Security for costs: an overview

by Practical Law Dispute Resolution in association with Allen & Overy LLP

A practice note discussing why and when a party may seek an order for security for costs in litigation. This practice note examines the grounds for making an application for security for costs under CPR 25, including against a claimant who is resident outside the jurisdiction, an impecunious company, or a nominal claimant. It explores how the court exercises its wide discretion when deciding whether to grant an order, balancing the potential injustice to a defendant facing unrecoverable costs against the risk of stifling a genuine claim. The practice note also addresses key practical considerations, such as the timing of an application, how the amount of security is quantified and the different forms it may take. Furthermore, it considers the roles of third-party funders and After the Event (ATE) insurance, the procedure for applying, and specific scenarios involving counterclaims, appeals, and applications against non-parties, providing valuable insights for litigators seeking to protect their defendant client's position, as well as for litigators acting for claimants facing a security for costs application.