Sheikh Tahnoon Bin Saeed Bin Shakhboot Al Nehayan v Kent (aka Joannis Kent) [2016] EWHC 623 (QB) (21 March 2016)

Neutral Citation Number: [2016] EWHC 623 (QB) Case No: HQ13X03549 IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION Royal Courts of Justice Strand, London, WC2A 2LL 21/03/2016 B e f o r e : MRS JUSTICE NICOLA DAVIES ____________________ Between: Sheikh Tahnoon Bin Saeed Bin Shakhboot Al Nehayan Claimant - and - John Kent (Also known as Joannis Kent) Defendant ____________________ Mr James Laddie QC (instructed by Simons Muirhead & Burton) for the Applicant Paul Burton (instructed by Davis Law) for the Respondent Hearing dates: 2 March 2016 ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © MRS JUSTICE NICOLA DAVIES: The defendant applies for security for costs of the entirety of the action. The claimant is a United Arab Emirates (UAE) national, resident in Abu Dhabi and a member of the ruling family. In these proceedings the claimant has acted as an investor in international real estate and allied business opportunities. The defendant is a business man with a particular interest in hotels and tourism. He is resident in Athens and carries on business, in particular in hotels in Greece and Cyprus. The claimant invested money with the defendant for the purpose of the hotel businesses. He issued his claim on 8 July 2013. It pleaded that pursuant to a Framework Agreement dated 23 April 2012 and governed by English law, the defendant owed him nearly £2,000,000, the Agreement obliged the defendant to discharge "operational debts" and to indemnify the claimant against certain costs. A Defence and Counterclaim dated 29 August 2013 admitted the Framework Agreement, it alleged that the defendant had paid many of the operational debts but not all. The Counterclaim alleged that the claimant had broken the Agreement to obtain the release of certain personal guarantees given by the defendant. Draft Amended Particulars of Claim were served in December 2013. The revised amount claimed was in the order of £18,000,000 referenced by sums owing under a Promissory Note also governed by English law. On 10 January 2014 newly appointed solicitors acting for the defendant notified the claimant's solicitors of an application for an interim security for costs order. On 7 March 2014 an Amended Defence and Counterclaim was served which set out in detail the circumstances as between the parties and alleged breach of contract. Declaratory relief was sought namely that the purported agreement under the Framework Agreement and/or Promissory Note and any transactions effected in accordance with the same should be set aside as having been entered into under economic duress and/or as the result of undue influence and/or negligent misrepresentation by the claimant and/or his representatives. Equitable compensation was sought for breach of the claimant's fiduciary obligations to the defendant. On 23 January 2014 Master McCloud conducted a case management conference. The Master's order provided for the filing and service of Amended Particulars of Claim and Amended Defence and Counterclaim. The Amended Defence and Counterclaim was in fact a substituted Defence and Counterclaim in that it advanced the defendant's case upon a different basis and with considerably more detail. The claimant took issue with the amended pleading which led to hearings before Master Eyre and a judgment from Cranston J [2015] EWHC 1176 (QB) on 5 May 2015. Cranston J upheld the amended defence pleading. Since that time there has been a hiatus in the proceedings. On 29 July 2015 the defendant amended his application for interim security for costs, he now seeks security for his costs of defending the claimant's claim in the proceedings. The sum sought is £1,000,000 to be provided by the claimant by payment into court as follows: i) £400,000 within 35 days of the date of the court's order; ii) £250,000 by no later than 35 days after the hearing of the restored CMC; iii) £350,000 by no later than 2 days before the date fixed for the trial in the action. Further the defendant claims that if security is not so provided, the claim be struck out and the defendant be entitled to judgment for his costs of the proceedings. The Law CPR 25.13 provides; 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 an order; and (b) (i) one or more of the conditions in paragraph (2) applies, or …. (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 or a Regulation State, as defined in section 1 (3) of the Civil Jurisdiction and Judgements Act1982; … The approach of the courts has been identified in a number of authorities. Nasser v. United Bank of Kuwait [2002] 1 WLR 1868 CA "58. The exercise of the discretion conferred by rule 25.13 (1) and (2) (a) (i) and (b) (i) raises, in my judgment, different considerations. That discretion must itself be exercised by the courts in a manner which is not discriminatory. In this context at least, I consider that all personal claimants (or appellants) before the English courts must be regarded as the relevant class. It would be both discriminatory and