Hirbodan Management Co & Anor v Cummins Power Generation Ltd  3 WLUK 446
The Commercial Court reviewed the principles applicable to the granting of security for costs, in circumstances where the claimants would be jointly and severally liable for costs but were based in different jurisdiction (Iran and ‘onshore’ Dubai). The court also re-iterated the duties incumbent on the participating party when the counterparty had ceased to participate, and reconfirmed that these duties apply to interim applications as much to a full trial hearing.
The claimants were corporate entities domiciled, respectively, in Iran and Dubai. Their claim is for the enforcement in England of an Iranian judgment. The defendant resists that claim, on a variety of grounds including want of Natural Justice and enforcement being contrary to English Public Policy and barred by operation of the Protection of Trading Interests Act 1980.
The defendant applied for security for costs against both claimants under CPR 25.12 and CPR 25.13(2)(a), relying on the risk of encountering substantial obstacles to enforcement of an English costs order in Dubai and Iran, and even the possibility that the defendant would be wholly unable to enforce such a costs order against either claimant in either foreign jurisdiction.
What to do when the Respondents do not participate in the hearing
Shortly before the hearing of the application, the claimants’ solicitors came off the record and communications from the claimants ceased. The claimants were not represented at the application hearing and served neither evidence nor a skeleton argument.
Simon Rainey QC, sitting as a deputy in the Commercial Court, reviewed the authorities as to the duties of a litigant when faced with an opponent who had ceased to participate. He held, following other recent cases, that the duties applied equally on an interim application, as at trial. The duties are those set out in CMOC Sales and Marketing Ltd v Persons Unknown  EWHC 2230 (Comm). The party must present its own case fairly and draw the court’s attention to such facts and legal points as the non-participating party had previously raised or might raise, or that might be beneficial to it. This duty of fair presentation falls short of the duty of full and frank disclosure which is engaged on without notice applications. The participating party is also obliged to keep the non-participating party advised of the hearing and its outcome.
In the current case, the defendant’s legal team satisfied their obligations by means of an additional skeleton argument addressing these points as well as by making a number of ‘fair presentation’ oral submissions. The defendant also filed additional materials showing how it had kept the claimants advised after their solicitors came off the record without any alternative contact address in the United Kingdom being provided.
On the merits of the security for costs application – enforceability in Iran and onshore Dubai
The defendant satisfied the court that it met the ‘residence’ condition under CPR 25.13(2)(a). The defendant had proved that there was a real risk that an English costs order in this case would be unenforceable in Iran. There was also a real risk that the costs order would be unenforceable in the Dubai onshore courts. Even if a costs enforcement claim could be brought within the DIFC jurisdiction in Dubai – and the evidence before the court was that there was no basis to do so – there were substantial additional burdens to enforcement. It would have been no answer for the claimants to allege that there was a possibility of easier enforcement in Dubai than in Iran.
The court was also persuaded that the justice requirement had been met such that substantial security for prospective (only) costs should be ordered. The court declined to deduct from security a deposit held by the defendant, particularly in circumstances where significant costs had been incurred already and the claimants had ceased participation.
Given the lack of service address in the UK, the court made an order for alternative service pursuant to CPR 6.27. This order both retrospectively validated service by email of costs schedules, and service of these documents on former solicitors, and also prospectively allowed service by email and postal service going forward until such time as the claimants provided an address for service in this jurisdiction. The claimants were ordered to provide such an address forthwith.