European Convention on Human Rights: security for costs

Every year since English law opened its arms to the European Convention on Human Rights, various pieces of well-established law and procedure have been tested for compatibility with it. One of many areas found wanting was the court rules for giving defendants security for costs.

In the old days, if you were being sued in the UK by an overseas claimant, there was a good chance that you could get security for your costs. Judges had a discretion but often did not need much persuasion to make the claimant provide security. He would be ordered to pay enough money into court to settle your costs if you won. Your estimate was usually good enough as to how much that was likely to be.

Because access to justice is a fundamental human right, national origin shouldn’t be an obstacle. Overseas claimants have human rights too. The courts don’t want to impose a security for costs order which would stifle a strong claim by an overseas claimant. On the other hand, they don’t want to leave the defendant victorious but unable to recover his costs through the courts in another jurisdiction.

Although the old White Book rules on security for costs survived the Woolf reforms, they were changed in 2000 and again in 2003. The Civil Procedure Rules now give a free pass to claimants resident in any country which has reciprocal enforcement rights with the UK courts. Broadly speaking, this means claimants from countries in the EU or EEA cannot be ordered to give security for costs just because they don’t live in England or Wales.

There is also new respect for the human rights of claimants from outside the enforcement zone (which in Europe includes the Isle of Man, the Channel Islands, Andorra, San Marino and Liechtenstein). They are now protected by an obligation requiring the judge’s discretion to be exercised on objectively justified grounds, to ensure no discriminatory treatment. This involves assessing the claimant against a number of factors:

• How easy, quick and cheap is it to enforce a UK judgment in his home country?
• Does he have substantial assets in the UK and, if so, how easily can they be transferred out of the UK?
• Does he have assets anywhere else in the world and, if so, how easily can they be transferred into the UK?
• Has he cooperated with requests for information about his assets?
• Is there any evidence of his assets being misapplied?

Applications for security can be refused if they are made too long after the court action was begun; and, where they succeed, the amount of security ordered should no longer be based on the defendant’s estimated costs for the entire proceedings but on the extra expense and difficulty he might face when enforcing his costs order in the particular overseas country. Only where enforcement was likely to prove impossible would the full amount of costs be ordered as security.

This is not the end of the story. The result seems to be that, in theory, overseas claimants can now avoid a security for costs order by taking up temporary residency in England (or another EU/EEA country). Security for costs can only be awarded on the basis of a claimant’s place of residence if they are resident out of the jurisdiction but are not resident in an EU/EEA country. So much for human rights.