unjustifiable if the mere fact of residence outside any Brussels/Lugano member state could justify the exercise of discretion to make orders for security for costs with the purpose or effect of protecting defendants or respondents to appeals against risks to which they would be equally subject, in relation to which they would have no protection, if the claim or appeal were being brought by a resident of a Brussels or Lugano State. Potential difficulties or burdens of enforcement in states not party to the Brussels or Lugano Conventions are the rationale for the existence of any discretion. The discretion should be exercised in a manner reflecting its rationale, not so as to put residents outside the Brussels/Lugano sphere at a disadvantage compared with residents within. The distinction in the rules based on considerations of enforcement cannot be used to discriminate against those whose national origin is outside any Brussels and Lugano State on grounds unrelated to enforcement. … 61. Returning to rules 25.15(I) and 25.13(I) and (2)(a) and (b), if the discretion to order security is to be exercised it should therefore be on objectively justified grounds relating to obstacles to or the burden of enforcement in the context of the particular foreign claimant or country concerned. 62. The justification for the discretion under Rules 25.13 (2) (a) and (b) and 25.15 (1) in relation to individuals and companies ordinarily resident abroad is that in some – it may well be many – cases there are likely to be substantial obstacles to, or a substantial extra burden (e.g., of costs or delay) in enforcing an English judgment, significantly greater than there would be as regards a party resident in England or Brussels or Lugano state. … 63. It also follows, I consider, that there can be no inflexible assumption that there will in every case be substantial obstacles to enforcement against a foreign resident claimant in his or her (or in the case of a company its) country of foreign residence or wherever his, her or its assets may be. If the discretion under rule 25.13 (2)(a) or (b) or 25.15 (1) is to be exercised, there must be a proper basis for considering that such obstacles may exist or that enforcements may be encumbered by some extra burden (such as costs or the burden of and irrevocable contingency fee or simply delay). 64. The courts may and should, however, take notice of obvious realities without formal evidence. There are some parts of the world where the natural assumption would be without more that there would not just be substantial obstacles but complete impossibility of enforcement; and there are many cases where the natural assumption would be that enforcement would be cumbersome and involve a substantial extra burden of costs or delay. But in other cases- particularly other common law countries which introduced in relation to English judgments legislation equivalent to Part 1 of the Foreign Judgments (Reciprocal Enforcement) Act 1933 (or Part II of the Administration of Justice Act1920) – it may be incumbent on an applicant to show some basis for concluding that enforcement would face any substantial obstacle for extra burden meriting the protection of an order for security of costs. Even then it seems to me that the court should consider tailoring the order for security to the particular circumstances. If, for example, there is likely at the end of the day to be no obstacle to or difficulty about enforcement, but simply an extra burden in the form of costs (or an irrecoverable contingency fee) or moderate delay, the appropriate course could well be to limit the amount of the security ordered by reference to that potential burden. 65 I also consider that the mere absence of reciprocal arrangements or legislation providing for enforcement of foreign judgements cannot of itself justify an inference that enforcement will not be possible. …….." The standard of proof was identified by David Richards J in Rasral Khaimah Investment Authority & ors v. Bestfort Development LLP & ors [2015] EWHC 3197 (CH) at [22]. "22. Reading the judgement of Mance LJ as a whole, but in particular in the light of the passages cited above, it is clear to me that he was setting the bar at likelihood, rather than a lower test of a real risk. It is, however, fair to make these points. First, it does not appear from the judgment to have been the subject of argument between the parties. Secondly, the word "likely" will not necessarily mean more likely than not. Its meaning will depend on its context; see In Re Harris Simons Constructions Limited [1989] 1 WLR 368. The effect of an order for security for costs in a case where the defendant is pursuing a counterclaim was considered in B. J. Crabtree (Insulations) Limited v. GPT Communication Systems Limited (1990) 59 BLR 43 . Bingham LJ (as he then was) stated: "It is however, necessary, as I think to consider what the effect of an order for security in this case would be if security were not given. It would have the effect, as the defendants acknowledge, of preventing the plaintiffs pursuing their claim. It