Contis Group Limited & Anor v Swipewallet Holdings Limited & Ors [2025] EWHC 3065 (Comm)

[2025] EWHC 3065 (Comm)Case No CL-2024-000484
IN THE HIGH COURT OF JUSTICE
KING'S BENCH DIVISION
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMMERCIAL COURT
Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 21/11/2025
Before
CHRISTOPHER HANCOCK KC(SITTING AS A JUDGE OF THE HIGH COURT)
Between
CONTIS GROUP LIMITEDClaimantsUAB FINANSINES PASLAUGOS CONTISClaimantSWIPEWALLET HOLDINGS LIMITEDDefendantsSWIPEWALLET EU OÜDefendantDIGITAL ANCHOR HOLDINGS LIMITEDDefendant
James Pickering KC and Christopher Pask (instructed by Cooley (UK) LLP) for ClaimantsJames Sheehan KC (instructed by Proskauer Rose (London) LLP) for DefendantsHearing Hearing dates: 30 April 2025 and 7 July 2025
Approved JudgmentThis judgment was handed down remotely at 10.30am on 21 November 2025 by circulation to the parties or their representatives by e-mail and by release to the National Archives..............................CHRISTOPHER HANCOCK KC (SITTING AS A JUDGE OF THE HIGH COURT)

MR CHRISTOPHER HANCOCK KC (sitting as a Judge of the High Court):

[1]The dispute concerns the operation and termination of two related agreements – a “Framework Agreement” and a “Participation Agreement”, together the “Agreements”– pursuant to which the Claimants provided services to the First and Second Defendants. The Agreements were originally entered into in November 2021, and were to last for five years. The Framework Agreement was between Contis Group Limited (“CGL”) and Swipewallet Holdings Limited (“Swipewallet Holdings”), and was dated 7 November 2021. The Participation Agreement was between UAB Finansines Paslaugos Contis (“UAB”) and Swipewallet EU OÜ (“Swipewallet EU”) and was dated 11 November 2021. I refer to the Swipewallet entities as “Swipewallet” for convenience. Finally, Digital Anchor Holdings Limited (“Digital Anchor”) guaranteed Swipewallet EU’s obligations to UAB by a Deed of Guarantee dated 16 November 2021.[2]Swipewallet, I was told, was at all material times an affiliate of the Binance group of companies, which operates the world’s largest cryptocurrency exchange. The subject matter of the Agreements was a programme (the “Programme”) by which customers of the exchange were able to use cryptocurrency held in their wallets to make purchases in fiat currency, mainly Euros, using physical or virtual VISA debit cards.[3]Those cards were provided by the Claimants pursuant to the Agreements. A customer would use their card to make payment for goods or services with a merchant. The necessary funds would be debited by the Claimants from a master account operated by UAB and funded by Swipewallet or related entities. The equivalent amount in cryptocurrency would in turn be debited from the customer’s account.[4]The Claimants provided the services (described in the Agreements as the “Canvas Services”) to Swipewallet, in return for fees calculated by reference to the number of card transactions and subject to monthly minimums, if the amounts of fees calculated by reference to the number of transactions fell below the minimums.[5]In January 2023, there was a novation of the Framework Agreement. The First Claimant was party to both the new and the old agreements, but the new agreement was with the First Defendant, in place of Swipewallet Holdings. I continue to refer to the Defendants as “Swipewallet”.[6]In 2023 a number of problems are said to have arisen. Those problems fell into three categories:6.1 The “VISA Issue”: In July 2023, following an investigation into UAB’s compliance with the rules governing the use of VISA card services, VISA determined that UAB was in breach of those rules in various respects. As a result, it directed UAB not to issue any new debit cards for the Programme. This meant that no new customers could be onboarded and no new cards could be issued to existing customers. VISA also threatened to suspend the use of cards altogether, though in the end it did not follow through with this.6.2 The “BoL Issue”: In April 2023, UAB’s financial regulator, the Bank of Lithuania (“BoL”), found that UAB was guilty (among other things) of systemic failures to safeguard client funds in accordance with Lithuanian law, and imposed a fine of €120,000. It was also reported in November 2023 that the BoL had fined UAB a further €840,000 for breach of anti-money laundering (“AML”) and terrorist financing prevention measures.6.3 The “KYC Requests Issue”: In summer 2023, the Claimants demanded significant further know-your-customer (“KYC”) documentation from Swipewallet for existing customer accounts, threatening to close or block those accounts if the documentation was not provided.[7]It is Swipewallet’s case that these matters put the Claimants in serious breach of their obligations under the Agreements, entitling Swipewallet to terminate the Agreements for material breach under their express terms (and repudiatory breach at common law), and on other grounds (not involving breach) related to the practical and economic impact of what had happened. Accordingly, on 13 October 2023 Swipewallet sent a termination notice to the Claimants.[8]The express term pursuant to which Swipewallet purported to terminate was clause 16 of the Framework Agreement (which was also incorporated by reference into the Participation Agreement). The relevant parts of that clause provided as follows:
“16.1 Without prejudice to any other rights or remedies available to it, Contis or the Client (the “InnocentParty”) may at any time by service of written notice on the Client or Contis (respectively) (the “DefaultingParty”) terminate a Participation or this Agreement if the Defaulting Party: (a) commits any material breach of this Agreement and that material breach is either: (i) not capable of remedy; or (ii) is capable of remedy, but the Defaulting Party fails to remedy it within 30 days of receiving a written notice from the Innocent Party containing full particulars of the material breach and requiring it to be remedied;… … 16.3 Without affecting any other right or remedy available to it, the Client may terminate this Agreement and/or a Participation Agreement with immediate effect on giving written notice to Contis if: (a) the withdrawal of any Regulator approval or the imposition of any law or regulation which means that this Agreement is substantially unable to operate in the manner contemplated or would make the operation of this Agreement uneconomical to operate on the part of the Client; or (b) this Agreement is substantially unable to operate due to the cause which is non-attributable to the Client.”
[9]The Claimants say that Swipewallet was not entitled to terminate the Agreements (on any ground, whether pursuant to clause 16 or at common law), and thus that its termination notice was itself a repudiation, which they purported to accept on 16 October 2023.[10]It is therefore common ground that the Agreements have been terminated. The key issues in dispute concern who is to blame and what remedies follow as a result.[11]The Claimants advance a primary claim in debt of €144 million, which they say fell due upon termination under clause 17.3 of the Framework Agreement in respect of fees to the end of the contractual 5-year term of the Agreements. Clause 17.3 provides as follows:
“ If Client terminates this Framework Agreement or Client Affiliates terminates a Participation Agreement for any reason other than a breach of clause 16.1(a) by Contis, then the greater of all Fees payable and the Guaranteed Monthly Minimum set out in Annex 1 of the Participation Agreement payable under any Participation Agreement shall become immediately payable and the Client shall pay or procure the payment of the same.”
[12]In response to this claim, apart from raising issues of construction of the clause, Swipewallet argue that clause 17.3 is a penalty clause.[13]Both sides also advance claims for damages for breach of contract against the other.[14]As regards these damages claims, a further issue of construction arises out of clause 15 of the Framework Agreement, which provides, in relevant part, as follows: 15. LIABILITY15.1 Nothing in this Agreement shall act so as to limit or exclude the liability of:(a) any party in respect of death or personal injury caused by negligence; for fraud or fraudulent misrepresentation; and/or for any other matter or liability which cannot be lawfully limited or excluded;(b) (c) (d) any party in respect of any breach of Clause 7 (Confidentiality) or Clause 8 (Data Protection); any infringement of any Intellectual Property Rights belonging to a third party; any fines imposed upon either party by a regulator or other authorising body as a result of a breach of the provisions in this Agreement; and(e) the Client in respect of its liability to pay the Fees in accordance with this Agreement.15.2 Each provision of this Agreement shall be read as subject to Clause 15.1 and no provision of this Agreement is intended to nor shall be interpreted as seeking to limit or exclude any of the types of liability as detailed in that Clause 15.1.15.3 Subject to clause 15.1, no party shall be liable to the other for: loss of business; loss of use; loss of profit; loss of anticipated profit; loss of contracts; loss of revenues; loss or damage to goodwill or brand; loss of anticipated savings; loss of data or use of data (other than to the extent arising under Clause 13.1 above); damage to reputation; and/or any consequential, special or indirect loss or damage in any case, regardless of whether or not the other party was aware or had been made aware (or ought reasonably to have been aware) at the time of signing this Agreement of the risk that such loss or damage might occur.” 15.1 Nothing in this Agreement shall act so as to limit or exclude the liability of: (a) any party in respect of death or personal injury caused by negligence; for fraud or fraudulent misrepresentation; and/or for any other matter or liability which cannot be lawfully limited or excluded; (b) (c) (d) any party in respect of any breach of Clause 7 (Confidentiality) or Clause 8 (Data Protection); any infringement of any Intellectual Property Rights belonging to a third party; any fines imposed upon either party by a regulator or other authorising body as a result of a breach of the provisions in this Agreement; and (e) the Client in respect of its liability to pay the Fees in accordance with this Agreement. 15.2 Each provision of this Agreement shall be read as subject to Clause 15.1 and no provision of this Agreement is intended to nor shall be interpreted as seeking to limit or exclude any of the types of liability as detailed in that Clause 15.1. 15.3 Subject to clause 15.1, no party shall be liable to the other for: loss of business; loss of use; loss of profit; loss of anticipated profit; loss of contracts; loss of revenues; loss or damage to goodwill or brand; loss of anticipated savings; loss of data or use of data (other than to the extent arising under Clause 13.1 above); damage to reputation; and/or any consequential, special or indirect loss or damage in any case, regardless of whether or not the other party was aware or had been made aware (or ought reasonably to have been aware) at the time of signing this Agreement of the risk that such loss or damage might occur.”

