Once parties to jurisdiction challenges appreciate the adverse costs consequences of not taking a realistic approach to the three true issues that arise the sooner these applications will take less time, consume less public resources and get disposed of more quickly.
Here’s a neat point for claimants facing a big costs bill at the end of a defendant’s successful jurisdictional challenge – and a warning for defendants planning on taking a ‘kitchen sink’ approach to such challenges.
Our readers will know that a claimant seeking to serve abroad has to satisfy the court of three matters. In summary: (i) there is a serious issue to be tried; (ii) the cause of action falls within one of the service gateways; and (iii) England is the proper place in which to bring the claim.
It can be tempting for a defendant advancing a jurisdictional challenge to put all three parts in issue to increase pressure on the claimant or to keep their options open in advance of a hearing.
But Abu Dhabi Commercial Bank PJSC v Shetty & Ors [2022] EWHC 1020 (Comm) shows the danger of taking that kind of approach, even if by the time of the hearing the focus has in reality narrowed to just one or two of the points.
HHJ Pelling QC thought that this was a paradigm situation for a departure from the usual rule that the winner recovers all of its costs:
In my judgment, it is entirely appropriate in reaching a conclusion about costs to consider the success of the parties in relation to each of those issues where, as here, all three were fully in dispute.
A defendant who had succeeded on one of the issues but had lost on the other two issues should not expect to recover its full costs of the jurisdictional challenge:
So to this case, I am entirely satisfied that the defendants have succeeded in the result and so in principle are entitled to recover at least some of the costs of the jurisdiction application. However, as I have said, that application depended on three true issues, two of which the defendants lost.
There is no need to descend to a granular analysis of the costs generated by each aspect of the challenge to reach that conclusion:
It is neither necessary nor desirable that I should descend into, or attempt to, analyse the issues further than that for costs purposes and, in particular to attempt to decide what parts of the evidence can be attributed to which true issues unless clearly and exclusively attributable to a true issue on which the defendants lost while succeeding in the ultimate outcome.
And it’s fairly straightforward for the judge to adopt a rough-and-ready approach based simply on the number of issues:
Whether I dismiss the point as unarguable, or as one which is arguable but only at trial (and so in the result had the same effect), is not helpful or informative in relation to the costs issue unless used in support of a submission that an issue was unreasonably resisted but that is an argument the claimants have said they are not advancing. In my judgment, the appropriate solution is to direct that each of the defendants should recover one-third of their costs of the jurisdiction challenge.
So, defendants take note!
Had they conceded the real issue to be tried and gateway issues, then it is likely they would have recovered a much higher proportion and possibly all their costs assessed due on the applicable (that is either the standard or indemnity) basis.