I am being sued by a person or company who has no money, or is based in another country – What protection have I got?

You may be confident of successfully defending a claim, but at the same time, you may be seriously concerned that your opponent is not able to pay any legal costs awarded against it. The usual costs award rule in court proceedings is that the unsuccessful party will be ordered to pay most of the successful party’s legal costs.

In certain circumstances, a defendant is able to make an application to the court early on in proceedings for an order that the claimant pays money into court as security for the legal costs that he might become liable to pay if he loses the claim. If the court grants this order, the claimant will not be able to proceed with his claim unless he makes a payment into court.

The legal issues surrounding such applications for security for costs are complex, and the court will only normally make such an order if you are able to present evidence to the court to show that your opponent’s finances are, or will become, critically fragile. You must also be able to show that you have good prospects of successfully defending the claim. Alternatively, you may be able to show the court that your opponent is a company or individual resident outside England and Wales, or is nothing more than a nominee claimant, or has given unreliable address details with the intention of evading a costs order. If your opponent is resident abroad, you will also need to show that there may be difficulty in enforcing any costs order in that foreign jurisdiction. This is not normally the case where your opponent is resident in another EU member state.