The applications:

[15]Apart from issues of timing, there were two issues in front of me.15.1 The first application was one by the Claimants for a bifurcated trial. In this connection, the Claimants sought an order for bifurcation or a split trial, so that liability and quantum on their primary claim (i.e. their claim in debt), together with the issue of the proper construction of clause 15.3, would be determined at stage one, and, if that primary claim was dismissed, the quantum of their alternative claim or of Swipewallet’s counterclaim was determined at stage two. This was resisted by Swipewallet.15.2 The second application was one by the Defendants for security for costs.[16]I deal with each application in turn, starting with the bifurcation application, which was argued, in the main, at the first hearing. Bifurcation: Applicable principles

Bifurcation:

[17]Both parties agreed that the court’s power to order a split trial is part of its general powers of case management under CPR 3.1, which are to be exercised in accordance with the overriding objective.[18]There was no dispute as to the applicable principles, which were conveniently summarised by Peter MacDonald Eggers KC (sitting as a deputy judge in the Commercial Court) in Jinxin Inc v Aser Media Pte Limited [2022] EWHC 2431 (Comm) at [23] as follows:(1) Whether the prospective advantage of saving the costs of an investigation of the issues to be determined at a second trial if the determination of the first trial renders it unnecessary to determine such issues outweighs the likelihood of increased aggregate costs if a further trial is necessary.(2) What are likely to be the advantages and disadvantages in terms of trial preparation and management?(3) Whether a split trial will impose unnecessary inconvenience and strain on witnesses who may be required in both trials.(4) Whether a single trial to deal with all issues will lead to excessive complexity and diffusion of issues, or place an undue burden on the Judge hearing the case.(5) Whether a split may cause particular prejudice to one or more of the parties (for example by delaying any ultimate award of compensation or damages).(6) Whether there are difficulties of defining an appropriate split or whether a clean split is possible.(7) What weight is to be given to the risk of duplication, delay and the disadvantage of a bifurcated appellate process?(8) Generally, what is perceived to offer the best course to ensure that the whole matter is adjudicated as fairly, quickly and efficiently as possible?(9) Whether a split trial would assist or discourage mediation and/or settlement.[19]Before I turn to a consideration of these matters, then, in my judgment, it is helpful to consider the issues which fall to be decided, the order in which they will be decided, and the evidence likely to be relevant to each. The issues, in my judgment, will be as follows: 19.1 The first set of issues will be whether Swipewallet were entitled to terminate pursuant to clause 16, the provisions of which I have set out above. This will involve consideration of a number of sub-issues.19.1.1 The first will be whether Swipewallet were entitled to terminate pursuant to clause 16.1. This in turn will involve a consideration of whether the Claimants were in breach of contract by reason of the matters complained of, and whether that breach was a material breach. If Swipewallet were entitled to terminate, then, as I understood matters, the parties agreed that they would have a claim for damages. This claim for damages would, in turn, involve the need for consideration of clause 15.3, to determine whether it limited any such counterclaim.19.1.2 The second will be whether Swipewallet were entitled to terminate pursuant to clause 16.3. This allegation does not involve an allegation of breach, so that it would not give rise to a counterclaim – a proposition which again I understood the parties to be in agreement on.19.1.3 The third issue will be, if the termination was unjustified, whether this was itself a repudiation. I understood the parties to be in agreement that this would be the case.19.1.4 If the termination was unjustified, and there was thus a repudiation, the fourth issue will be what the appropriate measure of loss would be. The Claimants’ primary claim is for the “minimum” earnings under the contract of Euros 144m. This issue involves questions of construction and consideration of the allegation that the clause is a penalty clause. It would only be if this primary claim was unsuccessful that it would be necessary to consider the alternative unliquidated damages claim.

Swipewallet’s contentions:

[20]Swipewallet contend that the Claimants’ application rests on the proposition that bifurcation will save unnecessary cost and court time, because resolution of the quantum issues will involve additional cost and not all of that cost will be necessary if there is a split trial. I accept that as a fair and pithy characterisation of the Claimants’ main proposition.[21]In this regard, Swipewallet accept that the Claimants and Swipewallet cannot both succeed on liability, and so, in the final analysis at the ultimate conclusion of the case, it will be possible to say that it was unnecessary to determine all of the quantum issues. However, they say that this is insufficient to warrant bifurcation, for various reasons.21.1 First, they say that in many cases one can say that a trial on one issue will render another issue irrelevant. This is not unusual and it does not in itself justify a split trial.21.2 Secondly, they argue that in this case one cannot say at this stage that it will be unnecessary to determine any given issue of quantum. It is frequently the case that the determination of the trial judge on issue A makes determination of issue B unnecessary, but the judge nevertheless determines issue B, in case there is an appeal for example. They argue that that is a real possibility here in respect of the different permutations on quantum. The only way to be sure to avoid the unnecessary determination of any quantum issue would be to stay all issues of quantum pending any appeal against the decision on liability. But this is not the usual course and would risk further significant and unjustified delay in the resolution of the case.21.3 Thirdly, although the Claimants have provided a table of what they suggest the likely costs of the quantum issues would be, estimating those costs at about £1,000,000, the estimates have not been properly explained, and it is not at all clear what they are said to be based on, in circumstances where neither party has pleaded a particularised case on quantum. They appear to be little more than finger-in-the-air guesses. The vast bulk of the suggested costs relates to the preparation of expert reports, plus Model B disclosure by the Claimants and any witness evidence (£480,000 to £650,000). However, the court and the parties have a duty to restrict such evidence to that which is reasonably required, pursuant to CPR 35.1, and given that quantum is likely to be in large part an arithmetical exercise (albeit a potentially complex one), these figures seem clearly disproportionate.21.4 In any event, it is overly simplistic to assume that these costs would be saved by a split trial. Adopting a more proportionate approach, the costs of the quantum phase are likely to be limited in comparison with the costs of the claim as a whole. Swipewallet has produced a forecast of its costs (on its part) for the purposes of the Security Application, which anticipates total costs of all quantum and liability issues of US$4.9 million (currently equivalent to approx. £3.7 million) See below on the updated estimates. . The Claimants have not commented on this or produced any estimate of their own likely costs.21.5 A single trial will obviously be longer than a stage one split trial, but this is not a reason to bifurcate. Any potential saving must be set against the likelihood of increased aggregate costs if a further trial is necessary. A further trial will only be unnecessary if the Claimants succeed in a whole series of arguments, namely that:(a) Swipewallet was not entitled to terminate;(b) clause 17.3 of the Framework Agreement is engaged in principle;(c) that provision should be construed as triggering a liability in debt for unearned fees for the whole of the remainder of the 5-year term; and(d) this does not amount to an unenforceable penalty. This is only one of five possible permutations. The other four being represented by the Claimants losing on any of the four issues identified.21.6 The Claimants suggest that a liability-only trial will take 10 days and a full trial 15 days. On this basis, a quantum-only trial would be expected to take at least 5 days, bearing in mind the need to consider overlapping issues. Estimating the cost of a quantum-only trial is difficult at this stage, but it is likely to be substantially more expensive to split the two, and have the parties and their legal teams get back up to speed and prepare for another trial after the first.21.7 The courts regularly warn of the dangers of false economy in ordering a split trial, particularly where it is difficult to draw a bright line between ostensibly separate issues: see for example Soroka v Payne Hicks Beach [2025] EWHC 602 (Ch) at [19].21.8 These observations are apt in this case, where there are at least two areas of overlap between liability and quantum.21.8.1 First, the penalty argument:21.8.1.1 This will involve an assessment of whether clause 17.3 of the Framework Agreement imposes a detriment on the contract-breaker out of all proportion to any legitimate interest of the innocent party in the enforcement of the primary obligation. Cavendish Square Holding BV v Makdessi [2016] AC 1172 at [32]. This in turn will require an assessment of (among other things) the anticipated performance of the Programme at the time of the Framework Agreement in 2021, and at the time of the novated agreement in 2023.21.8.1.2 Similarly, the Claimants’ alternative damages claim will no doubt be based on projections of performance from time to time. This is likely to overlap with the time at which the penalty argument falls to be assessed.21.8.2 Secondly, issues as to the impact of the Claimants’ breaches on the performance of the Programme. Thus, Swipewallet’s case is that the VISA Issue rendered the Framework Agreement substantially unable to operate (and/or to operate in the manner contemplated), and/or uneconomical to operate on the part of Swipewallet, giving Swipewallet a right to terminate under clause 16.3(a) and/or (b) of the Framework Agreement. Swipewallet also claims that the KYC Requests Issue rendered the Framework Agreement substantially unable to operate, again giving rise to a right to terminate. More generally, it is Swipewallet’s case that the Claimants’ breaches of contract were material and repudiatory (which engages the question, among others, of whether Swipewallet was deprived of substantially the whole benefit of the contracts).21.9 These are all issues of liability. But to determine them, the court will have to consider (among other things) the economic impact of the breaches of contract on Swipewallet. This will require precisely the sort of analysis (by reference to sums that would have been earned from customer transactions but for the Claimants’ breaches) that is required for the counterclaim.21.10 The overlap is not wholesale but it is clear, and provides a stark illustration of the dangers outlined in Soroka. There is a serious risk of the parties having to conduct overlapping disclosure and evidence-gathering exercises: for example, Swipewallet’s principal witness is likely to give evidence on issues of both liability and quantum. Moreover, the Claimants’ approach highlights the risk of the court determining issues at stage one (a) without being able to consider their impact on stage two, (b) on incomplete evidence, or both. For example, the Claimants say that they intend to rely on factual evidence on quantum from a witness within their finance function, who will not give evidence on liability. This does not however remove the overlap; on the contrary it makes it all the more problematic, because the evidence of this witness could be expected to be relevant to the penalty issue, but would be withheld from the trial at which that issue is determined. The Claimants have suggested that overlap may be reduced by binding determinations on relevant issues at the liability trial. This simply shows that the court would be asked to make findings on incomplete disclosure and evidence and without being able properly to consider the impact of its determination on related issues.21.11 There is inherent unfairness in a situation in which the first trial could (in theory at least) result in a money judgment in the Claimants’ favour, but could not result in a money judgment in Swipewallet’s favour because all issues of quantum on the counterclaim are deferred to a second trial. A split trial would also cause significant delay to the determination of Swipewallet’s counterclaim, as Swipewallet argued at the first hearing:21.11.1 A full trial could be listed in June 2026 (the Claimants’ estimate) or November 2026 (Swipewallet’s estimate). By contrast, a stage one trial could be listed in April 2026 (the Claimants’ estimate) or October 2026 (Swipewallet’s estimate). This would likely defer the final determination of the counterclaim until well into 2027, even assuming it is not held up by an appeal.21.11.2 Such a delay would be of serious concern to Swipewallet, since the Claimants’ financial position is poor and deteriorating. I consider this further below.21.11.3 The Claimants do not appear to be generating any income, whilst continuing to incur the costs of their continued existence (and of these proceedings). The longer the determination of the counterclaim is delayed, the greater the prejudice to Swipewallet’s prospects of recovery on that counterclaim.21.12 The disadvantages of a split trial outlined above are only exacerbated by the risk of an appeal. At this stage, the risk of an appeal is a real one: the Claimants’ primary case raises a number of issues of construction, as well as analysis of the penalty question; other liability issues will similarly raise questions of construction. If an appeal led to further delay in the resolution of the overall dispute, the risks to Swipewallet’s recovery prospects would become more acute. If, on the other hand, the quantum phase were not stayed pending any appeal, then any costs saving from a split trial would risk being lost altogether.21.13 As regards the impact of a bifurcated trial on mediation or settlement the Claimants propose a total deferment of any investigation of quantum—of anything except their own primary claim—until stage two. Neither party has even pleaded a case on quantum of the other claims at this stage, and would not do so until after the liability trial.There is accordingly almost no backdrop against which any mediation or settlement discussions could meaningfully proceed at this stage, particularly sincethe real obstacle to settlement is unlikely to be the number of issues, but the lack of mutual articulation and understanding of the parties’ cases on the bottom-line issues of quantum.[22]Following the adjournment of this question at the end of the first hearing, further evidence was served by both parties as to the financial standing of the Claimants. That evidence revealed the following:22.1 As regards the First Claimant:22.1.1 That Claimant was no longer trading. It was pursuing this litigation with the benefit of a loan of £9,000,000 from its parent company, which it was drawing down at the rate of £250,000 per month.22.1.2 Accordingly, said the Defendants, any delay in the trial of the Defendants’ counterclaim, if that counterclaim was successful, would mean that the Defendants’ right to prove in the liquidation of the First Claimant would be prejudiced, since claims of unsecured creditors would be shared pari passu. The debt of the First Claimant to its parent company would increase over time, as the loan was drawn down, so that the right of the Defendants to a share of the assets of the First Claimant would be reduced over time.22.1.3 The Defendants estimated that the delay in the period between a trial of the first stage of a bifurcated trial (in July or October 2026) and a full trial (at least a year later) would lead to an increase in the indebtedness of the First Claimant to its parent company of some £3m, which would reduce the right of the Defendants to recover on a successful counterclaim.22.2 As regards the Second Claimant, whose claim had been assigned to the First Claimant, but who was still a Defendant to the Counterclaim, the Second Claimant’s financial position was worsening, as its accounts demonstrated.[23]Accordingly, said the Defendants, bifurcation should not be ordered because Swipewallet would be prejudiced by reason of such because, if the counterclaim was successful, the amount that Swipewallet would recover would be reduced by reason of the delay in the determination of its counterclaim. The Claimants’ contentions:[24]I have noted above the Claimants’ principal contention, namely that to bifurcate the trial is likely to lead to a substantial saving in costs. As I have noted, the Claimants estimate that the costs that will be saved amount to some £1,000,000. It is their case that on any view some of these costs will be saved. If their claim for the guaranteed monthly minimum amount succeeds, then the quantum issues will not need to be determined at all; and if it fails, then the parties will know whose unliquidated damages claim needs to be determined – it will never be necessary to determine both.[25]Contrary to Swipewallet’s suggestion, there is, say the Claimants, a clear, bright line between the Stage 1 issues (i.e. everything but quantum) and the Stage 2 issues (i.e. quantum of claim or counterclaim). As to the alleged areas of overlap, these are very limited, they contend:25.1 Contrary to the suggestion that the penalty clause argument will require a consideration of much of the same evidence as that required to assess the quantum of Contis’ alternative, primary, damages claim, the only evidence relevant to the penalty clause argument will be projections made at the time of the agreement, since the issue is one of construction of the agreement and must be judged as at that time. Evidence of what actually happened will be irrelevant.25.2 Secondly, the argument that the evidence relevant to the question of whether Swipewallet was entitled to terminate pursuant to clause 16.3, because the effect of the matters relied on by Swipewallet was to render the Programme uneconomic from its point of view or made the Agreement substantially unable to operate in the manner contemplated will overlap substantially with the evidence required for the quantum issues is overstated. The enquiry required for the damages issues will be much more far reaching than the evidence required for this argument under clause 16.3.25.3 Thirdly, any argument to the effect that the evidence relevant to the issue of repudiatory breach by the Claimants overlaps with issues of quantum is again overstated. The argument based on repudiatory breach will focus on the impact of the three matters relied on by Swipewallet in support of its termination on the benefits derived by Swipewallet from the Programme, which is a very different and narrower issue than that which it would be necessary to examine as part of the quantum issues.[26]Next, the Claimants contended that it would be beneficial to determine liability sooner rather than later, because this would be likely to promote settlement, due to the fact that both parties would have a much clearer idea of where they stood.[27]Finally, the Claimants addressed the allegation that delay would unduly prejudice Swipewallet because of the Claimants’ deteriorating financial position.[28]As to Contis’ financial position:28.1 Contis’ financial position is stable and has crystallised pending the outcome of these proceedings; its only material outgoings are the costs of these proceedings which are paid for by its parent, Solaris, in pursuit of its only asset, its claims in these proceedings. Its liabilities are limited to the obligation to repay Solaris and to any liability under Swipewallet’s Counterclaim. Its costs exposure is covered by the ATE Policy.28.2 As to the position of Solaris, on 3 February 2025 it secured very substantial additional investment of €140m and is now (via an acquisition) majority owned by SBI Ventures Two Co., Ltd, in turn owned by SBI Holdings, Inc a Japanese financial services company group which generates annual profits of close to £1 billion.28.3 Any concerns as to Contis’ potential insolvency (and therefore the value of its obligations to UAB) are allayed by that acquisition, which required regulatory approval from the German authorities (“BaFin”) and the ECB. In order to satisfy both of those bodies, the SBI Group provided capital and solvency commitments in respect of Contis’ parent, Solaris, through to 2028.[29]As to UAB:29.1 Whilst UAB has been sold, it has assigned all of its claims in these proceedings to Contis, which in turn has indemnified the purchaser, Paysera, against any liabilities UAB may incur as a result of these proceedings (which is plainly satisfied by the protection offered by that indemnity and Contis’ position generally).29.2 Swipewallet’s evidence focuses on UAB’s position between 2023 and 2024; a period when UAB’s position understandably deteriorated, because, as is its case, Swipewallet unlawfully terminated the Agreements which are the subject of these proceedings.29.3 In any event, UAB has now provided updated financial information to Solaris which confirms that it is trading and meeting regulatory requirements for capital and liquidity.[30]The likely period of time between a full trial and Trial 2 is, on any sensible assessment, likely to be in the region of 6 months. In light of the additional evidence now provided by the Claimants, it is highly unlikely that there will be any material change in Contis’ financial position, let alone one that would cause prejudice to Swipewallet over and above the reasonable delay which is inherent in the bifurcation of any claim.[31]Given Solaris’ refinancing and the clear commitments given by the SBI Group, there is no material risk of Contis becoming insolvent. Further, there remain significant questions around the quantification of Swipewallet’s Counterclaim. Prior to the purported termination of the Framework Agreement and the Participation Agreement, the Programme Manager at Swipewallet confirmed to the Claimants that the Programme was not sustainable and was apparently loss-making from as early as March 2023.[32]Swipewallet’s evidence does not address that evidence at all and only provides the broadest of estimates as to the quantum of the Counterclaim.