would, however, leave the defendants free to pursue their counterclaim. The plaintiffs could then defend themselves against the counterclaim although their own claim was stayed. It seems quite clear – and, indeed, was not I think in controversy that in the course of defending the counterclaim all the same matters would be canvassed as would be canvassed if the plaintiffs were to pursue their claim, but on that basis they would defend the claim and advance their own in a somewhat nobbled manner, and would be conducting the litigation (to change the metaphor) with one hand tied behind their back. I have to say this does not appeal to me on the facts of this case as a just or attractive way to oblige a party to conduct its litigation. …. One comes back, I think, at the end of the day to the reflection that this is a rule intended to give a measure of protection to a defendant who is put to the cost of defending himself against a claim made by an impecunious corporate plaintiff. It may in some cases be fair and just to make such an order even though the defendant is himself counterclaiming, but I am persuaded to be wrong to do so here because the costs these defendants are incurring to defend themselves may equally, and perhaps preferably, be regarded as costs necessary to prosecute their counterclaim…" The Defendant's Application. The defendant makes two submissions: 1. The defendant would face serious and substantial difficulties in seeking to enforce any costs award in his favour against the claimant having regard to the claimant's status as a senior member of the ruling family of Abu Dhabi and for the position generally with respect to the enforceability in the UAE of judgments of the court of England and Wales. 2. If the court were to ignore the standing of the claimant and concerns about the judicial system in the UAE the expert evidence before the court demonstrates that the likelihood is that a costs order from the courts in England and Wales would not be enforced in the courts in the UAE. In his fourth witness statement the claimant's solicitor describes the claimant as "a very senior member of the Abu Dhabi Royal family…… a person of very substantial substance….. an individual whose reputation is of paramount importance to him". During the course of the hearing those acting on behalf of the claimant confirmed that he is a half brother of the incumbent ruler and sixth in line in succession. The defendant relies upon the United Nations Report of the Special Rapporteur on the independence of judges and lawyers in the UAE. The document was distributed in May 2015 and placed before the Human Rights Council of the UN. It followed a visit to the UAE in January and February 2014, by the Special Rapporteur. The purpose of the visit was to examine the achievements made and challenges faced in the country in ensuring the independence of the judiciary and the free exercise of the legal profession. In the report the following is recorded; "The justice system in the UAE has developed into an elaborate and complex court system in a relatively short timeframe. Despite commendable progress and achievements the Special Rapporteur is concerned that the challenges and shortcomings she has identified are serious and negatively affect the delivery of justice, the enjoyment of human rights and the public's confidence in the judiciary. … I Federal Supreme Court 19 The Federal Supreme Court was established by the Constitution and is regulated by Federal Law No 10 of 1973. It is the highest court of the federal justice system and is located in Abu Dhabi. The Court has exclusive jurisdiction over a series of matters, including disputes between the various Emirates or with the Federal Government; the constitutionality of federal and local legislation and regulations; the interpretation of the Constitution and international treaties; offences directly affecting the interests of the federation, in particular crimes in relation to internal and external security; and conflicts of jurisdiction. ….. 20 The Supreme Court is composed of a president and four judges, as well as a sufficient number of alternative judges, appointed by decree of the President of the United Arab Emirates after approval by the Cabinet of Ministers and ratification by the Federal Supreme Council which is composed of the rulers of the seven Emirates. …. III Challenges to the independence and impartiality of the judiciary and the proper administration of justice. 