Roman Pipia v BGEO Group Ltd (Formerly known as BGEO Group Plc)
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Moulder |
| Judgment Date | 22 February 2019 |
| Neutral Citation | [2019] EWHC 325 (Comm) |
| Docket Number | Case No: CL-2018-000026 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 22 February 2019 |
[2019] EWHC 325 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice, Rolls Buildings,
Fetter Lane, London, EC4A 1NL
Mrs Justice Moulder
Case No: CL-2018-000026
Mr P Burton (instructed by Blake Morgan LLP) for the Claimant
Mr A Hunter QC (instructed by Freshfields Bruckhaus Deringer LLP) for the Defendant
Hearing date: 15 February 2019
APPROVED JUDGMENT
This is the judgment on the defendant's application for security for costs made on 20 September 2018.
In support of the application I have two witness statements from Mr Patrick Swain dated 20 September 2018 and 9 November 2018. The witness statements of Mr Swain exhibit two memoranda from Professor Kereselidze and a third memorandum dated 7 February 2019 was also before the court. Professor Kereselidze is currently Head of the Academic Board at New Vision University in Georgia, head of the PhD programme in law and the masters programme in comparative private and international law. From 2005–2017 he was at Tbilisi State university in Georgia responsible for the law faculty structure and curriculum. During this time he provided advice on the evaluation of draft laws on harmonisation with the legislative instruments of the European Union.
In response I have a witness statement from Ms Sarah Rees dated 18 October 2018 and a report from Mr Irakli Adeishvili and a supplemental report dated 4 January 2019. In Ms Rees' witness statement Mr Adeishvili is described as a senior lawyer at Geocell Ltd, a large telecommunications company in Georgia, and from 2009 to 2015, a judge of the Tbilisi court of appeal. He was a member of a number of commissions working on judicial issues at the Council of Europe.
In the proceedings the claimant is seeking to recover damages for losses arising out of an alleged delict under Georgian law. The amount claimed is just under US$286.5million.
Relevant rules
The relevant provisions of the CPR on security for costs are as follows:
CPR 25.12
(1) A defendant to any claim may apply under this Section of this Part for security for his costs of the proceedings.
(2) An application for security for costs must be supported by written evidence.
(3) Where the court makes an order for security for costs, it will –
(a) determine the amount of security; and
(b) direct –
(i) the manner in which; and (ii) the time within which the security must be given. 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) …
(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
On this application it is common ground that the claimant is resident in Georgia. However it was submitted for the claimant that:
(i) the condition in (2)(a) is not satisfied by reason of the Association Agreement (the “Association Agreement”) between the European Union and the European Atomic Energy Community and their Member States, and Georgia that took effect from 1 July 2016.
(ii) it is not just to make such an order- there is no proper evidence before the court which establishes a real risk that a costs order would not be enforced in Georgia.
(iii) even if the threshold test had been passed the court should not exercise its discretion in favour of making an order.
Absence of jurisdiction
Counsel for the claimant submitted that the condition in CPR 25.13 (2)(a) was not satisfied by virtue of the Association Agreement:
(i) Counsel submitted that the Association Agreement was to be interpreted as “tantamount” to the conventions identified in CPR 25.13 (2)(a)(ii) i.e. Brussels, Lugano and the Regulation states.
(ii) Counsel submitted that the Association Agreement impliedly excluded any application for security for costs against a Georgian party. He referred to the fact that as noted in the White Book at 25.13.7 conventions and agreements may expressly or impliedly exclude the jurisdiction to request security for costs. Counsel relied by analogy on the 1960 Convention on Third Party liability in the field of nuclear energy (the “1960 Convention”) and the provision in that convention against discrimination based upon nationality, domicile or residence.
Counsel relied, amongst others, on Article 21, Article 414 and Article 416 of the Association Agreement.
Article 21 headed “Legal cooperation” specifically refers to the Hague Convention and states that:
“1. The Parties agree to develop judicial cooperation in civil and commercial matters as regards the negotiation, ratification and implementation of multilateral conventions on civil judicial cooperation and, in particular, the conventions of the Hague Conference on Private International Law in the field of international legal cooperation and litigation as well as the protection of children.”
Article 21 merely refers to “developing judicial cooperation” as regards the ratification and implementation of the Hague Convention. The stated aims of the Association Agreement are set out in broad terms in Article 1. They include:
“(f) to enhance cooperation in the area of freedom, security and justice with the aim of reinforcing the rule of law and the respect for human rights and fundamental freedoms”.
The Association Agreement does not provide for the enforcement of judgments either on a bilateral basis or through the Hague Convention. I do not accept therefore that there is any basis on which the Association Agreement can be interpreted as falling within the express terms of CPR 25.13 (2)(a)(ii).
As to the submission that the Association Agreement impliedly excluded any application for security for costs against a Georgian party, counsel relies on Articles 414 and 416. Article 414 “Access to courts and administrative organs” states:
“Within the scope of this Agreement, the Parties undertake to ensure that natural and legal persons of the other Party have access free of discrimination in relation to its own nationals to the competent courts and administrative organs of the Parties to defend their individual rights, including property rights”
Article 416 “Non-discrimination” states:
“1. In the fields covered by this Agreement and without prejudice to any special provisions contained therein: (a) the arrangements applied by Georgia in respect of the EU or the Member States shall not give rise to any discrimination between the Member States, their nationals, companies or firms; (b) the arrangements applied by the EU or the Member States in respect of Georgia shall not give rise to any discrimination between nationals, companies or firms of Georgia.” [emphasis added]
It is noteworthy that unlike the 1960 Convention which refers to discrimination based on residence, the Association Agreement refers only to discrimination based on nationality. In my view the provisions of CPR 25.13 providing for security for costs do not give rise to discrimination between nationals, companies or firms of Georgia. The rules on security for costs are based on the residence of the party, and not on nationality, and thus apply equally to any party who is not resident in the UK or one of the states which is party to the Brussels or Lugano convention or in a Regulation state. The nationality of the party is irrelevant for this purpose and the residence condition can encompass therefore nationals of other states who are resident in Georgia as well as nationals of Georgia. In this regard the observations of Gloster LJ in Bestfort Developments LLP v Ras Al Khaimah Investment Authority [2016] EWCA Civ 1099 at [59] are equally applicable in my view.
Accordingly I do not accept that the Association Agreement impliedly excludes any application for security for costs against a Georgian party.
Is it just to make an order?
An order for security for costs is intended to protect a defendant put to the cost of defending themselves against those claimants for whom the residence conditions are satisfied.
It was common ground that the test to be applied on an application for security for costs is as set out in the Court of Appeal decision in Bestfort Developments LLP v Ras Al Khaimah Investment Authority [2016] EWCA Civ 1099.
Allowing the appeal Gloster LJ held that:
“[77] 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”, 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” 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...
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