to enforcement against the defendant, there is a very substantial risk which cannot presently be quantified but nevertheless a very substantial risk that enforcement of an English judgment for costs in Kazakhstan would, even if not impossible, be extremely difficult and expensive. It seems to me that is a risk against which the claimants are entitled to be protected…"

    It was thus clear that Mr Moss QC considered that a real but unquantifiable risk was a sufficient basis upon which to order the provision of security.

  120. In the second case, Texuna, Gross J. considered the relevant consideration to be one of real risk, having given detailed consideration to the decision in Nasser. He held that:
  121. "…23(ix) As to the applicant for security demonstrating the risk (Nasser, at [67]) of additional obstacles to or burdens of enforcement in a country outside the zone, evidential requirements will necessarily depend on the facts of the individual case: Nasser, at [64]. Satellite litigation is undesirable so that in some cases the Court will no doubt be content to take notice of obvious realities or to draw commonsense inferences, without formal evidence. But, ordinarily, even if the Court is minded to take a broad brush, commonsense approach, it will be necessary for the applicant at least to show some evidential basis for the conclusion that there would be a realistic risk of additional obstacles or burdens in the way of enforcement in a country outside the zone; it will be recollected that Nasser, at [63], precludes the Court from making any inflexible, generalised assumption".

    Further at paragraph 24, he said:

    "Having now taken account of Nasser, I remain of the view that security is to be ordered – but by reference to the realistic risk of an additional burden of enforcement outside the zone rather than the likely costs of the proceedings."

    Gross J's approach appears to me to be one that is eminently sensible and reflects what in my experience is the approach habitually taken by judges and masters in this area.

  122. For all the above reasons it follows that, in my judgment, if and to the extent that Hamblen J in Dumrul was departing from that traditional approach, as articulated in Texuna and requiring an applicant for security to show more than a "real risk" of an obstacle to enforcement, namely a "likelihood" in the sense of a probability, I cannot agree with him. It is in fact somewhat unclear from paragraphs 24 and 25 of his judgment, read together, precisely what he was saying was the appropriate test; but the better view is that he was excluding both "real risk" and "mere possibility" as justifying an order for security. As I have already said, I do not consider that the judgment of Mance LJ in Nasser on proper analysis requires or points to such a result and, moreover, there was in any event no need for Hamblen J to engage in a debate as to the correct threshold test, since, in any event, the bank's evidence in Dumrul did not demonstrate even a real risk of obstacles to enforcement. What actually suffices to justify the making of an order will depend on the evidence adduced; "mere possibility" of obstacles to enforcement in my view will usually be insufficient to justify an order for security; but (depending on the evidence) "real risk" will usually, but not invariably, suffice.
  123. In those circumstances I consider that both the Master and David Richards J adopted the wrong approach in this case. Moreover they appeared to take Hamblen J's approach one stage further and construe "likelihood" as requiring the defendant to establish on the balance of probabilities at an interlocutory stage that there were obstacles to enforcement. I should also mention that, in his judgment, David Richards J referred to the judgment of Tomlinson LJ in Star Reefers Pool Inc. v JFC Group [2011] EWCA Civ 1065 where the judgment in Dumrul was described as "helpful and useful" (at paragraph 3). However, in my judgment, neither that case, nor references in certain other cases to Dumrul, take the matter any further in the sense of upholding or validating Hamblen J's rejection of a "real risk" test. In Star Reefers, for example, Tomlinson LJ's observation was made without hearing any argument on the issue which arises in this case and in circumstances where the case for security was overwhelmingly made out. A consideration of Dumrul was not necessary for the determination of the case and in those circumstances very little significance can be attached to the remark.
  124. Disposition

  125. Accordingly, in my judgment David Richards J should have allowed the appeal against the Master's refusal to make an order for security in favour of the appellants, on the basis that the Master applied the wrong test. The evidence which I have summarised above clearly showed, notwithstanding the respondents' expert evidence to the contrary, a real and serious risk that an order for costs might not be enforced in Georgia. Indeed, Mr Millett correctly accepted as much before this court and properly conceded that, if the test was one of real risk, then an order for security should have been made. Accordingly, at that stage, before the provision of the first Dechert undertaking, David Richards J should have re-exercised the discretion under CPR r25.13(1)(a) and made an order requiring the respondents/claimants to provide security for the costs of the section 25 proceedings. It follows that I would allow the security appeal and, subject to any further argument from counsel, order that the appellants should have their costs of the proceedings before both the Master and the judge. This is a case where in my view it was obvious on the evidence that an order for security was justified.
  126. It also follows in my judgment that, on the evidence before it, this court should exercise its discretion and make an order on the security for costs application requiring the respondents/claimants to provide security in respect of the costs of their section 25 appeal against the decision of Rose J. I would award security to the appellants/defendants in the sum of £192,062.52, reflecting the appropriate reductions made to the sum originally claimed.
  127. Lord Justice Briggs:

  128. I agree.
  129. Lady Justice Black:

  130. I also agree.

Note 1   All emphasis in this judgment is mine.    [Back]

Note 2   1982 c. 27, as amended by the Civil Jurisdiction and Judgments Act 1991 (c. 12) and by S.I.1989/1346, S.I. 1990/2591, S.I. 1993/603, S.I. 2000/1824 and S.I. 2001/3929.    [Back]

Note 3   The “sensitive” or “suspect” grounds” where the court is required to "scrutinise with intensity any reason said to constitute justification. The reasons must be cogent if such differential treatment is to be justified."; see per Lord Walker at paragraphs 57-58 of Carson in the House of Lords, where he quotes from Lord Nicholls in Ghaidan v Godin-Mendoza [2004] 2 AC 557, 568, para 19.    [Back]

Note 4   Although see contra per Parker and Russell LJJ in Berkeley Administration Inc v McClelland [1990] 2 QB 407, Staughton LJ dissenting on this point.    [Back]

Note 5   See the discussion in Frans Pennings, ‘Non-Discrimination on the Ground of Nationality in Social Security’, Utrecht Law Review, vol 9 issue 1 (January 2013) at 123.     [Back]

Note 6   Lord Walker agreed with the result proposed by Lord Hoffmann but gave his own, albeit substantially similar, reasons.    [Back]

Note 7   All text emphasised in Bold font reflects my emphasis.    [Back]

Note 8   As per the test articulated by Sir Thomas Bingham in Fitzgerald v Williams at 675 in the context of an order for security for costs against a national or resident of another Convention state.    [Back]

Note 9   See paragraph 25 of Hamblen J's judgment.    [Back]

Note 10   See for example Thune v London Properties Ltd [1990] 1 WLR 562 per Bingham LJ, at 574.    [Back]

Note 11   See Nasser at paragraph 61.    [Back]

Note 12   See Nasser at paragraph 63.    [Back]

Note 13   With whom Lord Goff and Lord Mustill agreed.    [Back]

Note 14   See Gee on Commercial Injunctions, Sixth Edition, para 12-033 citing: Ninemia Maritime Corp v Trave Schiffahrtsgesellschaft GmbH (The Niedersachsen) [1983] 2 Lloyd’s Rep. 600 at 606–607, per Mustill J; Choy Chee Kee Collin v Public Utilities Board [1997] 1 S.L.R. 604 at [19]–[22]; Lee Kuan Yew v Tang Liang Hong (o.1) [1997] 2 S.L.R. 819 at [7]; Meespierson NV v Industrial and Commercial Bank of Vietnam [1998] 2 S.L.R. 632 at [16].    [Back]

Note 15   Although the analogy is not precise, since a freezing order does not provide actual security for the claim.    [Back]


BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2016/1099.html