27 Despite the remarkable progress and modernisation that has been achieved in a limited timeframe, the federal justice system of the UAE still faces serious challenges that directly affect the delivery of justice and the realisation of human rights. The independence and impartiality of the judiciary and the transparency and efficiency of the administration of justice can vary between the Emirates and between the local justice systems and the federal system. A. Legal uncertainty 28 The federal system of the United Arab Emirates is complex and can be difficult to understand, in particular for non nationals, who constitute the majority of the population. During a visit, the Special Rapporteur was told that because of the complex superposition of federal and local laws, it is sometimes difficult for the public to know where the boundaries lie between the federal and local justice systems. There also appears to be a lack of consistency between the applications of federal laws between the Emirates. The Special Rapporteur is concerned about reports that it is difficult for people to know which legal provisions are applicable to them depending on where they are in the Federation, and that laws are sometimes applied in an arbitrary manner, that creates ambiguity and mistrust with both law enforcement authorities and the justice system. … B. Independent and impartiality of the judiciary. 1 Separation of powers and interference in the independence of the judiciary. 30 The Special Rapporteur regrets that the principle of the separation of powers is not explicitly guaranteed in the Constitution. Together with the rule of law the separation of powers opens the way to an administration of justice that provided guarantees of independence and impartiality. There should be a clear demarcation in the respective competencies of the different branches of power. … 31 In that context, it is important to note that in the UAE, the legislative branch is not clearly separated from the executive. … 32 The administrative and financial supervision of the courts is a competence currently exercised by the Ministry of Justice. The composition of the Supreme Council of the Federal Judiciary is problematic, and out of a total of seven members only three are judges. The other members are the Attorney General and three representatives of the executive. … 33 While any direct interference in the work of judges or threat against their independence is extremely difficult to document, reports and allegations of pressure exerted by members of the executive, prosecutors and other state agents, in particular members of the State security apparatus are of serious concern to the Special Rapporteur. She is especially concerned that the judicial system remains under the de-facto control of the executive branch of government. … 2 Selection and appointment of judges 35 The president and judges of the Federal Supreme Court are appointed by presidential decree after approval by the Cabinet and ratification by the Federal Supreme Council. Other Federal judges are appointed by Presidential decree upon the proposal of the Minister of Justice. Appointments and nominations by the highest representatives of the executive branch can have a strong influence on judge's attitudes and behaviour. The Special Rapporteur is concerned that the current mechanism for appointing judges lacks transparency and may expose them to undue political pressure…. 3 Impartiality Public Perception and Confidence 37 The Special Rapporteur is concerned at reported incidences in which judges appear to have lacked impartiality and shown bias, especially with regard to non nationals of the UAE. Among foreigners residing in the UAE there seems to be an exception that the domestic courts cannot be trusted and more specifically that judges do not treat nationals in the same way as non-nationals. … D. Accountability and disciplinary measures 46 Another shortcoming affecting the defendants and impartiality of the judiciary is the absence of a written code of conduct for the judges, as currently only a draft exists. The judiciary in Abu Dhabi has a code of judicial conduct containing 10 fundamental rules and principles. Lack of a code of conduct to all judiciaries in the UAE could prove problematic and lead to discrepancies between the Emirates and between the federal and local justice systems. …. E. Fair trial, due process and administration of justice. 48 The Special Rapporteur is extremely concerned at the serious allegations of violations of due process and fair trial guarantees made during her visit, especially during her visit to State security related offences. The consequences that such violations might have on people's lives or respect their human rights cannot be over emphasised." The defendant relies upon this report, emanating from an independent source albeit resulting from a visit in 2014, as raising fundamental concerns as to the independence, fairness and transparency of the judicial system in the UAE. No specific concerns are raised regarding the civil jurisdiction but in view of the serious nature and breadth of concerns relating to the criminal sphere it is submitted that it would be remarkable if the civil justice system operated according to what are described by the defendant as western standards. The defendant also relies upon the report of Dr Habib Al Mulla, a UAE national and practising lawyer, Chairman of Baker and McKenzie Habib Al Mulla in the UAE. Dr Al Mulla has rights of audience before all the courts in the UAE, he has previously served as a member of UAE Federal National Council and was a member of the Legislative Committee which oversees the review for UAE federal laws. He has held other positions within the UAE