On 27 May 2022, Mr Justice Michael Green handed down judgment in relation to a series of applications for security for costs in RAKIA v Azima. The underlying proceedings have a long and complex history. In May 2020, Andrew Lenon QC (sitting as a Deputy Judge of the Chancery Division) found that Mr Azima had committed fraudulent misrepresentation and conspiracy against RAKIA (which is the sovereign wealth fund of Ras Al Khaimah, one of the seven Emirates of the UAE). He also dismissed Mr Azima’s counterclaim which alleged that RAKIA had unlawfully hacked his email accounts and used his hacked data against him. On the basis of new evidence, the Court of Appeal remitted Mr Azima’s hacking counterclaim to be retried in the Chancery Division.
Each of the Defendants to the remitted counterclaim, namely RAKIA, Dechert LLP and its former partner Neil Gerrard (the “Dechert Parties”), and James Buchanan made separate applications for Mr Azima to provide security for their costs of defending the counterclaim, pursuant to CPR 25.13(2)(a) on the basis that Mr Azima was resident out of the jurisdiction in Missouri, USA. Mr Justice Michael Green granted the applications. His judgment provides important guidance on the Court’s jurisdiction to grant such applications and on the duties of asset disclosure which are incumbent upon a respondent seeking to defeat such applications.
In defending the applications, Mr Azima asserted that he was a man “of substantial means” but declined to give details about the value, nature, and location of his assets, whether in Missouri or elsewhere in the world. He argued that, since there was no requirement on a domestic claimant (or counterclaimant) to provide details of their assets, he could not be required to provide such details either, otherwise the Court would be breaching Articles 6 and 14 of the ECHR and the non-discrimination principles set out by the Court of Appeal in Nasser v United Bank of Kuwait [2002] 1 WLR 1868.
Mr Justice Michael Green rejected this argument, holding that, when assessing potential obstacles to enforcement of a future costs order against a claimant, it is permissible (and indeed necessary) for the Court to consider not just the claimant’s country of residence but also other jurisdictions where the claimant’s assets may actually be located. Once through the CPR 25.13(2)(a) ‘gateway’ of a claimant being resident out of the jurisdiction, the Court has an expansive discretion in determining whether it is just to make an order for security. His conclusion at [21] was as follows: “It seems to me that, if [Mr Azima’s position] was the law, it would be virtually impossible for security for costs applications to succeed to the full extent if the respondent adopted that approach. I consider that a respondent needs to provide some evidence from which the court can assess whether a future costs order will be able to be enforced against the non-resident respondent, wherever their assets are located. If such a respondent decides not to disclose any details about their assets, and there is no other evidence as to the value, nature and location of their assets, the court is entitled to infer that there is a real risk of there being substantial obstacles in the way of enforcing a future costs order.”
In reaching this conclusion, Mr Justice Michael Green accepted in particular the Dechert Parties’ argument that foreign law evidence as to the ease or difficulty of enforcement in Missouri (which had been relied upon by Mr Azima and RAKIA respectively) “misses the point”, in circumstances where there was no evidence that Mr Azima actually had valuable assets located in Missouri and thus no evidence that Missouri was the relevant jurisdiction where the Defendants would seek to enforce a future costs order.
In other instructive parts of the judgment, Mr Justice Michael Green: (i) accepted that it was relevant for the Court to take into account Mr Azima’s disreputable character and the judicial findings of fraud and dishonesty which had already been made against him; (ii) dismissed the relevance of Mr Azima previously having paid adverse costs orders in the proceedings, given that “there is a substantial qualitative difference between being ordered to pay a sum of money or costs as the price of continuing with the litigation and being willing to pay an adverse costs order at the end of the proceedings, having lost”; (iii) noted that, where proceedings are funded by a third party, that third party may similarly be unwilling to satisfy an adverse costs order at the end of the proceedings; (iv) commented on an “interesting debate on the doctrine of precedent” where there are conflicting first instance decisions; and (v) expressed the view that it is odd to distinguish between “execution” and “enforcement” of a judgment or costs order (as Hamblen J had done in Dumrul v Standard Chartered Bank [2010] EWHC 2625 (Comm)), given that the latter generally encompasses the former.
The judgment is available here.
Robert Harris (led by Laura Newton of Brick Court) acted for the successful Dechert Parties, instructed by Enyo Law LLP.