In UK litigation, a defendant can apply for an order requiring the claimant to provide security for costs — a financial guarantee to cover the defendant’s legal costs if the claim fails. This is especially relevant for international claimants, including those based in China.
When Can Security for Costs Be Ordered?
A UK court may order security if:
- The claimant is based outside the UK.
- There are concerns the claimant cannot or will not pay the defendant’s costs if ordered.
- The claimant appears to be avoiding enforcement (e.g. hiding assets).
- The court finds it just and fair to do so.
How Much Security and How to Provide It
The amount depends on the estimated costs the defendant may recover. Security can be provided by:
- Paying into court,
- Providing a bank guarantee, or
- An undertaking from a third party.
Failure to provide security may result in the claim being paused or struck out.
Advice for International Clients
- Be prepared: Understand the potential for a security for costs application.
- Demonstrate financial standing early, if needed.
- Seek early legal advice to navigate UK court procedures confidently.
Conclusion
Security for costs is a common and powerful tool in UK litigation, especially in cases involving international claimants. Understanding how it works can help international businesses protect their position and plan effectively.
Our firm has extensive experience advising international, but particularly Chinese clients in UK legal disputes. If you would like to discuss how security for costs could affect your case, please contact our team for expert guidance.
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