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Security for costs – through what lens is the enforcement criteria viewed?

22 September 2021. Published by Nina Pulimood, Associate and Simon Hart, Partner

Political obstacles can trump legal obstacles when court is considering enforcement in security for costs applications Haque v Hussain(i)

In September 2020 the claimant, Syed Aminul Haque, brought an action on behalf of the unincorporated association known as the Muttahida Quami Movement Pakistan ("MQM Pakistan"), against an unincorporated association based in London known as the Muttahida Quami Movement ("MQM London"). Both MQM Pakistan and MQM London claim their organisations stem from the Muttahida Quami Movement ("MQM"), a political party which was founded by the first defendant in Pakistan in about 1984.

Dispute

The claimant asserts that MQM Pakistan is the beneficial owner of six properties, the legal titles to which are in the names of the defendants, and additionally that MQM Pakistan is entitled to the proceeds of sale of a seventh property. The defendants, meanwhile, assert that MQM London is the beneficial owner of these properties and the proceeds of sale.

Security for Costs

An application for security for costs was made by the first defendant under CPR25.13.  The relevant provisions state that the court may make an order if it is satisfied, having regard to all the circumstances of the case that it is just to make such an order, and that one of the conditions in CPR25.13(2) is satisfied.  One such condition is that the claimant is resident out of the jurisdiction but not resident in a State bound by the 2005 Hague Convention, as defined in section 1(3) of the Civil jurisdiction and Judgments Act 1982. Having satisfied herself that this condition was  so satisfied, the master noted that where this ground is relied upon, impecuniosity would be relevant to the exercise of the Court's discretion only to the extent that it would serve "(i) to preclude or hinder or add to the burden of enforcement abroad against such assets as do exist abroad or (ii) as a practical matter, to make it more likely that the claimant would take advantage of any available opportunity to avoid or hinder such enforcement abroad" (1). The claimant had not provided evidence as to his means in either Pakistan or the UK, and the master proceeded on the basis that the claimant personally would not be able to satisfy a costs judgment made against him.

Legal Obstacles to Enforcement

Although there is a legal framework to enforce English judgments in Pakistan, the first defendant argued that there were certain provisions in the Civil Procedure Code of Pakistan 1908 that would give rise to obstacles to the enforcement of a judgment against the claimant in this case. However, the master rejected these arguments, stating that they fell short of showing a "real 

risk" of substantial obstacles to enforcement. A key factor in the master's conclusion on this point was the lack of expert evidence relating to Pakistani law in relation to these provisions.

The first defendant argued that because the representative claimant did not have any apparent means to fulfil a costs judgment against him, the only realistic route to recovery was by seeking to enforce against other members of MQM Pakistan, and that this would be an additional risk and burden of enforcement. Relying on the English law position, CPR 19.6(4) would require the defendants to seek the permission of the Court prior to enforcement, and it would then be open to any non-party to put forward special reasons why the costs order should not be enforced against them (2). Additionally, in Pakistan, it was contended that other members of MQM Pakistan would try to prevent enforcement by suggesting that they had never approved of the English action or had insufficient knowledge of the costs implications of the case. The master rejected both of these arguments, stating again that there was insufficient evidence in relation to Pakistani law and the difficulties in recovering costs could be attributed to the representative nature of the claim rather than the jurisdiction. Additionally, the mere fact that CPR 19.6(4) would need to be fulfilled was equally not enough of a barrier to enforcing an order against the claimant.

Political/Practical Obstacles to Enforcement

The master found that there were four key features of the claim and in the evidence indicating that, in her judgment, showed that  there would be a real risk of substantial obstacles to enforcement of a costs order by the defendants against the claimant:

(1) the claimant's status as a government minister, in his capacity as a member of MQM Pakistan;

(2) MQM London's status as a political party which (for whatever reasons) is effectively outlawed in Pakistan;

(3) the first defendant's status as a high profile and controversial political figure, who has been accused of serious criminal offences including money laundering (and convicted in Pakistan, in his absence, of murder), as well as facing criminal charges in London pursued with the co-operation of the Government of Pakistan; and

(4) the material from [the] two watchdog organisations as to the level of corruption in the court system generally, and specifically of the politicisation of the judiciary." (3)

A "Certificate of Guarantee" offered by the claimant as security for the defendants' costs was similarly found to face the same political obstacles to enforcement as a judgment would.

Comment

In exercising her discretion and making an order for security for costs in relation to the claim, the master found that political obstacles to enforcement, rather than legal obstacles to enforcement, were key factors in her decision. The judgment also reinforces the message that evidence relating to the law of another jurisdiction should be presented by an expert in the field, or risk being deemed to be inadmissible.

Endnotes

(1) Mance LJ, [62] in Nasser v United Bank of Kuwait [2002] 1 WLR 1868; [2002] 1 All ER 401, CA
(2) Howells v Dominion Insurance Company [2005] EWHC 552 (QB) at [25] & [28].
(3) Haque v Hussain and others [2021] EWHC 2347 (Ch) [52]
(i) [2021] EWHC 2347 (Ch) [52]