Discussion and conclusions:

[33]As I have already noted, the parties were agreed that the decision that I had to take was quintessentially one of case management, and therefore one of the exercise of a judicial discretion.[34]I indicated at the end of the first day’s hearing that I was minded to bifurcate the trial, in view of the inevitable saving in costs that this would be likely to produce. However, I also indicated that I wished to hear further argument on the question of the prejudice which could be caused to the Defendants by delay in the resolution of its counterclaim, given the alleged worsening of the Claimants’ financial position. Furthermore, I indicated that I wished to have further evidence on this point. It was in the light of this direction that the further evidence to which I have referred was served.[35]Having considered that further evidence, and the further submissions made at the second hearing, I remain of the view that, as a matter of case management, the best approach is to order bifurcation of the trial. I have reached this conclusion for the following reasons.[36]I start with Swipewallet’s contentions, which in my view were essentially fourfold.36.1 The first was that any order for bifurcation involved risks of increased costs, and inherent uncertainty. I accept that submission; but I take the view that it is necessary to assess the risks and weigh up the pros and cons of bifurcation as opposed to the refusal of bifurcation. I also accept that the savings involved in an order for bifurcation are uncertain, but I take the view that there are likely to be significant savings if the Claimants are correct.36.2 The second was that there was a significant degree of overlap between the first stage of the trial and the second stage of the trial, in particular because of the arguments on the alleged penalty clause and the arguments as to the potential impact on Swipewallet of any breach on the part of the Claimants. In my judgment, these risks are overstated. I accept the Claimants’ submissions that the argument on the penalty clause will be confined to the projections at the time of the contract, and that therefore the enquiry as to these matters will not involve detailed consideration of the quantum of the counterclaim; and I also accept the Claimants’ submissions that the extent of the inquiry as to the impact of the alleged breach of clause 16.3 will not be the same as the inquiry relating to the quantum of the counterclaim.36.3 The third was that to split the trial would be likely to make settlement more difficult, because the calculation of the quantum of each party’s claim would be delayed. I do not accept this submission, and indeed I accept the Claimants’ submission that a bifurcation would make settlement more likely. In my judgment, it should be possible for each party to quantify the likely quantum of its claim on the basis of the information currently available, and bifurcation would mean that each party would know more rapidly where it stood.36.4 The last was as to the possible prejudice to Swipewallet in the event that there is bifurcation. The argument that I have noted above was as to the potential worsening in the financial position of the Claimants if the trial of the counterclaim was delayed because of bifurcation. In my judgment, the strength of this argument depends on a number of factors.36.4.1 First, the argument is dependent on the proposition that Swipewallet’s counterclaim is more likely to succeed than the Claimants’ claim. If the counterclaim fails, then this prejudice will not arise.36.4.2 Secondly, the argument is also dependent on Swipewallet succeeding in showing that it was entitled to terminate on a ground that involves a breach of contract on the part of the Claimants. As I have noted above, only certain grounds of termination would involve a breach on the part of the Claimants.36.4.3 Thirdly, the argument is dependent on the quantum of the counterclaim. Whilst I have an estimate of this, I have no way of assessing the likely accuracy of that estimate.36.4.4 Fourthly, the argument depends on the suggestion that if the trial were to be bifurcated, the recovery that Swipewallet might make would be reduced because of the delay in the determination of its counterclaim. Again, the evidence on this is not clear.36.4.4.1 Swipewallet’s claim against the Second Claimant might or might not be prejudiced. Whilst the Second Claimant, now under different ownership, seems to be less profitable than it was, it is not possible for me to tell whether this will continue to be the case in the future.36.4.4.2 I accept that it is, on the other hand, likely that Swipewallet’s claim against the First Claimant will be prejudiced to some degree. I do not accept the submission that the First Claimant will remain solvent because its parent has had an injection of cash. However, in weighing up the upsides and downsides of bifurcation, it is necessary to analyse whether the First Claimant would be better off if the trial were to be bifurcated (with a consequent saving in costs) as opposed to not bifurcated (with an increased expenditure funded by its parent, which would therefore be owed a greater amount in any liquidation). On the figures that I have, it is not possible to draw any firm conclusion on this point.[37]As against what I regard as the speculative prejudice to Swipewallet which would be caused by bifurcation, there is what I regard as the clear advantage of bifurcation to which I have already referred, namely the saving of costs involved in a bifurcation.[38]Weighing up these potential advantages and disadvantages of bifurcation, I have decided that the best course, in the exercise of my case management discretion, is to order bifurcation.

Security for costs:

[39]The second application that I need to deal with is Swipewallet’s application for security for costs. I consider this on the basis of the decision that I have already reached, namely that the trial should be bifurcated.[40]The basis for this application is CPR 25.27(b)(ii), which provides as follows: Conditions to be satisfied 25.27. The court may make an order for security for costs if— (a)it is satisfied, having regard to all the circumstances of the case, that it is just to make such an order; and (b)either an enactment permits the court to require security for costs, or one or more of the following conditions apply— (ii)the claimant is a company or other body (whether incorporated inside or outside England and Wales) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so;[41]Swipewallet seek security for their costs of the claim, because there is reason to believe that the Claimants would be unable to pay those costs.[42]The Claimants have not sought to contest the suggestion that they do not have the resources to pay Swipewallet’s costs, if the Claimants do not succeed (other than out of the proceeds of the ATE insurance that I deal with below). Accordingly, I need say no more as to the Claimants’ resources.[43]Instead, the Claimants have put forward three arguments, which I deal with below, together with Swipewallet’s submissions as to those arguments. Those arguments are as follows: First, the Claimants argue that they have, responsibly, taken out an ATE insurance which provides sufficient security to Swipewallet. It is their contention that this involves an issue of jurisdiction, relying on the Court of Appeal decision in Premier Motorauctions Ltd v PricewaterhouseCoopers LLP [2017] EWCA Civ 1872, as well as a question of discretion. I accept, on the basis of that decision of the Court of Appeal, that the question of whether the ATE insurance provides sufficient security for Swipewallet’s costs does indeed arise both at the jurisdictional and discretionary stage.43.1 Secondly, the Claimants contend that their claim is the mirror image of Swipewallet’s counterclaim, that it is happenstance that they are the Claimants, and that it would therefore be wrong in principle to award security for costs against them.43.2 Thirdly, the Claimants argue that to award security would result in a stifling of their claim, making it unjust to order such.43.3 The Claimants say that these last two issues involve questions of discretion, which arise (along with the issue of the adequacy of the ATE insurance) if I determine that I have jurisdiction to order security.[44]I consider each of these points in turn, beginning with the issue relating to the ATE insurance. The ATE policy Swipewallet’s submissions:

The ATE policy

[45]Although it accepts that it is possible in principle for an ATE Policy to provide adequate security for costs, Swipewallet contended that it is rare that such a policy provides as good a form of security as payment into court or a bank guarantee. The question ultimately is whether there is a real, as opposed to fanciful, risk that the policy will not respond in full: Asertis Ltd v Bloch [2024] EWHC 2393 (Ch) at [20]. They said that the risk is clearly more than fanciful in this case, for a number of reasons. 45.1 First, the insurer may cancel the ATE Policy, without notice to Swipewallet, in a number of circumstances under clause 4.8 e.g. where the insurer and the Claimants’ solicitors agree that:45.1.1 The legal merits of, and/or the prospects of, a Successful Outcome “Successful Outcome” is defined as any final settlement, order, judgment or award disposing of, or otherwise ending the action against the Defendants, pursuant to which Contis is entitled to “Claim Proceeds” (defined in turn as, in summary, value due to and/or received by Contis in connection with or arising out of the claim). See clause 1.25. fall below 51%;45.1.2 It is more likely than not that, even if there is a Successful Outcome, the Claimants will be ordered to pay Swipewallet’s costs in an amount exceeding the total Claim Proceeds (as defined); or45.1.3 It is more likely than not that any Claim Proceeds will be insufficient to pay any deferred and contingent premium (which is premium other than that payable at the outset, and the payment of which is dependent on the outcome of the proceedings).[46]Swipewallet said that although the Claimants have sought to brush this off by asserting that it is highly unlikely that any of these events will occur:46.1 The Claimants’ legal team have not disclosed their present merits assessment (or that of the insurer). This is understandable, but it makes it difficult for them to maintain that it is fanciful to think their assessment (or that of any replacement legal team) could fall below 51%: see Michael Phillips Architects v Riklin [2010] Lloyd’s Rep IR 479 at [22].46.2 The suggestion that there are unlikely to be any material developments is obviously wrong. Litigation is inherently uncertain. The outcome of the case will turn heavily on the court’s assessment of the facts surrounding the VISA Direction, the findings and sanctions of the BoL in respect of UAB, and the Claimants’ requests for substantial further KYC information, which are hotly contested and will fall to be determined (alongside issues of expert evidence) at trial. Disclosure has not been given, factual evidence not exchanged, and neither party has pleaded a quantum case.46.3 The Claimants’ debt claim depends on a highly ambitious (and, Swipewallet will say, plainly incorrect) reading of clause 17.3 of the Framework Agreement, which involves seeking €144 million in fees to the end of the contractual 5-year term of the Agreements, despite the fact that none of these fees had yet been earned by the provision of any services, it being common ground that this would leave the Claimants overwhelmingly better off than if the Agreements had run their course as planned.46.4 The prospects are not much better for the Claimants’ alternative loss of profits claim, in light of the plain words of clause 15.3 of the Framework Agreement which exclude liability for this type of loss. Thus, even if the Claimants could show that Swipewallet were in breach of contract, their prospects of recovering enough to pay a deferred and contingent premium are (at best) uncertain.46.5 There is thus also a real possibility that the Claimants would be ordered to pay costs even if they secured some form of judgment in their favour, a question which would depend among other things on the terms of any admissible offer to settle.[47]Secondly, the ATE Policy only provides cover in respect of interim applications pursued or defended by the Claimants with the insurer’s written consent: clauses 1.14(b) and 2.4. Again there is clearly (at the lowest) a real risk that:47.1 The insurer may refuse consent in its discretion, provided it acts reasonably (clause 4.4.2). It must be assumed that an insurer will seek to avoid cover where possible. Giaquinto v ITI Capital Ltd [2022] EWHC 973 (QB) at [36]. In addition, as the court observed in Asertis at [31], even if a party may be said not to have any reason not to comply with a notification requirement such at this, “It is all too possible however that such a condition might simply be overlooked, or arguably not complied with”, leaving the opposing party at risk.47.2 This very case provides a lesson: whilst Cooley stated in correspondence on 6 November 2024 that they would provide confirmation once the second instalment of premium had been paid in January 2025, in fact it seems Contis did not pay it until 19 February 2025 and they did not inform Swipewallet of this until their evidence in response to the Security Application on 11 March 2025, after it was pointed out in Swipewallet’s evidence that they had failed to do so.47.3 The Claimants have also not said whether they obtained the insurer’s written consent before pursuing the Bifurcation Application or resisting the Security Application.[48]Thirdly, cover is only provided for costs due pursuant to the terms of a settlement of the Claimants’ claims if the insurer’s prior written consent to the settlement has been obtained (clause 2.1.1(d)). This engages the same considerations as those identified above. Swipewallet should not be left in a position where they can only obtain a payment of their costs on settlement if the insurer agrees to pay in the exercise of its discretion.[49]Fourthly, cover terminates on a number of events, including the termination or cancellation of the retainer of the Claimants’ present solicitors, Cooley (UK) LLP, without the insurer’s prior written consent (clause 1.20(d)). A change of solicitors is not uncommon in litigation, as this very case demonstrates: Contis changed their solicitors in the pre-action phase and Swipewallet have just done so. The consent requirement is, again, all too easy to overlook or arguably fail to comply with.[50]The Claimants have produced an endorsement (the “Endorsement”) which, unfortunately, does not alleviate the difficulties. In particular, whilst the Endorsement states generally that a claim on behalf of Swipewallet would be “honoured in fullirrespective of…any exclusions or provisions of the [ATE] Policy” (clause 3(b)), the effect of this is clearly open (at the very least) to debate, particularly since:50.1 The insurer’s cancellation rights under clause 4.7 and 4.8 of the ATE Policy are specifically preserved by clause 10 of the Endorsement;50.2 Whilst clauses 11 and 12 of the Endorsement would give Swipewallet the right to be informed of any cancellation of the ATE Policy under clause 4.7 or 4.8 of the ATE Policy, they would only have costs protection up to the date of cancellation;50.3 If the ATE Policy comes to an end under clause 1.20 of the ATE Policy because Cooley cease to act, there is nothing in the applicable terms to require Swipewallet to be told about this;50.4 To be capable of being honoured, a claim has to fall within the scope of cover under the ATE Policy in the first place. Where there is no such cover in respect of interim applications or a settlement, or the policy comes to an end as part of the ordinary operation of its terms (e.g. on a change of solicitors), on the face of it the Endorsement will not assist. At the very least there is a real risk of the insurer successfully making such an argument, and it has notably not agreed that it will not do so.50.5 It is also to be noted that the insured under the ATE Policy is Contis alone, not UAB which was also pursuing a claim until it assigned that claim to Contis. Clause 2.1.1(b) provides cover in respect of an order for costs against UAB “for which [Contis] is liable” under the terms of an agreement dated 16 August 2024. The fact that UAB has no cover at all in its own right and instead Swipewallet are asked to rely on this convoluted arrangement gives them no comfort.50.6 Contis were invited to provide an amended form of Endorsement. On 28 November 2024, Cooley stated that it was liaising with the insurers. However, no amendments were forthcoming, from which Swipewallet inferred that the insurer had declined to extend cover so as to address their concerns. Contis assert that the insurer’s underwriting agent agrees with their interpretation of the ATE Policy, but the insurer’s own position is unknown. Whilst it was said as long ago as March 2025 that the underwriter was confident that the insurer would be amenable to making “clarificatory” amendments (ibid), this has not been done.[51]For these multiple reasons (which operate individually and cumulatively), it cannot be said that the risk of the ATE Policy not responding in full is fanciful. It thus does not provide an answer to the security application.

The Claimants’ submissions:

[52]The Claimants began with a consideration as to the approach to be taken when an ATE policy is offered as security:52.1 Since at least 2013, and Stuart-Smith J’s decision in Geophysical Service Centre Co v Dowell Schlumberger (ME) Inc [2013] EWHC (TCC). it has been recognised that “the court’s starting position should be that a properly drafted ATE policy provided by a substantial and reputable insurer is a reliable source of litigation funding” at [15].52.2 Subject always to the terms of the particular policy under consideration, there is no objection in principle to an ATE policy being held to provide sufficient protection to a defendant and an answer to a security for costs application (Premier Motorauctions) Premier Motorauctions Ltd (in liquidation) v PWC LLP & Anr [2017] EWCA Civ 1872 at [19] – [22]. .52.3 The question is whether there is a “realistic” as opposed to fanciful risk that the relevant policy will not respond in full Harlequin Property (SVG) Ltd v Rukadze [2015] EWHC 1122 (TCC) at [21]. .[53]Of particular note in this case is that:53.1 First, materially the same wording as appears in the Endorsement to the ATE Policy has recently been held to be sufficient to rebut a security for costs application in Saxon Woods Investments Ltd v Costa & Ors [2023] EWHC 850 (Ch) at [65] and followed in Musst Holdings Limited v Astra Asset Management Uk & Ors [2024] EWHC 2310 (Ch) at [63]. . The court in that case concluded, at [65], that the wording was a clear agreement by the insurer that it would not be entitled to avoid the policy or rely on any of the other remedies normally available to it. Further, Saxon Woods involved allegations of dishonesty and fraud; such allegations do not appear anywhere in these proceedings;53.2 Second, Swipewallet appear to accept that the ATE Policy will meet its costs incurred prior to any (unlikely) termination or cancellation of the ATE Policy. The risk Swipewallet seeks to avoid only therefore arises if the ATE Policy is cancelled or terminated in accordance with its terms.[54]Turning to Swipewallet’s contentions on the ATE policy, Contis made the following submissions.54.1 Starting with the anti-avoidance provisions and the provisions relating to premium, clause 4.7 of the Policy Wording (maintained by clause 10 of the Endorsement) entitles the Insurer to rescind or avoid the ATE Policy for non-payment of the Paid Premiums. The ATE Policy required the Paid Premium to be paid in two stages;(i) at the inception date of the ATE Policy and(ii) on 6 January 2025.54.2 Those premiums have been paid, and Swipewallet does not challenge the premise that the required payments have been made and the ATE Policy is in force. Swipewallet however argued that the terms of the ATE Policy, in so far as they relate to the payment of the Deferred and Contingent Premium, are unclear; specifically, that it is unclear whether the Deferred and Contingent Premium is payable only from a Recovery or Recoveries and on a Successful Outcome. In the light of that argument, Contis provided a further copy of the Policy Schedule, which removed the majority of the redactions in respect of the premiums due. From that version of the Policy Schedule, it can be seen that the Deferred and Contingent Premium is payable only upon a Successful Outcome, in three stages (delineated by reference to the point in time such an outcome occurs); and that it is “… solely payable by the Insured from any Recovery and the Insured shall have no further liability for the Deferred and Contingent Premium other than from Recoveries”.54.3 The only remaining redactions are of the actual amounts of Paid Premium and the Deferred and Contingent Premium, and the stages of the latter. As such, there is no question of the protection offered by the ATE Policy being lost pursuant to clause 4.7 of the Policy Wording and no reason to believe that Contis will be unable to pay Swipewallet’s costs for this reason.[55]Turning next to the cancellation provisions, Contis noted that Swipewallet relied on three aspects of Clause 4.8 of the Policy Wording which entitle the Insurer to cancel the ATE Policy where it is agreed that(i) the merits / prospects of a Successful Outcome fall below 51%,(ii) it is more likely than not that adverse costs orders would exceed the total claim proceeds and(iii) it is more likely than not that the claim proceeds would be insufficient to pay the Deferred and Contingent Premium. 55.1 As to the assessment of the merits:55.1.1 the Defence and Counterclaim was filed on 1 November 2024, so that the Insurer has had sight of the issues in the proceedings for some time; it continues to support Contis’ reliance on the ATE Policy and has not sought to exercise its right pursuant to clause 4.8.1(a)(i). Nor has Swipewallet applied to strike out any aspect of Contis’ case.55.1.2 Notwithstanding that it is well established that the underlying merits of a claim are irrelevant unless it can be demonstrated one way or another that there is a high degree of probability of success or failure CPR 25.27.3 (White Book notes, page 749). , Swipewallet invites the court to find that there is more than a fanciful risk that the option in clause 4.8.1(a)(i) will be exercised.55.1.3 However, there is nothing before the court to make that assertion good, in circumstances where the pleadings have closed and the nature of the matters in dispute are clearly defined. Contis have been represented since the inception of the ATE Policy by experienced litigators and there is no basis for suggesting that Contis or its representatives have not fully co-operated (and going forward, will not fully co-operate) with the Insurer, with an eye on the terms of the ATE Policy generally, the notification requirements in clause 4.5 of the Policy Wording and their professional duties.[56]As to the likelihood that the claim proceeds will be insufficient for the purposes of clauses 4.8.1(a)(ii) and (iii):56.1 For the same reasons set out above, this invites speculation as to the underlying merits of Contis’ claims, which the court is not in a position to properly undertake and the authorities caution against.56.2 This is a similarly theoretical concern. Further, as explained above, Contis has no liability in respect of the Deferred and Contingent Premium unless Recoveries are made upon a Successful Outcome.[57]Finally, even if the Insurer sought to rely on one of those sub-clauses, the Insurer would be required to give Swipewallet 30 days’ notice (clause 11 of the Endorsement), and it would remain liable to pay their costs incurred up to the date on which notice of the actual termination of the ATE Policy was given to them (clause 12(ii) of the Endorsement).[58]As such, said Contis, there remains no real, as opposed to fanciful, risk at the present time that the ATE Policy will not respond sufficiently.[59]Whilst Swipewallet also relies on the requirement for the Insurer to provide written consent to Contis for(i) the termination of the retainer with its solicitors,(ii) the pursuit or defence of any interim applications, and(iii) the settlement of the proceedings as giving rise to deficiencies in the ATE Policy, Contis submitted that those concerns do not undermine the sufficiency of the ATE Policy as a matter of principle:59.1 There is plainly a strong commercial incentive for Contis to comply with the terms of the ATE Policy and ensure that the steps necessary to preserve the ATE Policy are taken, such that it remains in place Which Stuart-Smtih J accepted as an answer to this type of concern in Geophysical at [30]. . Swipewallet’s concern is again no more than theoretical.59.2 In litigation of this nature, the Insurer is highly likely to be involved in such decisions in any event, given the terms of the ATE Policy and the liability it has agreed to in respect of Swipewallet’s costs. The Insurer has approved all the correspondence sent in respect of the ATE Policy; there is nothing to suggest anything but a high degree of co-operation between the Insurer, Contis and its representatives .59.3 Further, the wording of clause 3 of the Endorsement (the anti-avoidance provision) is an answer to Swipewallet’s concerns regarding those consent requirements. Clause 3 of the Endorsement prevents the Insurer from avoiding the ATE Policy even if its consent was not obtained, by providing that any of Swipewallet’s costs “accrued prior to the date of cancellation” (emphasis added)will be met in full.59.4 In those circumstances, the Insurer would still be obliged to pay any claim made on the ATE Policy made prior to its cancellation, but retains its rights as against Contis in respect of any breach of the Policy Wording (such as a failure to obtain its consent).[60]Accordingly, the requirement for the Insurer’s consent in respect of those three eventualities does not undermine the sufficiency of the protection provided by the ATE Policy. In addition to the above points:60.1 As to Contis’ retainer with its solicitors (clause 1.20 of the Policy Wording), there is nothing to suggest there is any real prospect of it being terminated without the Insurer’s consent (and would not in any event automatically terminate the ATE Policy).60.2 Similarly, in respect of interim applications (clauses 1.14(b) and 2.4 of the Policy Wording), there is nothing to suggest that this concern is justified. Both the Security Application and the Bifurcation Application are interim applications which have not resulted in notice of termination being given; Contis is plainly complying with its obligation to obtain written consent from the Insurer. Contis’ prudent conduct of this litigation so far demonstrates the fanciful nature of this concern.60.3 As to settlement (clause 2.1.1(d) of the Policy Wording):60.3.1 Swipewallet appears to accept that this risk is fanciful; at the first hearing of this CMC, Swipewallet described the prospect of settlement if the proceedings were bifurcated as “impossible”.60.3.2 Nevertheless, considering the ATE Policy to be inadequate due to this requirement necessarily involves speculation about inter alia60.3.3 Finally, any risk to Swipewallet is mitigated by the fact that it knows of this requirement; it can simply require confirmation that the terms of any proposed settlement will be consented to by the Insurer before executing any such agreement.(i) the potential for settlement in principle,(ii) the precise terms of any such settlement,(iii) the position the Insurer may take, and(iv) how the proceedings are likely to progress generally through the various stages (including disclosure and witness evidence). In the same way that trying to predict the likely outcome of the proceedings is unhelpful and to be avoided, so too is attempting to predict the outcome and parameters of any potential settlement (which will include the parties’ own specific commercial considerations and aims, in addition to the parties’ assessment of the merits of their respective legal positions).[61]For the reasons set out above, Contis submits that the ATE Policy is entirely adequate and there is no good reason to think that Contis would not be able to pay Swipewallet’s costs.

Further submissions after the hearing:

[62]Following the hearing, I indicated that I wished to have further submissions in relation to my jurisdiction to impose conditions on the continuance of the claim other than, or over and above, the power to grant security. In particular, in view of the risks identified by Swipewallet, I asked for submissions as to my ability to require Contis to notify Swipewallet of any termination of the ATE policy, and in addition to provide evidence that it has its insurers’ consent to the making of any interim application and to any proposed settlement.[63]Contis, for its part, contended that I had such jurisdiction, but in any event offered to provide undertakings to obviate the necessity for any such orders. Swipewallet, on the other hand, contended that I did not have jurisdiction, but accepted that the giving of undertakings rendered this question academic. Nevertheless, they maintained that these undertakings could not take the place of an order for security. In particular, they reiterated their submissions as to the fact that the interregnum between termination and any further application for security needed to be the subject of an order for security and the fact that they would be prejudiced by any settlement reached without consent.

Discussion and conclusions:

[64]First, I accept that an appropriately worded ATE insurance may provide security for a Defendant’s costs, and I also accept (indeed I do not believe that there was any argument about this) that the appropriate test is whether there is a real, or realistic, as opposed to fanciful, prospect that the policy in question will not respond so as to provide security.[65]In my judgment, it is appropriate in this case to differentiate between the risks of avoidance or rescission or termination ab initio, which would mean that Swipewallet was deprived of any security; the risks that individual applications might not be covered by reason of a lack of consent; and the risks of termination, which would mean that Swipewallet had security for its costs up until the date of termination but not beyond.[66]I start with the risk that the policy might be avoided, rescinded or terminated ab initio. Here, the principal risk relied on by Swipewallet, in my judgment, was the risk that the claim might be abandoned or settled without insurers’ consent. In my judgment, this issue raises two sub-issues.66.1 The first is whether, as a matter of the construction of the policy, insurers would be able to validly argue that they were not on risk in these circumstances.66.2 The second is whether, as a matter of practicality, this situation is likely to arise.[67]Dealing with the question of policy construction first, I take the view that Swipewallet were right that there was a very real argument that the policy, on its true construction, would be read as excluding cover where the claim was settled or abandoned without insurers’ consent.[68]However, turning to the practical considerations, it is my view that it is very unlikely that this situation would arise. In practice:68.1 If the Claimants decided that they wished to abandon or settle the claim, they would wish to involve insurers so that they preserved their right to claim on their insurance to cover the costs that they would almost inevitably incur.68.2 If insurers were involved, and their consent was sought, then, in my judgment, they would have to act reasonably. Consent could not unreasonably be withheld.68.3 If the Claimants sought to involve insurers, then this would be, in all probability, because the view had been taken that the claim was likely to fail. This scenario would come within clause 4.8.1, so that insurers would be obliged to pay costs to the date of settlement. If the claim was not likely to succeed, then, in my judgment, insurers would be likely to be acting unreasonably if they required the Claimants to proceed. Moreover, if the action did proceed, this would increase the costs for which the insurers would then become liable, making it still more likely that insurers would agree to a termination.68.4 Taking all of the above into account, it would, in my view, be in the best interests of both the Claimants and insurers to ensure that insurers’ consent was sought and obtained before any settlement or discontinuance.68.5 In these circumstances, I view the prospects of a settlement or abandonment without consent as unrealistic – i.e. unreal.[69]Next, I turn to the position in relation to individual applications. Again, this involves legal and practical considerations.69.1 The legal question is whether insurers would be able to refuse to pay Swipewallet’s costs of an application which they, insurers, had not been consulted on. In my judgment, there is a real risk that the policy would be construed in this way.69.2 However, once again, I regard the possibility that an application would be made without insurers’ consent as remote. That is because the Claimants would wish to ensure that they had cover for the costs of the application, if unsuccessful, before making that application. Again, too, insurers would have to act reasonably; many interlocutory applications would not result in an order for costs against the applicant; and the quantum of such costs should be limited.69.3 I also take the view that I can order that the Claimants provide evidence to Swipewallet and the Court at the time of the making of any application that insurers have indeed consented to such, and that it would be appropriate to make such an order.[70]Finally, I turn to the risk that the cover will be terminated, for one of the grounds set out in clause 4.8.1. I regard this as a real risk, for the following reasons, but I also regard the effect of termination as limited.70.1 I start with the effect of termination. It is clear, in my judgment, that a termination operates prospectively and not retrospectively. Indeed, I did not understand Swipewallet to contend otherwise.70.2 I also take the view that consent must have been obtained for the steps taken by the Claimants in the action to date. I accept Mr Pickering’s submission that, were the position to be otherwise, the hearings before me would not be taking place.70.3 It follows from these findings that there had been no termination by the time of the hearings before me in April and July. Accordingly, I take the view that Swipewallet already have security for their costs up until July 2025.70.4 Thereafter, there is clearly, in my judgment, a risk that the position may change, in particular should the Claimants’ representatives, Cooley, and the insurers, conclude that the Claimants’ prospects of success are below 51%. In view of the vagaries of litigation, and particularly since this litigation is at a relatively early stage, I take the view that this risk is real and not fanciful. In the light of this finding, I do not think it necessary to consider the other parts of clause 4.8.1.70.5 Next, I accept Swipewallet’s contention that I must ask myself whether there is a risk of the Claimant being unable to pay their costs of the claim (as opposed to the counterclaim) at the end of the action (i.e. the end of the claim). In my judgment, there is clearly such a risk. I exclude the counterclaim because, particularly in the light of my decision on bifurcation, the counterclaim will only arise when the claim has been determined, and it is only the costs of the claim that Swipewallet are entitled to security in respect of.[71]In these circumstances, I have concluded that the appropriate order is an order to protect Swipewallet in respect of the costs of the claim, going forward, to take account of the prospect of the possibility that the insurance cover currently in place may be terminated. In my judgment, that order should be as follows:71.1 First, I should require Contis to notify Swipewallet in the event that the insurance is terminated. This may or may not add to the terms of the insurance, but can do no harm.71.2 Secondly, I should require that Contis provide evidence of insurers’ consent to any interim application and any settlement. If they cannot provide such, Swipewallet will be able to rely on this on any further application for security.71.3 Thirdly, I should require that to cover the possibility that the insurance is terminated, an amount is put up by way of security to enable Swipewallet to make a further application for an alternative form of security. I assess that amount at £300,000, having taken into account both the Claimants’ submissions and the evidence put forward by Swipewallet. Claim and counterclaim The Claimants’ submissions:

Claim and counterclaim

[72]The Claimants contended that this principle was established in the case of BJ Crabtree (Insulation) Ltd v GPT Communication Systems Ltd [1990] 59 BLR 43. They argued that the Crabtree principle has been confirmed and applied in numerous cases:72.1 In Dumrul v Standard Chartered Bank [2010] EWHC 2625 (Comm). , Hamblen J held at [5] that “As a general rule, the Court will not exercise its discretion under CPR Part 25 to make an order for security of the costs of a claim if the same issues arise on the claim and counterclaim and the costs incurred in defending that claim would also be incurred in prosecuting the counterclaim…”.72.2 Endorsing that description in Anglo Irish Asset Finance plc v Flood [2011] EWCA Civ 799. at [20], Moore-Bick LJ observed that “If the claim and counterclaim raise the same issues it may well be a matter of chance which party is the claimant and which a counterclaiming defendant and in such a case it will not usually be just to make an order for security for costs in favour of the defendant, although the court must always have regard to the particular circumstances of the case” at [20].72.3 As put in Abbotswood Shipping Corporation v Air Pacific Limited [2019] EWHC 1641 (Comm). ,not all the circumstances of a case carry equal weight, with the analysis focussing on the pleaded cases to determine if they raise the same issues; “If they do, then in accordance with the principle identified in Crabtree, that is likely to be a very significant, and in many cases probably a determinative factor, albeit that any other considerations will also have to be taken into account” at [29].[73]It is common ground, said the Claimants, by reference to the agreed Issue 14 of the List of Common Ground and Issues, that the claims and the Counterclaim are based wholly or very substantially on the same facts and issues, such that the costs incurred in defending the claims, would also be incurred in prosecuting the Counterclaim.[74]The core of this dispute concerns the question of whether the Termination Notice was a valid exercise of contractual rights, or was repudiatory:74.1 The Claimants contend that the Termination Notice was repudiatory in nature.74.2 Conversely, Swipewallet contends that the Termination Notice was a valid exercise of certain contractual termination rights as a result of the VISA Direction, the BoL Resolutions and the Additional KYC Requests.74.3 The parties’ cases on those three central events occupy the majority of the pleadings.74.4 They also occupy the majority of the List of Issues for determination and the majority of the disclosure which will be required.[75]It is clear that the Counterclaim is inseparable from Swipewallet’s’s defence. Indeed, the vast majority of the costs incurred in defending the claim would also be incurred in prosecuting the Counterclaim. Swipewallet has in any event made no attempt to separate out its anticipated defence costs from those of pursuing the Counterclaim – no doubt because it is unable to do so, said the Claimants.[76]One point of distinction on which Swipewallet may place weight, said the Claimants, is the reliance of their Primary Claim on the interpretation of clause 17.3 of the Framework Agreement which (uncontroversially) only arises in relation to that claim. However, that does not affect the overall analysis:76.1 It is an important, but discrete, issue of interpretation, which is unlikely to occupy substantial amounts of court time and costs.76.2 Similarly, there will be limited disclosure in respect of it, relating only to Swipewallet’s argument that it is a penalty clause.[77]As to the points Swipewallet make in response, the Claimants argued that in this case, it is clear that the composition of the proceedings is one of chance and arises from the circumstances in which the Agreements terminated, rather than establishing that the Counterclaim is purely responsive.77.1 The Claimants submitted that the hypothetical consideration of what would have happened if the Claimants had not issued proceedings first (described as a “sterile debate” in Abbotswood Shipping) does not assist Swipewallet. The Counterclaim has been pleaded as ‘substantial’ and pursued, which in all likelihood it would have been in any event.77.2 Prior to the hearing, the Claimants relied on the fact that it was important that Swipewallet had not taken the opportunity to dispel any concerns as to whether it is just to order security in this case by indicating that it would consent to the stay or dismissal of the Counterclaim in the event that security is ordered and not provided. However, shortly before the hearing before me, Swipewallet provided such an undertaking.[78]The next point relied on by Swipewallet was that Digital Anchor does not pursue the Counterclaim. However, said the Claimants, it does not raise any separate points of defence from Swipewallet. It also does not appear to be incurring any incremental costs and Swipewallet’s estimate of its anticipated costs does not identify the quantum of any costs which would be incurred by Digital Anchor alone as the proceedings progress. Swipewallet has also asserted in relation to disclosure that “there is no Issue for Disclosure, nor any issue in the proceedings generally, which is directed at Digital Anchor. Indeed, its role in these proceedings is solely as a guarantor and its potential liability under that guarantee is admitted”. Swipewallet’s submissions.[79]Where a claim and counterclaim raise the same issues, the court has a discretion to refuse to order security in favour of the defendant. However, whilst this has in some cases been described as a ‘default’ rule, in the case which gives its name to this principle, BJ Crabtree (Insulation) Ltd v GPT Communication Systems Ltd [1990] 59 BLR 43, Bingham LJ stated in terms that “It cannot be too firmly emphasised that there can be no rule of thumb as to the grant or refusal of an order for security in these circumstances”. See Anglo Irish Asset Finance Plc v Flood [2011] EWCA Civ 799 at [18]; Explosive Learning Solutions Ltd v Landmarc Support Services Ltd [2023] EWHC 1263 (Comm) at [21]. Ultimately each case turns on its facts, and insofar as there can be said to be a general rule, it arises where it can be shown to be “a matter of chance which party is the claimant and which a counterclaiming defendant”: Anglo Irish at [20]. To the same effect, see Stavrinides v Cyprus Popular Bank Public Co. Ltd [2018] EWHC 313 (Ch) at [19].[80]Here, the so-called Crabtree principle cannot be applied so as to deprive Swipewallet of security:80.1 It is not a matter of chance which party is claimant and which the counterclaiming defendant. On the contrary, when Swipewallet terminated the Agreements in October 2023, they did not intimate any claim of their own against the Claimants. It was the Claimants who threatened proceedings in a letter before action in October 2023. In their response in December 2023, Swipewallet denied liability but, again, did not intimate any claim of their own. The counterclaim was not advanced until well after the commencement of the proceedings by the Claimants.80.2 Accordingly, in this case the counterclaim is responsive to the claim, and thus the Crabtree principle does not apply. Instead, the basic point applies that “the design of the rules is to protect a defendant…who is forced into litigation at the election of someone else against adverse costs consequences of that litigation”: Autoweld Systems Ltd v Kito Enterprises LLC [2010] EWCA Civ 1469 at [59].[81]Whilst there is overlap between the claim and counterclaim in this case, it is by no means complete. Swipewallet rely on grounds for termination which do not form the basis of their counterclaim (in particular, under clause 16.3 of the Framework Agreement), and there are other issues arising on the claim which will require an investigation going beyond that necessary for the counterclaim. This includes the proper construction of clause 17.3 and whether it amounts to an unenforceable penalty, as well as the quantification of the Claimants’ alternative damages claim which Swipewallet say will alone cost up to £520,000.[82]Importantly, the Third Defendant is not pursuing any counterclaim.[83]In any event, any unfairness which may arise where a claimant fails to provide security and thus has its claim stayed, but has to fight the same issues in defending a counterclaim, may be removed by a defendant undertaking not to pursue the counterclaim if the claim is stayed for failure to provide security. This was recognised by Hamblen J in Dumrul v Standard Chartered Bank [2010] 2 CLC 661 and in several subsequent cases. Including Harrison v Laidlaw [2014] CP Rep 20 at [53] (where the Crabtree point was not pursued in light of the undertaking); Hniazdzilau v Vajgel [2015] EWHC 1582 (Ch) (obiter); Stavrinidesat [20]; Explosive Learning (above) at [40]; URE Energy Ltd v Notting Hill Genesis [2021] EWHC 2695(Comm) at [24]; and most recently Somerset Equipment Finance (UK) Limited v Lan Support Limited [2025] EWHC 586 (Comm) at [100]. Swipewallet are willing to offer an undertaking in these terms, should the court consider this necessary. Discussion and conclusions.[84]As I have indicated, in my view then I must consider this question in the light of my conclusion that the trial should be bifurcated. I must also take into account my conclusions that Swipewallet are adequately secured to date, that the risk of avoidance ab initio or the loss of costs cover in relation to individual applications are minimal (and not real), but that the risk of loss of costs cover in relation to future costs is not fanciful but is realistic.[85]On these hypotheses, then there is a clear overlap between the costs of the claim and the costs of the counterclaim going forward, but that overlap is far from complete.85.1 The first group of issues will relate to the question of whether or not termination by Swipewallet was justified. Such termination might have been on a basis that involved a right to claim damages, or it might not. Insofar as the right to terminate did not involve an inquiry into damages, then it would be relevant to the claim but not to any counterclaim.85.2 The second issue will relate to the question, if a termination was not justified, of whether the appropriate measure of loss is the Claimants’ primary claim in debt or not. This is an issue which goes to the Claimants’ claim alone, and which will also involve the argument as to whether this clause is a penalty clause.85.3 The third issue will relate to the question of the proper construction of clause 17.3. This issue again goes only to the Claimants’ claim.[86]In these circumstances, I take the view that the Crabtree principle has limited application to this case. However, I also take the view that it is appropriate that Swipewallet should give the undertaking that has been offered, and I will so order.[87]Overall, therefore, I do not think that this argument detracts from my conclusions on the ATE policy. In essence, in my judgment, it is appropriate that the Claimants should provide security for Swipewallet’s costs of defending the issues which arise only on their claims, which will form the majority of the costs of the first leg of the bifurcated claim; but that that security is already in place, by reason of the ATE policy, for costs incurred to date, and for costs to be incurred in the future prior to any termination of that policy. The order for security that I propose to make, covering the costs of an application for security post termination, taken together with the orders that I propose to make in relation to the giving of notice of termination and in relation to consent, in my view provide Swipewallet with adequate security. Prematurity The parties’ submissions:

