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Cite as: [2015] EWHC 3197 (Ch)

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Neutral Citation Number: [2015] EWHC 3197 (Ch)
Case No: HC-2015-003056

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ON APPEAL FROM MASTER BOWLES
IN THE MATTER OF AN APPLICATION UNDER SECTION 25 OF THE CIVIL JURISDICTION AND JUDGMENTS ACT 1982

Royal Courts of Justice
Rolls Building
London, EC4A 1NL
5 November 2015

B e f o r e :

MR JUSTICE DAVID RICHARDS
____________________

Between:
(1) RAS AL KHAIMAH INVESTMENT AUTHORITY
(2) RAS AL KHAIMAH INVESTMENT AND DEVELOPMENT OFFICE
(3) RAKEEN DEVELOPMENT PJSC-FZC
(4) RAKEEN DEVELOPMENT LLC
(5) RAKEEN UPTOWN DEVELOPMENT LLC
(6) RAS AL KAHIMAH INVESTMENT AUTHORITY GEORGIA LLC Claimants /Respondents


(1) BESTFORT DEVELOPMENT LLP
(2) MANLINE PROJECTS LLP
(3) BELLCROWN ALLIANCE LLP
(4) LABBEY DEVELOPMENT LLP
(5) TECBERG PROJECTS LLP
(6) MONTBURY LLP
(7) HORNBERG SOLUTIONS LLP
(8) WORLDFOUND UNIVERSAL LLP
(9) RAYSTAR TRADE LLP
(10) BONTRADE LLP
(11) SONLAND TRANSIT LLP
(12) QB ENTERPRISE LLP
(13) THE SOLUTIONS ALLIANCE LLP
(14) LUXTRON WORLDWIDE LLP Defendants /Appellants

____________________

Philip Marshall QC and Ruth den Besten (instructed by Peters & Peters Solicitors LLP)
for the 1st - 6th, 8th and 10th - 14th Defendants/Appellants
Stephen Moverley Smith QC and Andrew Holden (instructed by Dechert LLP)
for the Claimants/Respondents
Hearing date: 3 November 2015

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Mr Justice David Richards:

  1. The defendants in these proceedings apply for permission to appeal against the dismissal of their application for security for their costs of the proceedings and, if permission is granted, for the order below to be set aside and for an order for security for costs to be made in their favour. The hearing before me proceeded on the basis that, if I gave permission, I would also determine the appeal and I accordingly heard full argument from both sides on the substance of the appeal.
  2. The proceedings are brought under section 25 of the Civil Jurisdiction and Judgments Act 1982 for a worldwide freezing order and associated disclosure orders against the defendants and for the appointment of receivers. These orders are sought in support of pending or intended proceedings by the claimants against a Mr Mikadze in Georgia and in Ras Al Khaimah in the United Arab Emirates. The claimants are entities associated with the government of Ras Al Khaimah and the claims are said to arise out of dealings between the claimants 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 claimants allege, among other things, that the defendants are beneficially owned or controlled by Mr Mikadze, and that it will be possible to enforce a judgment against Mr Mikadze against the defendants' assets. This allegation is denied by the defendants. The details of the claims made or to be made in the foreign proceedings and in the present proceedings are not relevant to the present application.
  3. The application for the worldwide freezing orders and other relief was commenced on 1 May 2015 and evidence of both fact and Georgian law have been filed. The application is due to be heard with an estimate of three days starting on 9 November 2015.
  4. The application for security for costs is made by all the defendants, except the seventh and ninth defendants who are 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.
  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:
  6. "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."
  7. 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.
  8. 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. 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.
  9. 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.
  10. 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.
  11. 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.
  12. I will deal first with the main ground, and point of principle, on which the defendants seek to appeal the Master's order, namely 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 so as to constitute objective justification for the making of an order for security for costs that would otherwise be discriminatory in breach of article 14.
  13. The Master held that the court needs to be satisfied that there is likely to be an obstacle or burden to enforcement, basing himself on the terms of the judgment of Mance LJ, with which Simon Brown LJ agreed, in Nasser and on a decision to the same effect, after argument on the point, by Hamblen J in Dumrul v Standard Chartered Bank [2010] EWHC 2625 (Comm). These authorities were cited to the Master by counsel for the claimants and no submissions to contrary effect were made in reply at the hearing on behalf of the defendants.
  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, p ibilii5that 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.
    26. In this regard, I received after the hearing, but not in the course of argument at the hearing, a supplemental submission from Philip Marshall Q.C., who is the leading counsel for the LLPs but who did not appear before me at the hearing, challenging the approach adopted by Hamblen J in Dumrul and submitting, or suggesting, that that decision was per incuriam, a decision of the Court of Appeal in De Beer v Kanaar [2003] 1 WLR 38. De Beer v Kanaar was not an authority cited, referred to or provided to the court at the hearing. I say no more on this than that, as just stated, I consider the approach adopted in Dumrul to be correct. More to the point, however, is the basis, or the lack of it, upon which Mr. Marshall's submission is advanced. The context of that submission was a permission that I had given that the parties could put in written submissions limited to the question (dealt with later in this judgment,) as to whether, in respect of the enforcement of an order of the English court within the EU or EEA areas, it would be open to the respondent to oppose enforcement upon the ground of fraud. I made it specifically clear that my invitation for assistance on this point was not to allow re-argument of any other point.
    27. In the light of that indication, I have to say that I regard Mr Marshall's supplemental submission, in so far as it goes, as it does, beyond the invitation given as inappropriate and unhelpful. The submission I add, as well as raising, for the first time, a debate as to standard of proof also purported to open up another matter not challenged at the hearing; namely, that a Georgian judgment would be enforceable in the English courts.
    28. It seems to me that the proper approach, with respect to Mr. Marshall, is to disregard these additional submissions as coming too late in the day. Particularly on an application brought on urgently, because of the imminent hearing of the section 25 application, there must be finality. All of the matters now sought to be raised could have been raised at the hearing, but were not. Enough is enough."
  16. In their skeleton argument for the present application, counsel for the defendants are critical of the approach adopted by the Master. They suggest that he chose to ignore a Court of Appeal decision that was binding upon him, preferring a first instance decision that was per incuriam and that it was not open to him to do so.
