Security for costs

In litigation, the usual position in relation to costs is that the unsuccessful party will be ordered to pay the successful party’s recoverable costs. Such costs may be substantial, especially when dealing with cases involving a foreign element which gives rise to additional costs, eg travel, expert evidence on foreign law, etc. While a defendant may be confident of their ability to defend the claim, they may nevertheless have concerns about potential difficulties in recovering costs that are provided for in any costs order against the claimant. The purpose of a security for costs order, which is an interim remedy, is to alleviate that concern by requiring the claimant to pay money into court, or to provide some other form of security, as a precondition to being able to continue with the claim. Where an order for security for costs is made, the proceedings will often be stayed, pending payment or provision of security.

Note, security for costs can be sought against the claimant or, in the case of a counterclaim, against the defendant. In cases where the defendant has brought a counterclaim specific considerations will apply.

Security

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The English Court’s powers to issue injunctive reliefs aimed at preserving arbitral confidentiality. (A Corporation v Firm B and another)

Arbitration analysis: This case arises from the claimant’s application for interim injunctive reliefs (the ‘Application’) seeking, among others, to restrain the first defendant (‘Firm B’), including any of its branches from (i) acting for Corporation C in an ongoing arbitration against Corporation D (the ‘Second Arbitration’); and (ii) providing any confidential information from a previous arbitration between the Claimant and Corporation B (the ‘First Arbitration’), to Corporation C. In determining the Application, the Court considered the principles governing the grant of interim reliefs as established in American Cyanamid v Ethicon Ltd. The court also considered the boundaries of arbitral confidentiality by considering what documents and information the obligation of arbitral confidentiality covers, and the relevant exceptions to this obligation. The court concluded that the claimant was not entitled to the requested reliefs. After examining the claimant's allegations of breaches of arbitral confidentiality, the court found no breach, except for some limited settlement information from the First Arbitration. The court was also not persuaded that there was a real risk of confidential information being transferred between Firm B’s London and Asia offices. Consequently, the court decided that granting the injunction would significantly prejudice Firm B and Corporation C, while not granting it would cause no prejudice to the claimant and only minimal prejudice to Corporation D. Written by Dr. Ademola Bamgbose, solicitor advocate and senior associate at Hogan Lovells, London and IfeOluwa Alabi, associate at Hogan Lovells, London.

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