Prematurity

[88]Swipewallet said that they had followed the requirement in para 1 of Appendix 10 to the Commercial Court Guide that first applications for security for costs be made not later than the CMC.[89]Despite this, they said, the Claimants have suggested that the application is premature because Swipewallet’s costs will be covered by the ATE Policy up to the point of cancellation and Swipewallet should wait until then before applying for security.[90]I do not consider that this argument adds anything to the arguments I have already considered. Stifling the claim and other general discretionary considerations. The Claimants’ submissions:[91]In this regard, the Claimants relied on the principles identified by Marcus Smith J in Absolute Living Developments Ltd (in Liquidation) v DS7 Ltd [2018] EWHC 1432 at [3]. . They argued that I could take into account(i) whether the claim is bona fide and not a sham and(ii) whether a claimant’s want of means has been brought about by the conduct of the defendants when considering whether to exercise its discretion.[92]As to the first factor, they contended that there is no basis to suppose that the Claimants’ claim has not been brought in good faith or that it is a sham. Plainly, neither is true. Whilst Swipewallet of course denies the claims, they are clearly bona fide and properly brought by the Claimants.[93]As to the second:93.1 The termination of the Agreements has directly resulted in the Claimants’ business being discontinued. In 2023, the Programme generated a gross profit in excess of £20 million, with the First Claimant’s contemporaneous financial statements directly referring to the impact on profitability due to the loss of Swipewallet as a client.93.2 In circumstances where it must be assumed that the Claimants have a good arguable case that the termination of the Agreements was unlawful, the Claimants submitted that this factor militates against the exercise of the discretion. The impact on the Claimants has been fundamental to their ability to carry on business and ordering security beyond the protections provided by the ATE Policy would have the effect of rewarding the unlawful termination to the prejudice of a bona fide claimant. Swipewallet’s submissions.[94]Swipewallet contended that a claimant who alleges that an order for security would stifle the claim bears the burden of proving that allegation on the balance of probabilities, by reference to “full, frank, clear and unequivocal evidence”, not just as to the claimant’s own means but also its ability to raise security from directors, shareholders or other backers or interested persons: see Ure Energy v Notting Hill Genesis at [25]–[36].[95]It was Swipewallet’s case that the Claimants had made no real attempt to discharge this burden. Indeed, they contended, the argument has been rendered hopeless in light of their recent disclosure that they are funding this litigation by a loan of £9,000,000 from Solaris, which is said to have secured €140m of new investment from a group which holds ca. JP¥ 32 trillion (ca. £162 billion) in assets. It was Swipewallet’s case that it is obvious that the Claimants are able to provide security; they simply do not wish to do so.[96]As to the attempt to blame Swipewallet for the Claimants’ financial position, it is unrealistic to give any weight to this assertion when investigation of the merits is inappropriate (Ure Energy at [23]), and here the facts simply do not make the point good. The Claimants’ evidence goes no further than a solicitor’s witness statement referring to extracts from Contis’ financial statements and making allegations on instructions, which fall far short of establishing the necessary causal link.[97]In fact, said Swipewallet, the underlying evidence does not suggest that the Claimants’ difficulties are the fault of Swipewallet. Contis’ 2022 financial statements (published prior to the termination of the Agreements) noted the need for additional equity and the risk that the German regulator would take measures resulting in the termination of the group’s operations, which may cast doubt on its ability to continue as a going concern; UAB was placed under regulatory restrictions at the end of 2023; Solaris’ press statements justifying its decision to discontinue major parts of its business did not mention Swipewallet but instead blamed market factors; and the same is true of Solaris’s brush with liquidation.

Discussion and conclusions:

[98]I can deal with this last point briefly.98.1 I accept that the claim is not a sham, but is a very real one.98.2 However, I also accept that Swipewallet’s defences are real, and that there are very real and tenable disputes between the parties.98.3 In these circumstances, I do not think that it is possible to say that Swipewallet’s wrongful conduct has caused any lack of means on the part of the Claimants. This requires an assessment of the merits of the claim, and I am not in a position to perform an informed assessment.98.4 That leaves the question of whether it would be unjust to order security because, irrespective of what has caused the financial position of the Claimants to worsen, an order for security would prevent it from pursuing its claim. In this regard, I am not satisfied, on the evidence before me, that an order for security would have this effect.[99]In all the circumstances, I do not think that this point is a good one.

Overall conclusions on security:

[100]Overall, I have concluded as follows:100.1 I should require the giving of the undertakings offered by Contis and by Swipewallet. If the terms of such undertakings cannot be agreed, I will rule on the matter.100.2 Contis should provide security, in a form to be agreed or ruled upon, in an amount of £300,000.[101]I would be grateful if the parties would draw up an order to give effect to this judgment.