relating to both law and finance. Dr Al Mulla holds a PhD from the University of Cambridge his dissertation being "Enforcement of Civil and Commercial Judgments under Multilateral and Bilateral Conventions". He acts both as an expert on UAE law and as an arbitrator. He was instructed on behalf of the defendant to provide an opinion on the conditions of enforcement of English money judgments in the UAE, including the anticipated procedure, timeline and cost, the procedure for enforcement and the procedure for execution if enforcement is successful. The report is CPR compliant containing the necessary statement of an expert's duties and the Statement of Truth. In summary the report makes the following points: i) There is no bi-lateral or multi-lateral convention that provides a route for the recognition and enforcement of an English court judgment or order in the UAE courts. In the absence of such conventions the UAE courts apply the local procedural law, in particular Article 235 of the Civil Procedures Code ("the CPC"). Article 235 states: "1- An order may be made for the enforcement in the UAE of judgments and orders made in a foreign country on the same conditions laid down in the law of that country for the execution of judgments and orders in the UAE. 2- An order for execution shall be applied for before the court of first instance within the jurisdiction of which it is sought to enforce, under the usual procedures for bringing a claim, and an execution order may not be made until after the following matters have been verified: a - that the courts of the UAE had no jurisdiction to try the dispute in which the order or judgment was made an that the foreign courts which issued it did have jurisdiction thereover in accordance with the rules governing international judicial jurisdiction laid down in their law: b - that the judgment or order was issued by a court having jurisdiction in accordance with the law of the country in which it was issued: c - that the parties to the action in which the foreign judgment was issued were summoned to attend and were correctly represented: d - that the judgment or order has acquired the force of res judicata in accordance with the law of the court that issued it, and e - that it does not conflict with a judgment or order already made by a court in the UAE and contains nothing that conflicts with morals or public order in the UAE." ii) Reciprocity Article 235 (1) identifies the importance of the principle of reciprocity. Its application by the UAE courts is said to be well illustrated by the ruling of the Dubai Cour de Cassation in case number 269/2005 which provides that the foreign law of the originating state in which the judgment was issued must be presented to the local court of the enforcing state in order to confirm the existence of reciprocal treatment in the provisions of enforcing foreign judgments in the originating foreign state and the conditions of enforcing foreign judgements in the UAE. In that case the court stated that " a judgment creditor who wishes to rely on the provisions of the foreign country must present a translated version of such law to the local court in the UAE". The UAE court refused to enforce the UK judgment as it was not able to determine whether the local UK laws adopt certain enforcement provisions of foreign judgments to the ones applied in the UAE. On this point Dr Al Mulla states "it is notable that is not sufficient for the parties seeking to enforce the foreign judgment or order to show that the foreign court where the judgment or order was made would enforce any UAE court judgment, the UAE courts would need to review all relevant foreign laws in that respect to be satisfied that the foreign court would enforce a UAE judgement or order by applying similar or less restrictive conditions to the ones set out at Article 235 of the CPC." Dr Al Mulla is not aware of any case where it has been established to the satisfaction of the UAE courts that reciprocity exists between the UAE and the English court so as to permit enforcement of UK judgments in the UAE courts. He is aware of several UAE court cases where the courts have refused the endorsement of English judgments/awards on the basis of the lack of reciprocity between the English courts and the UAE courts. In a footnote he identifies the relevant judgments. iii) As to Article 235 (2) Dr Al Mulla states the main impediment to enforcement is that the UAE courts do not recognise a foreign judgment in circumstances where they would otherwise have jurisdiction over the matter within the meaning of Article 235 (2)(a) of the CPC. In this context the jurisdiction of the UAE courts is governed by Article 20 of the CPC, pursuant to which the UAE courts have jurisdiction to hear all actions brought against UAE nationals or foreigners having an address or place of residence in the UAE. Dr Al Mulla cites the ruling of the Dubai Cour de Cassation judgment no.114 of 1993 in which the court refused to enforce a foreign money judgment issued by a court in Hong Kong holding that the UAE court could not enforce the judgment