  17. I can well understand the attitude adopted by the Master to the written submissions lodged on behalf of the defendants. It is clear from the transcript that the Master invited further submissions on only one, clearly defined issue. The correct course to adopt in this case was not to attach new submissions on the threshold test to the coat-tails of the permission given by the Master, but to raise the point with him in writing and ask for permission to make written submissions on the topic. In any event, I do not consider the criticism levelled at the Master that he ignored the decision of the Court of Appeal in De Beer v Kanaar [2003] 1 WLR 38 to be well-founded. As I read paragraph 26 of his judgment, the Master was saying that he considered the approach adopted by Hamblen J in Dumrul v Standard Chartered Bank to be correct, notwithstanding the decision in De Beer v Kanaar. What the Master did ignore was the further matter that was sought to be opened up in the written submissions, to which he refers in paragraph 27. That was an entirely new matter which, for its proper consideration, required expert evidence on Georgian law. If this point was to be raised, it should have been raised well before the hearing, so enabling the claimants to deal with it. The Master was entirely correct to disregard it and to take the view that, as he put it, enough is enough.
  18. The threshold test point is an issue which can be raised on the present application. First, as I have said, I consider that the Master dealt with it. Secondly, in any event, the point was never conceded by the defendants and it is a point of law which can be raised on appeal.
  19. In considering this issue, I shall start with the judgment of Mance LJ in Nasser v United Bank of Kuwait. Immediately before turning to the issue as to whether the rules concerning security for costs raised any issue of discrimination, Mance LJ said at [46]:
  20. "What remains as one ground on which security may be ordered is foreign residence except in cases involving the "single legal market" to which the Brussels and Lugano Conventions aspire in matters of enforcement and recognition. The rationale of the discretion to order security on that ground is that enforcement of an order for security for costs abroad may be more difficult or costly than elsewhere."
  21. Having set out principles agreed by counsel as to the ambit of article 14, Mance LJ said at [50]:
  22. "Mr Irvin accepts, realistically, that the rules relating to the provision of security for costs fall within the ambit of the right of access to courts under article 6. The reasoning in the Tolstoy case indicates this, likewise that in Federal Bank v. Hadkinson. I took the same view, after the incorporation of the Convention, sitting as a single judge of this court in Gulf Azov Shipping Co. Ltd. v. Chief Idisi (unrep'd; 19/12/00). My reasoning there (in the context of applications made under both the old and the new rules, though the application under the new rules failed for the special reason that the appeal related to a finding of contempt) depended on clear evidence that there would, in the light of the defendant's conduct in the action so far and influence and conduct in Nigeria, be very substantial difficulty in enforcing any judgment for costs against him in Nigeria. That made it appropriate to order security on the first application by reference to the full amount of the costs likely to be incurred in the Court of Appeal."
  23. At [62] [64], Mance LJ said:
  24. "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."
  25. Turning to the position in the case before the court, Mance LJ said at [66]:
  26. "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."
  27. Mance LJ concluded at [67]:
  28. "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."
  29. 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.
  30. 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.
  31. The claimant was ordinarily resident in the United States but he contended that he had sufficient assets in the Netherlands and Switzerland, respectively signatories to the Brussels and Lugano Conventions, to meet any order for costs that might be made against him. He contended that he was therefore not a person against whom an order for security for costs could be made because, under the terms of CPR 25.13(2)(a), as it was then framed, he was "a person against whom a claim can be enforced under the Brussels Conventions or the Lugano Convention". The court therefore had no jurisdiction to make an order for security for costs against him, a submission accepted by the judge at first instance.
  32. The issue of principle which the court had to decide was whether the relevant provision in the Rules, when it referred to "a person against whom a claim can be enforced" under the Conventions, was referring to the location of the person or the location of his assets. If the latter were the correct construction, then, at least if the assets would be sufficient to meet any order for costs, the claimant would succeed in his submission that the court had no jurisdiction to make an order for security for costs against him under that paragraph. The court dealt with this jurisdiction issue at paragraphs [29] to [64]. For the purpose of discerning the true intent of the relevant provision, there was extensive consideration of two decisions of the Court of Appeal, Nasser v United Bank of Kuwait and White Sea & Onega Shipping Co v International Transport Workers Federation [2001] EWCA Civ 337. Some but not all of the paragraphs in the judgment of Mance LJ in Nasser cited above were also set out in that section of the judgment.
  33. Having held that CPR 25.13(2)(a) was concerned with a person who was not resident in a Convention State rather than with the location of his assets, the Court went on to consider the question whether the discretion to make an order for security for costs should be exercised on the facts of that case. This is dealt with in paragraphs [65] to [91] of the judgment which concludes as follows:
  34. "90. In all the circumstances, we conclude that Kanaar is at risk of being unable to enforce an order for costs against Mr de Beer, whether in part or at all, due either to lack of available assets against which such an order could be enforced, or to the unenforceability of such an order in Florida, or both.
