Cayman Islands litigation trends from the Middle East – Security for Costs

Walkers (Dubai) LLP has a full service Insolvency and Dispute Resolution team based in Dubai which regularly provides time-zone sensitive Cayman Islands and British Virgin Islands legal advice to a broad range of clients in the United Arab Emirates and elsewhere in the Middle East on all aspects of litigation, restructuring, insolvency and dispute resolution. In the light of a recent increase in instructions concerning applications for security for costs against individuals or companies domiciled in the United Arab Emirates, the below recent Cayman Islands case where Walkers acted for the successful applicant for security for costs against an individual based in Dubai, UAE gives a helpful summary of the approach that the Cayman courts will take.

The Cayman Islands is a "loser pays" jurisdiction in the context of litigation. That is to say, where a claimant is unsuccessful, it will ordinarily be ordered to pay a significant portion of the defendant's costs. To protect defendants from the risk of a claimant being unable to pay the defendant's costs in such circumstances, it may ask the Court to order the claimant to provide security for the defendant's costs where it has reason to believe the claimant would not be able to satisfy such costs.

In the case of Abdulhameed Dhia Jafar v Abraaj Holdings and others [FSD 203 of 2020 (NSJ)] , applications were made by the defendants in these proceedings for Abdulhameed Dhua Jafar (the plaintiff) to provide security for the defendants' costs. Mr Jafar was domiciled in the United Arab Emirates, which is outside of the Cayman Islands triggering one of the grounds under which a defendant can apply for security for costs. However, this alone is not sufficient to succeed in an application for security for cost as you must also demonstrate to the Court that it is just in the circumstances of the case to order the plaintiff to give security. The defendants argued that Mr Jafar refused to disclose his assets and their location, causing it to be necessary to enforce any cost awards in the onshore courts of the UAE, which they claimed was a "substantial obstacle and additional burden to enforcement amounting to a real risk of total non-enforcement of a costs order in Dubai." Having considered the expert evidence before it on this issue, on 10 August 2021 the Judge concluded that there was a real and serious risk that a Cayman Islands costs order might not be enforced in the UAE and that it was just to order Mr Jafar to provide security for costs.

The decision illustrates the willingness of the Cayman Islands Courts to award security for costs against an individual domiciled in the UAE and other foreign jurisdictions in which enforcement of Cayman orders is not straightforward, unless the individual discloses that they have assets domiciled in a jurisdiction that is not subject to the risks of non-enforcement outlined in this case.

For more information on this case, or if you require offshore legal advice, please contact any of the following individuals on the Insolvency and Dispute Resolution team in Dubai.



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