Published on April 4, 2023
Jurisdiction challenges and non-party disclosure applications: Court of Appeal clarifies principle governing liability for costs

The Court of Appeal has confirmed that a non-party respondent to a CPR 31.17 application will generally be entitled to their costs of an unsuccessful jurisdiction challenge.

The judgment arose in connection with long-running litigation between two Russian businessmen, Mr Gorbachev and Mr Guriev, over Mr Gorbachev’s claimed interest in a USD6 billion Russian fertiliser business. Mr Gorbachev was seeking non-party disclosure under CPR 31.17 from two Cyprus law trusts.

The Trustees challenged the application on jurisdiction and merit. Whilst the Trustees successfully opposed the CPR 31.17 application on its merits, their jurisdiction challenge was dismissed.

The first instance judge held that as the jurisdiction challenge was a self-standing application, commenced by separate application notice, the general rule that a non-party respondent to a CPR 31.17 application should be entitled to their costs under CPR 46 did not apply, and pursuant to CPR 44.2(2)(a) costs should follow the event.

The issue for the Court of Appeal was whether the judge was correct to order the Trustees to pay Mr Gorbachev’s costs under CPR 44.2(2)(a), or if the general rule under CPR 46 applied.

The Court of Appeal allowed the Trustees’ appeal. Popplewell and Males LJJ held that the costs were within the letter and spirit of CPR 46.1(2). Dingemans LJ reached the same conclusion by analogy.

Males LJ noted that CPR 46.1(3) enables the court to depart from CPR 46.1(2) where it is appropriate to do so, such as when the non-party has acted unreasonably, and therefore the decision does not give an overseas non-party a “free ride” to challenge jurisdiction at the expense of an applicant.

Enyo Law LLP acted for the trustees of the Cyprus law trusts.

The decision is available here: Gorbachev v Guriev & Ors [2023] EWCA Civ 327.

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