    91. We further conclude that it is just in all the circumstances that Kanaar should be protected against that risk by the making of an order that Mr de Beer give security for its costs of the action to the end of the trial. Bearing in mind the nature and potential size of the risk, and given that Mr Saini's accepts that the proposed figure of 130,000 represents a reasonable estimate of Kanaar's costs up to the end of the trial, we order that security be given in that sum."
  35. Mr Marshall naturally relies on the conclusion that the defendant was "at risk" of being unable to enforce an order for costs against the claimant and that it was just in all the circumstances that it should be protected "against that risk" by the making of an order for security for costs. To similar effect, the court had said at [84]:
  36. ".. that there is, to put it at its lowest, a risk that an order for costs in Kanaar's favour may be difficult or even impossible to enforce in Florida."
  37. It is important to see how the court came to that conclusion. In the entirety of the section of the judgment dealing with the discretion issue, there is only one passing reference to Nasser and no discussion at all as to whether the threshold test is one of likelihood or real risk. At [65] [72], the court summarised the submissions made by Mr Marshall on behalf of the defendants. Mr Marshall relied, as he did before me, on observations made by Bingham LJ in Thune v London Properties Ltd [1990] 1 WLR 562. There was "a risk" in that case that the defendants would be unable to achieve full recovery of any costs ordered in their favour and Bingham LJ said at page 574:
  38. "Thus the defendants are put to the very great cost of defending this expensive litigation with the risk, however small, that if they are ultimately successful they will be unable to recover their taxed costs despite the ease of procedural enforcement in Norway. I consider, in the exercise of my discretion, that this is a risk to which the defendants should not be put and that security should be given "
  39. Mr Marshall submitted that a similar risk existed in relation to enforcement of any order against the claimant, either in Florida or in the European states in which the claimant then had assets. Counsel for the claimant took no issue with the test of risk put forward by Mr Marshall but submitted in the light of the evidence that "the court should proceed on the footing that there is no significant risk that enforcement of an order for costs may prove more difficult or materially more expensive, in Florida": see [76].
  40. In the light of the submissions made by both parties, it is not surprising that the court applied a test based on risk. It appears that the parties were agreed that it was the correct approach. There is no discussion in the judgment as to the correct test and nothing to suggest that the court was either modifying or even elucidating the approach stated by Mance LJ in Nasser, still less ruling on the correct test. In my judgment, it does not throw any significant light on the correct approach to be adopted by the court in determining whether there exists objective justification for discrimination on grounds of national origin in making orders for security for costs.
  41. Mr Marshall also relies on two decisions at first instance. The first is a decision of Mr Gabriel Moss QC, sitting as a Deputy Judge of the Chancery Division, on an appeal against an order for security for costs made by a Master, in Aims Asset Management SDN BHD v Kazakhstan Investment Fund Ltd (unreported, 22 May 2002). There is consideration of the judgment in Nasser and citation of some of the passages cited earlier in this judgment. The issue was not the threshold test but whether the difficulties of enforcement related to the place of residence of the defendant making a counterclaim, in that case the Cayman Islands, or the place where its assets were located, in that case Kazakhstan. It was agreed that, because the counterclaiming defendant was resident outside the United Kingdom and any Convention state, the court had jurisdiction to make an order for security for costs against it and the judge held that he was entitled to have regard to the difficulties of enforcement in the place where its assets were located. On that issue the judge observed that there was no evidence before the court as to whether it would be impossible or very difficult to enforce an English judgment in Kazakhstan and he continued:
  42. "It seems to me, therefore, that 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 that is a risk against which the claimants are entitled to be protected. If that is correct, then the learned Master does not appear to have erred in relation to the authority of the Nasser v United Bank of Kuwait case."
  43. I do not consider that this decision assists the defendants in the present case, as the threshold test was not in issue and not the subject of argument. I note that the judge identified "a very substantial risk", rather than merely a real, as opposed to fanciful, risk.
  44. The other decision at first instance on which Mr Marshall relies is the decision of Gross J in Texuna International Ltd v Cairn Energy Plc [2004] EWHC 1102 (Comm). Mr Marshall relied on what the judge said in paragraph 23(ix) of his judgment. Paragraph 23 starts: "In my judgment, having regard to Nasser, together with the other authorities to which I was referred, the following approach is warranted". The judge then sets out relevant propositions in 11 numbered sub-paragraphs. Sub-paragraph (ix) is as follows:
  45. 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."
  46. In paragraph 28 having dealt with the availability of assets in Hong Kong, Gross J said:
  47. "I cannot however exclude the risk that the Defendant might have to look further afield or take more expensive and time consuming steps to enforce any order for the payment of its costs. I assess this risk as low but realistic and not so low that it can be discounted."
  48. It is clear from the judgment of Gross J that he is taking "a realistic risk" as the relevant threshold test, but it is again to be observed that this does not appear to have been the subject of any submissions by the parties.
  49. In contrast, the threshold test was the subject of argument in Dumrul v Standard Chartered Bank. At [21], Hamblen J set out in full paragraphs 58, 59, 60-65 and 67 of the judgment of Mance LJ in Nasser. He continued:
  50. "22. That case suggests that the essential question is whether "there would be substantial obstacles to, or a substantial extra burden (such as 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."
    23. The present case raises two issues of law in relation to the Nasser approach. The first is the standard to which the court has to be satisfied that there would be an obstacle or burden. The second is whether the Nasser approach applies not just to obstacles/burdens to enforcement but also to obstacles/burdens to execution.
    24. In relation to the first issue, the Bank submits that it is sufficient to show that an obstacle or burden is a real possibility. It is not necessary to show that it is likely. A real risk suffices.
    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. There are other cases in which courts have expressed the same view as Hamblen J but without it being an issue or the subject of argument.
  52. In Allen v Bloomsbury Publishing Ltd [2011] EWCA Civ 943 at [19], Lloyd LJ, in a judgment with which Rix LJ and Sullivan LJ agreed, having referred to Nasser and briefly summarised its effect, said:
  53. "The court's conclusion was that security should be ordered but only so far as enforcement against the claimant in the United States of America would be likely to be more difficult and expensive than it would have been in the United Kingdom or in the area covered by the Brussels and Lugano Conventions."
  54. In Star Reefers Pool Inc v JFC Group [2011] EWCA Civ 1065, on an application for security for the costs of an appeal, Tomlinson LJ referred at [2] to Nasser and to the need for objectively justified grounds relating to obstacles to or the burden of enforcement:
  55. "which has been interpreted as meaning that what needs to be identified is some real prospect of a difficulty manifesting itself which goes further than the difficulty which might be encountered were an attempt being made to enforce an order for costs in this country or indeed in one of the other states with which there are broadly speaking, what might be called reciprocal arrangements."
  56. In the following paragraph, Tomlinson LJ referred to the:
  57. "helpful and useful decision by Hamblen J in Dumrul "at which Hamblen J at paragraph 25 said that he considered that, as a matter of both principle and authority, the court needs to be satisfied that there is likely to be an obstacle or burden and that a mere possibility of this should not justify treating the party resident outside of Brussels or in a Lugano State differently "
  58. In [4] Tomlinson LJ said that he could be entirely confident that, in the event of their being unsuccessful in relation to their appeal, the appellants would seek to frustrate enforcement of an order for costs made against them. In [5] he said that in his judgment the evidence of an expert on Russian law "demonstrates that there is indeed likely to be an obstacle or burden to enforcement." He concluded at [6] that in his judgment the case for making an order for security for costs was "quite overwhelmingly made out".
  59. Mr Marshall submits that reliance should not be placed on the judgment of Hamblen J in Dumrul or on the judgment of Tomlinson LJ in Star Reefers, or indeed on the observation of Lloyd LJ in Allen v Bloomsbury Publishing Ltd, because in none of those cases does it appear that the decision of the Court of Appeal in De Beer v Kanaar was cited. 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.
  60. 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.
  61. 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.
  62. I mentioned earlier that Mr Marshall had relied before me, as he had done in the Court of Appeal in De Beer, on the observations of Bingham LJ in Thune v London Properties Ltd. Those observations were concerned with the correct approach to be adopted to an application for security for costs under the regime as it existed before the introduction of the CPR, before any reference to parties resident outside Convention states and before the incorporation of the European Convention on Human Rights into English law. It simply was not concerned with the level of risk or likelihood required to provide objective justification for the exercise of the discretion to order security for costs which is discriminatory on grounds of national origin. Moreover, the risk of impecuniosity to which Bingham LJ referred in the passage relied upon by Mr Marshall did not survive the incorporation of the Human Rights Convention: see Nasser at [61].
  63. It follows that the grounds of appeal set out in paragraph 2 of the defendants' ground of appeal do not arise.
  64. Paragraph 3 of the grounds of appeal is that, in any event, the Master erred in failing to take account of relevant matters or took into account irrelevant matters. Four matters are identified, of which one is the issue which I have earlier in this judgment ruled that the Master was right not to entertain. I will deal with each of the remaining matters.
  65. First, it is submitted that the Master wrongly took account of an undertaking proffered by the claimants to meet any costs order made against them within 14 days and/or not to oppose recognition of any order obtained in favour of the defendants in Georgia. It is submitted that such undertakings were not capable of being enforced either at all or without considerable difficulty, given that the claimants have no assets or presence within the jurisdiction of the court, that if the application for injunctive relief is refused there will be no continuing proceedings in the jurisdiction to which the claimants are parties, and that in the light of the allegations of serious wrongdoing made by the defendants against the claimants there is good reason to suppose that the claimants would not honour their undertakings. These submissions were made to the Master and he dealt with them in his judgment at [56]:
  66. "Ms Den Besten submits powerfully in this regard that undertakings proffered by offshore entities and, in consequence, not enforceable by the English court should carry no, or very little, weight. I am not persuaded, however, that the undertakings which have been proffered can be disregarded by this court in quite such a preemptory fashion. Although Mr Mekadze is manifestly distrustful of the RAK Claimants and alleges political motivation and, in effect, a witch-hunt, I have no evidence that undertakings emanating from apparently responsible quasi-governmental bodies would be cynically offered and cynically disregarded when the purpose of those undertakings was achieved; such as to enable me to hold that it is likely, or even that there is a real risk, that that might happen."
  67. The Master's consideration of the undertakings displays no error of principle. In my judgment, he was clearly required to consider the undertakings and to reach a view as to the weight that should be put upon them. The assessment of weight was a matter for him and I can see no possible grounds on which an appeal court can interfere with his conclusion.
  68. The second matter which is said to arise under this ground is that the Master failed to take account of the short period for which security was required. This was not a factor relied on by the defendants before the Master and it is not therefore a matter of which they can legitimately complain. In any event, I am bound to say that it appears to me to be a factor of very little significance.
  69. The third matter is that it is said that the Master failed to take account of the circumstances in which issues of public policy or the "basic legal principles of Georgia" could prevent an English judgment being enforced in Georgia. This factor is relevant to the assessment of the likelihood that the defendants would face additional difficulties or burdens of enforcement in Georgia. The point arises under Article 68 of the Law of Georgia on International Private Law. Article 68 is headed "Recognition of decisions of foreign countries". Article 68.1 provides that "Georgia shall recognise legally effective court decisions of foreign countries." By way of derogation from that general principle, Article 68.2 sets out a number of circumstances in which such a decision shall not be recognised. The relevant circumstance for present purposes is that set out in Article 68.2(g): "the decision contradicts the basic legal principles of Georgia."
  70. No point was taken by the defendants on Article 68.2(g) until the evidence in reply of their solicitor in a witness statement made on 2 October 2015. Included in the exhibit to that witness statement was a copy of a letter dated 2 October 2015 from BLC Law Office, which I assume to be a law firm in Georgia although this is not clear. The letter is said to deal with the practical difficulties that the defendants would face on seeking to enforce an order for costs in their favour in Georgia. In answer to a question which appears to have been put by the defendants' solicitors, "can the opponent request that the Georgian court re-examine the merits of the decision of the foreign court?", the letter states, by reference to Article 68.2(g), that "the opponent may argue that the merits of the foreign judgment contradict the basic principles of Georgian legislation, and therefore the judgment debtor is capable of requiring the court to re-consider the merits of the case." Neither of the Georgian law experts comment in their reports on this suggestion. Indeed, it was raised for the first time too late for either of them to consider it. No explanation is given in the letter from BLC Law Office as to the basic principles of Georgian law that might be engaged nor was any case on this outlined either in the skeleton argument before the Master or in the opening submissions of the defendants' counsel. In reply, counsel mentioned two factors, first, the fact that worldwide freezing orders are not available in Georgia and secondly, the possibility that the claimants might allege that the order for costs was obtained as a result of fraudulent reliance on forged documents.
  71. The Master dealt with this on a number of bases, the first of which is set out at [61] of his judgment:
  72. " I am not satisfied that there is in this case a likelihood or, indeed, a serious risk of non-recognition, or delay in recognition, arising out of Article 68(2)(g). I have, as already stated, no evidence at all that the Georgian court would treat an assertion by a party resisting recognition of a foreign judgment, that that judgment had been procured by fraud, as properly falling within the matters the Georgian court would regard as precluding recognition as being in contradiction of the basic legal principles of Georgia."
  73. In my judgment, the Master was entirely correct to deal with this late submission in this way. There is no evidence of Georgian law before the court going to the issue. The letter from BLC Law Office exhibited to the defendants' evidence in reply is not evidence of Georgian law at all. The experts have not dealt with the issue in their reports. Moreover, the letter gives no indication at all of the grounds on which objection could be taken under Article 68.2(g). In my judgment there is nothing in this proposed ground of appeal.
  74. In conclusion, I take the view that the issue raised in ground 1 of the grounds of appeal relating to the legal threshold test is a ground on which it is right to give permission to appeal from the order of the Master. De Beer v Kanaar does not appear to have been cited in any of the other cases in which this issue has arisen or been referred to and it is right that the matter should be considered on a first appeal. However, for the reasons given in this judgment, I dismiss the appeal based on ground 1. If I had held that ground 1 was well-founded, it would follow that the issues raised in ground 2 would have to be considered and it follows that I also give permission to appeal on ground 2 but likewise dismiss the appeal on that ground. For the reasons that I have given in this judgment, I do not consider that any of the matters raised in ground 3 has any prospect of success on an appeal and I accordingly refuse permission to appeal on that ground.


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