in circumstances where it would have had jurisdiction over the subject matter. The defendants were residents of the UAE, under UAE law the resident status conferred jurisdiction on the Dubai court. In this case it is the opinion of Dr Al Mulla that even if the UAE courts do not have jurisdiction to determine the pending substantive issue before these courts it is very likely that the UAE courts would hold that they do have jurisdiction to determine an application for a costs judgment or order against the claimant in respect of his claims in the English proceedings by strict application of Article 20 and 22 of the CPC. He concludes that there is a significant risk that the UAE courts would hold that they have jurisdiction over any claim against the claimant in the English proceedings including any claim for costs and on that basis alone would refuse to recognise or enforce any costs order pursuant to Article 235 (2a) of the CPC. iv) Public Policy In the UAE the term public order is synonymous with what Dr Al Mulla states western jurisdictions refers to as "public policy". The UAE definition of public policy is widely defined by Article 3 of the Federal law number 5 for 1985 on Civil Transactions law in the following terms: "Are considered of Public Policy, rules relating to personal status such as marriage, inheritance, dissent, and rules concerning governance. Freedom of commerce, trading in wealth, rules of personal property and provision of foundations on which society is based in a way that they do not violate final decisions and major principles of Islamic Shari'a." Dr Al Mulla states that there is a general lack of guidance, no coherent practice, nor development of a consensus on the rules and principles that constitute the body of public policy in the UEA. The discretion to determine the context and meaning of public policy remains with the UAE courts on a case by case basis. v) Finally, in his report Dr Al Mulla details the considerable procedural difficulties which the defendant would have to follow in order to obtain the payment of a substantial amount of costs including the time which would be taken in order to execute any enforcement order against the claimant's assets. The defendant also relies upon a case reported in January 2010 by Amnesty International in which it questioned the decision of a court in the UAE to acquit a sheikh and a member of Abu Dhabi's ruling family who was charged with causing the assault and rape of a man in 2004. The director of Amnesty International's Middle East and North Africa programme stated that they were not in court and could not be certain as to the judge's reasoning but identified it as a questionable verdict. Within the report it was stated that "it will do little to dispel concern that the sheik's position as a member of Abu Dhabi's ruling family may have been the decisive factor in assuring his acquittal, especially as it took the authorities several years to bring the prosecution". The defendant relies upon this case as illustrative of the manner in which the courts in the UAE treat a member of the ruling family. The defendant accepts that in principle there are processes which could and should permit the enforcement of foreign judgments in the courts of the UAE but he identifies the practical difficulties which would present namely: i) The lack of a bi-lateral convention; ii) The difficulty/impossibility in establishing reciprocity because of evidential difficulties; iii) The likelihood of the UAE court asserting jurisdiction over the subject matter of the defendant's claim; iv) The availability of an incoherent public policy exemption which would permit the courts to prevent enforcement. Points ii to iv are susceptible to the standing of the claimant within the UAE. By reason of these difficulties it is the defendant's case that he is likely to be deprived of the ability to recover any costs from the claimant. It appears to be undisputed that the claimant does not personally own assets within the jurisdiction against which the defendant could enforce any costs order. As to the two costs orders in the total sum of £60,000 which the claimant has paid, the defendant contends that the payments had the effect of keeping the claim alive. If the claimant was faced with a costs order having lost the substantive action there would be no incentive on his part to pay a substantially higher award of costs. Quantum The defendant contends that his costs reflect the fact that this is relatively high value commercial litigation and of importance to the defendant in terms of financial and reputational consequences. He lives and works in Athens, the hotel business at the centre of the dispute is managed from Athens, the key witnesses for the defendant live and work in Athens. Thus costs have been incurred which reflect the fact that the defendant's English lawyers have attended Athens on various occasions and will need to do so for the preparation of the trial. No costs have been sought in respect of those incurred in paying the defendant's former solicitors, a reduction of 10% has been allowed