Adam Taylor wants Order 23 amended to treat EU residents equally

Adam Taylor is a litigator at Withers.

Order 23 rl (1) (a) of the rules of the Supreme Court enables the court to order that a plaintiff resident abroad give security for the costs of the defendant where just to do so. A recent European Court of Justice decision reopens the issue of a possible conflict with Article 6 (formerly 7) of the EU Treaty – non-discrimination on grounds of nationality.

On the face of it Order 23 applies to all non-residents, including English persons. It says nothing about nationality. The argument, however, is that it affects far more foreign than English nationals.

In Berkeley v McClelland [1990] the Court of Appeal upheld Order 23 after considering its objective of protecting defendants who would face real difficulty enforcing a costs order.

Also, residence abroad was not itself a ground for a security order – it was merely a precondition. And one powerful discretionary factor against imposing security on a foreign EU plaintiff was the ease of enforcement of judgements under the Brussels Convention. Despite all this, Order 23 now looks fragile as against EU plaintiffs.

In Mund and Fester (398/92) the ECJ condemned a German procedural rule which worked so that assets of non-resident defendants in German proceedings were liable to 'precautionary' seizure in circumstances where assets of German residents were not.

In practice this covertly discriminated against non-German nationals. So far as the EU was concerned, the Brussels Convention had undermined the presumption that foreign enforcement of judgements was more difficult.

Non-resident EU plaintiffs should invoke this case when facing an application for security. Order 23 may discriminate by exposing them to a risk of security – albeit rarely granted – in circumstances where English residents would not generally be liable.

Order 23 should be amended so that it is seen to treat EU residents equally, for example, by replacing the residence precondition with that of difficulty of enforcement.