to reflect overlap between the costs of the defence and the costs of the current claim. The quantum has also been reduced by 1/3 to reflect the fact that a successful party will not generally recover more than 2/3 of its costs. The Claimant's Response. The claimant accepts that the provisions of CPR 25.13. (2) are met. He relies upon the discretion of the court as set out in the authorities above. Reliance is placed upon the fact that the claimant is a very wealthy individual who has more than sufficient assets to meet any order for costs against him. On two occasions the claimant, having failed on applications, has been ordered to pay costs which have been immediately met. Further, there has been significant delay by the defendant in applying for security and no justification for that delay. The defendant was served with the claim soon after its issue in July 2013, the Defence was entered in August. He waited over a year before formulating his first application for security for costs, and then delayed before issuing it at court. Relying upon the authorities it is submitted that the claimant should not be treated less favourably than a person within the Brussels or Lugano convention. It is also contended that the defendant had not adduced evidence sufficient to justify the exercise of the costs jurisdiction. The substantive point upon which the claimant relies is his contention that the claim arises out of a simple debt and is pleaded in those terms, the substance of the defence case is to be found in the Counterclaim. Reliance is placed upon the fact that within the pleaded Amended Defence and Counterclaim paragraphs 6 to 94 of the Defence are repeated which in reality represents the Counterclaim, put shortly the costs may be equally incurred in pursuing the Counterclaim rather than defending the action. Reliance is placed on the authority of Crabtree above as being illustrative of the situation in this case where it is submitted that the use of the security for costs rule is being invoked to obtain a tactical advantage rather than to obtain protection. No attempt has been made by the defendant to separate the costs of the Counterclaim from the Defence. In response to the defendant's expert report the claimant has submitted three reports, the author being Dr Salloum who would appear to work for Salloum and Partners LLC described as legal consultants. In no report is there any identification of Dr Salloum's qualifications or experience. It is not until the second report that a Statement of Truth is included. Within no report is a statement that the expert a) understands his duty to the court and has complied with that duty and b) is aware of the requirements of Part 35 CPR. The terms of the Practice Direction 35 are mandatory. The reports, if the same can be properly so described, fail to comply with the requirements of Practice Direction 35. The third report, which was received by the court on the morning of the hearing, relies upon self serving newspaper articles published in the UAE to support its contention that the UAE is "consistently ranked amongst the top countries for Rule of Law". The claimant is represented by counsel and solicitors who will be well aware of the requirements of CPR 35 and its Practice Direction. They have known for some time that the reports do not comply with the Practice Direction and have had ample opportunity to remedy the defects in the reports. If the court were to admit these reports the weight to be attached to them would be minimal however given the mandatory requirements of the Practice Direction and the failure by those who act on behalf of the claimant to comply with them, these reports are not be admitted in evidence. As to the report from the United Nations the point is made that no Terms of Reference are available, it is also out of date. The document deals primarily with public and criminal law, it does not specifically deal with enforcement in the civil/commercial courts. It does not distinguish between Abu Dhabi and other Emirate states. The focus of the report is upon crime and state security. The court has no means of checking the factual assertions contained in the Report. There is nothing in the report which would assist this court in its assessment of the progress of an enforcement of a costs order in the civil justice system in the UAE. As to the report of Dr. Al Mulla the claimant submits that what it does not state is that the defendant could not enforce a costs order in the UAE. It identifies difficulties but nowhere in the report says that such a claim would fail. Reliance is placed on the complex and sophisticated judicial system and Article 235 CPC as providing a legal mechanism for the defendant's application. Reciprocity is said by the claimant to be established because a court in England and Wales would enforce a foreign judgment. The report of Dr Al Mulla does not say that the enforcement of a costs order would offend public order or public policy. It is inviting the court to speculate that by reason of what is described as its incoherent nature, such enforcement would not take place. In reply on behalf of the defendants Mr Laddie QC informed the court that if the order for security for costs were to be made the defendant would consent to the Counterclaim being dismissed by consent. This, he said, would dispense of the Crabtree spectre, the substance of the defendant's response is contained in the Defence. Conclusion Undisputed is the position of the claimant as a member of the ruling family of Abu Dhabi, no issue is taken upon the contention that he is a man of wealth. It is agreed that the provisions of CPR 25. 13 (ii) apply and that if proceedings had to be initiated in UAE the provisions of Article 235 of the CPC would apply. The claimant has raised the issue of delay. He has pointed to no prejudice emanating from such alleged delay. The point goes nowhere. The issue in this case is the discretion conferred by CPR 25.13 (1) (2). The question is whether in seeking to enforce a costs order made by a court of England and Wales in the courts of the UAE the defendant would face such obstacles that he is likely to be deprived of the ability to recover any costs from the claimant. The United Nations report of the Special Rapporteur identifies challenges and questions to the independence and/or impartiality of the judiciary in the UAE. It identifies the fact that the principle of separation of powers is not explicitly guaranteed in the Constitution and that the legislative branch is not clearly separated from the executive. The composition of the Supreme Council of the Federal Judiciary is described as "problematic" in that of a total of 7 members only 3 are judges. Concern is expressed that the judicial system remains under the de-facto control of the executive branch of government. These are concerning observations emanating from a wholly independent source. However, this report does not deal specifically with the civil/commercial jurisdiction of the courts in Abu Dhabi. The particular focus is upon the criminal system, state security and human rights. The report of Dr Al Mulla provides illustrative detail of the difficulties of pursuing a claim for enforcement of a foreign judgment in the courts of the UAE. Striking is the fact that Dr Al Mulla is not aware of any case where it has been established to the satisfaction of the UAE courts that reciprocity exists between the UAE and the courts of England and Wales so as to permit enforcement of such judgments in the UAE courts. Concerning also is the opinion Dr Al Mulla in respect of Article 235 (2) when he stated that the main impediment to enforcement is that the UAE courts do not recognise a foreign judgment in circumstances where they would otherwise have jurisdiction over the matter, be it the substantive issue or the more limited matter of costs. Dr Al Mulla in his detailed and considered report, concludes that there is a significant risk that the UAE courts would hold that they have jurisdiction against any claim over the claimant in the English proceedings including any claim for costs and on that basis alone would refuse to recognise or enforce any costs order pursuant to Article 235. This court does not seek to minimise the knowledge and experience of Dr Al Mulla. What he is highlighting are the difficulties which the defendant could encounter in seeking to pursue a prescribed legal process identified within the rules of the courts of the UAE. Nowhere in the report does he state that the defendant could not successfully obtain enforcement of a judgment or costs order. In my view the identified difficulties would be better protected by a security for costs order tailored to the additional costs which the defendant would incur in pursuing these matters in the courts of the UAE. In his submissions to the court Mr Laddie QC referred to the obvious realities which the court had to consider. I accept that as a proposition but what the court must not do is speculate. To infer from the contents of Dr Al Mulla's report that it is likely that the defendant would be unable to enforce an order for costs against the claimant in the courts of the UAE would be to enter into the realm of speculation. In my view there are not objectively justified grounds upon which to conclude that this defendant is unlikely to successfully obtain enforcement of a costs judgment against this claimant in the civil/commercial courts of the UAE. Having considered the report of Dr Al Mulla I accept that the defendant is likely to have to embark upon a legal process which could be lengthy and thus costly in order to attempt to obtain enforcement of a costs order. It is in respect of this process that I would be minded to grant a security for costs order. Such an order would be limited in its amount and would not preclude this claimant from pursuing the claim. The application as presently drafted does not include such a claim, no quantification has been provided I am inviting both parties to provide written submissions as to whether such a course could be agreed or whether a further hearing on this point is necessary. BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII