Russian Operator Policy Claims, Re [2026] EWHC 542 (Comm)

[2026] EWHC 542 (Comm)Case No CL-2023-000097IN THE HIGH COURT OF JUSTICEBUSINESS & PROPERTY COURTS OF ENGLAND AND WALESCOMMERCIAL COURT (KBD)Venue Royal Courts of Justice, Rolls Building, Fetter Lane, London, EC4A 1NLDate 26 February 2026
Before
Mr Justice Picken
IN THE MATTER OF THE RUSSIAN OPERATOR POLICY CLAIMS
Christopher Loxton, Ryan Hughes and Simran Gill (instructed by Fieldfisher LLP) for the Deep Sky Holdings Limited ClaimantsJames Duffy KC, Lachlan Hopwood, and Max Kasriel (instructed by CMS) for the CMS DefendantsAlexandros Demetriades (instructed by Kennedys Law) for the Kennedys DefendantsAlexander Hutton KC and Ian Chai (instructed by Holman Fenwick Willan LLP) for the War Risk DefendantsHearing Hearing dates: 26/02/26
RULINGMr Justice Picken Thursday, 26 February 2026(11.09 am)Ruling by MR JUSTICE PICKEN

Introduction

[1]This is a hearing which is dealing with various applications made by certain of the War Risk Defendants in the substantial litigation that is due to be heard at trial in front of me this coming autumn. It is a hearing concerned with applications for security for costs by the Defendants known as the HFW WR Defendants, the CMS War Risk Defendants and the Shoosmiths Defendants in their capacity as War Risk Defendants. I will refer to them globally for the present purposes as the ‘War Risk Defendants’.[2]The applications are made against one set of Claimants in claim number CL-2023-000097, known for shorthand purposes as the ‘Deep Sky Claimants’. The applications involve monetary amounts as follows: on the part of the Shoosmiths Defendants £1,619,000 or so; on behalf of the HFW WR Defendants, £1,339,000 or so; and on behalf of the CMS War Risk Defendants, £2,086,000 or so.[3]It is the War Risk Defendants’ position that they are plainly entitled to security for costs against the Deep Sky Claimants, and that that accordingly is what the Court should today order. The position of the Deep Sky Claimants is that the Court should not make such an order, because to do so would entail the claims brought by the Deep Sky Claimants being stifled because the ability of the Deep Sky Claimants to meet any security for costs orders in the amounts sought is such as to mean that in reality the claims would not be capable of being pursued.[4]These applications were originally listed to be heard alongside other costs-related issues at a hearing that took place on 16 and 17 December 2025, but, owing to time constraints, this being very substantial litigation with a multitude of parties, the applications had to be adjourned.[5]It is worth noting, in passing, that the War Risk Defendants have made security for costs applications or requests in respect of other Claimants, and that security for costs has been agreed in relation to those other Claimants. In short, as Mr Duffy KC, speaking for these purposes on behalf of all the War Risk Defendants when dealing with the matter of principle, points out, it is only the Deep Sky Claimants that have maintained their opposition to the security for costs sought by the War Risk Defendants.

Applicable principles

[6]The applicable principles are not in issue. It is accepted on behalf of the Deep Sky Claimants, by Mr Loxton, that this is a case where CPR 25.27 is applicable. This is the provision which provides that: “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) ... 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; …”.[7]It is, therefore, accepted by Mr Loxton on behalf of the Deep Sky Claimants that they are, indeed, companies where there is reason to believe that they will be unable to pay the Defendants’ costs if ordered to do so. The issue, in such circumstances, is whether the Court should, in the exercise of its discretion and having regard to the matter in the round, make the orders that are now sought; in other words, in the language of CPR 25.27(a), having regard to all the circumstances of the case.[8]I have been referred to a number of authorities in this respect. It is unnecessary for me to set them all out, but I confirm that I have had regard to them in considering these applications. One such authority is a decision of Mr Andrew Henshaw QC, as he then was, namely Deleclass Shipping Co Limied v Ingosstrakh Insurance Co Limited [2018] EWHC 1149 (Comm), where

the judge said as follows at [20]:

“It is generally accepted that the factors relevant to the exercise of the discretion to order security for costs are those set out by Lord Denning in Sir Lindsay Parkinson & Co Limited v Triplan Limited [1973] QB 609, in particular: (i) whether the claimant’s claim is bona fide and not a sham; (ii) whether the claimant has a reasonably good prospect of success; (iii) whether there is an admission by the defendant; (iv) whether there is a substantial payment or an open offer of a substantial amount; (v) whether the application for security is being used oppressively (e.g. so as to stifle a genuine claim); (vi) whether the claimant’s want of means has been brought about by any conduct by the defendant, such as delay in payment or in doing their part of the work; and (vii) whether the application for security is made at a late stage of the proceedings.”
[9]It is in relation to the fifth of those matters that the submissions advanced by Mr Duffy and Mr Loxton have today largely focussed. In short, the issue which I must determine is whether ordering security, as sought by the War Risk Defendants here, would entail a stifling of the Deep Sky Claimants’ claims.[10]As to this, it is worth noting that the White Book provides the following guidance at para.25.7.2:
“If the effect of an order for security would be to prevent the respondent to application from continuing its claim, then security should not be ordered—see Goldtrail Travel Ltd v Aydin [2017] UKSC 57 … per Lord Wilson at [12]. However, the burden lies on the respondent to show, on the balance of probabilities, that the effect of an order would be to stifle the claim—see Goldtrail per Lord Wilson at [15] and [23]. To discharge that burden the claimant will need to show that it cannot provide security and cannot obtain appropriate assistance to do so. The court will expect the claimant to be full and frank in relation to these matters.”
[11]I have been taken by Mr Loxton to the Goldtrail decision itself, as referred to in those notes to the White Book. Mr Loxton has highlighted, in particular, that Lord Wilson in that case said as follows at [16]:
“… for all practical purposes, courts can proceed on the basis that, were it to be established that it would probably stifle the appeal, the condition should not be imposed.”
Lord Wilson went on to say this at [17]:
“It is clear that, even when the appellant appears to have no realisable assets of its own with which to satisfy it, a condition for payment will not stifle its appeal if it can raise the required sum.”

Lord Wilson then said this at [18]:

“It seems that, in particular and as exemplified by the present case, difficult issues have surrounded the ability of a corporate appellant, without apparent assets of its own, to raise money from its controlling shareholder (or some other person closely associated with it); and this is the context of what follows. When, in response to the claim of a corporate appellant that a condition would stifle its appeal, the respondent suggests that the appellant can raise money from its controlling shareholder, the court needs to be cautious. The shareholder’s distinct legal personality (which has always to be respected save where he has sought to abuse the distinction … must remain in the forefront of its analysis. The question should never be: can the shareholder raise the money? The question should always be: can the company raise the money?”
Later, at the end of [23], Lord Wilson returned to the issue and summarised it in this way:
“In this context the criterion is: ‘Has the appellant company established on the balance of probabilities that no such funds would be made available to it, whether by its owner or by some other closely associated person, as would enable it to satisfy the requested condition?’”
Lord Wilson went on to say this at [17]: Lord Wilson then said this at [18]:[12]It was Mr Loxton’s submission, as I will come on to address shortly, that in the present case there must be a limit, consistent with the observations Mr Loxton would suggest of Lord Wilson in Goldtrail, to the extent that the court will expect a claimant to look to companies further up the corporate structure.[13]I have also been taken to a decision of the Court of Appeal, namely Gama Aviation (UK) Ltd v Taleveras Petroleum Trading DMCC [2019] Costs LR 497, in which Males LJ set out the applicable principles at [45] to [51]. Without setting out everything that Males LJ had to say, it is nonetheless helpful to note the following. At [45], he stated:
“First, at any rate in a case where the defendant has a real prospect of successfully defending the claim, the court must not impose a condition requiring payment into court or the provision of security with which it is likely to be impossible for the defendant to comply.”
At [46], Males LJ said this:
“… the burden is on the defendant to establish on the balance of probabilities that it would be unable to comply with a condition requiring payment into court or the provision of equivalent security… .”

Then at [47], Males LJ said this:

“… in order to discharge that burden a defendant must show, not only that it does not itself have the necessary funds, but that no such funds would be made available to it, whether (in the case of a corporate defendant) by its owner or (in any case) by some other closely associated person.”
At [46], Males LJ said this: Then at [47], Males LJ said this:[14]Then, having regard to what Lord Wilson had had to say inGoldtrail, Males LJ said this at [48]:
“It is important in the case of a corporate defendant to keep well in mind that the question is not whether the company’s shareholders can raise the money but whether the defendant company has established that funds to make the payment will not be made available to it by its beneficial owners.”
Then, particularly relevant for present purposes, as will become apparent shortly, Males LJ said this, again by reference to what Lord Wilson had had to say in Goldtrail, in this passage in Gama at [49]:
“Lord Wilson went on at [24] to explain the kind of evidence which the court would expect to receive when a company seeks to discharge this burden: ‘In cases, therefore, in which the respondent to the appeal suggests that the necessary funds would be made available to the company by, say, its owner, the court can expect to receive an emphatic refutation of the suggestion both by the company and, perhaps in particular, by the owner. The court should therefore not take the refutation at face value. It should judge the probable availability of the funds by reference to the underlying realities of the company’s financial position; and by reference to all aspects of its relationship with its owner, including, obviously, the extent to which he is directing (and has directed) its affairs and is supporting (and has supported) it in financial terms.’”
[15]Returning to Deleclass, the decision of Mr Henshaw QC, as he then was, Mr Loxton highlighted how in that case the court refused to grant an insurance company security for costs against two claimants following the total loss of a vessel and those claimants’ bringing of a claim against the insurance company to recover their losses under the insurance contract with the insurance company. This refusal was on the basis that the claimants had demonstrated that they had limited assets available as a result of the loss of the vessel and subsequent failure to pay out by the insurance company, and that there was no real prospect of them obtaining funds from shareholders or an outside source. It was, in those circumstances, the decision of Mr Henshaw QC that an order for security would likely stifle their claim and that they were not unfairly using impecuniosity to put pressure on the defendant.[16]It is worth in this connection considering the evidence that was deployed before Mr Henshaw QC in Deleclass since the contrast with the evidence deployed by the Deep Sky Claimants in the present case is striking. In Deleclass the judge set out the evidence which was before him under the heading “Stifling” at [43] to [56]. This was evidence coming from the claimant’s solicitor and also, importantly for present purposes, from a Maria Williams, who was a director of the first claimant and a shareholder in both claimants. It was her evidence, as recorded at [44], that:
“If an order for security were made it is likely it would result in the Claimants being unable to pursue their claim against the defendant and it would be impossible for the Claimants to obtain the sums sought by the defendant… .”
Mrs Williams was recorded by

the judge as then going on to say, again at [44], that:

“The Claimants are already struggling to fund their costs of the litigation and have done so to date by relying on a loan, the limit of which was soon to be reached.”
Mrs Williams then explained in her witness statement, as recorded at [48]:
“… the first claimant has no bank accounts, assets or cash - it was simply a ship-owning company - and that all commercial operations were carried out by the second claimant. She says [Mr Henshaw QC noted] the first claimant never had a bank account and did not prepare balance sheets or profit and loss statements.”

Then, at [49], Mr Henshaw QC said this:

“She goes on to say that, by reason of these matters, obtaining funding is very difficult. ‘Funding the litigation to date has already been difficult, but the Claimants have managed to do so as set out below…’ She says: ‘The prospects of obtaining any further substantial funds, let alone of the order of the £500,000+ security sought by the Defendants, are very low indeed’.”
Mr Henshaw QC then set out other aspects of the evidence of Mrs Williams at [50] to [56], and that evidence entailed, as noted by Mr Henshaw QC at [55], evidence that, were security to be ordered, it would be impossible for the claimants to continue with their claims. Thus, Mr Henshaw QC said this:
“Mrs Williams says that, thus, she and her husband and the Amberseas businesses do not have the funds to provide security for costs anywhere near the sums sought. She adds that they will struggle even to find the funds for the Claimants’ own legal costs going forward should the Part 20 defendant remain party to the proceedings. She states: ‘We will find it incredibly difficult to find even those substantial further sums but will do the best we can in meeting sums due to Clyde & Co LLP as they fall due. It would simply be impossible for the Claimants to find a further sum of the order of GB £500,000, as is apparently sought by the defendant, particularly if any substantial amount is required in short order’.”
Mrs Williams then explained in her witness statement, as recorded at [48]: Then, at [49], Mr Henshaw QC said this:[17]Just lastly on Deleclass, Mr Loxton drew my attention to the following at [85] to [87]:
“85. Mrs Williams’ evidence was that the first claimant was a one-ship company with no other business. I do not understand that to be contested. When the vessel was lost, its only asset and income source were lost with it. The insurance policy proceeds are, thus, its only potential asset. The evidence indicates that the same is true of the second claimant, in that the loss of the vessel in fact meant the loss of its whole business. 86. Policy coverage and loss are common ground. I have already indicated that, in my view, the Claimants have an arguable prima facie case. Even leaving aside the valued policy argument, the vessel was worth about $1.5 million on the Claimants’ case and $725,000 on the defendant’s case. Had indemnity been provided under the policy, the first claimant would be less impecunious by that amount, plus the sums it has had to incur in costs vis-à-vis the defendant in this litigation to date. 87. The force of this factor is reduced to a degree by the lack of specific evidence about the Claimants’ pre-existing financial position, although, bearing in mind this was a one-ship operation, it seems likely that non-payment of the insurance claim has materially contributed to the Claimants’ lack of means.”
[18]Just lastly on the authorities, I also have had my attention drawn to a decision of another Deputy Judge, Mr David Edwards QC in World Challenge Expeditions Limited v Zurich Insurance plc Costs LR 1039. In that case, Mr Edwards said this at [35]:
“There is a related point as to whether Zurich’s conduct in refusing to pay the sums claimed has contributed to WCEL’s financial position. Whilst it is a fact that, if Zurich had paid the £10.8 million currently claimed, WCEL’s current insolvent position would be cured, I am in no position to decide now whether Zurich should have paid that amount, or indeed any amount, or not. I do not say that it is irrelevant but it is a factor to which I attach little weight. The reality, as demonstrated by the documents I have already referred to, is that WCEL’s financial difficulties pre-dated the current dispute.”
[19]In that last respect, Mr Loxton submitted that the fact that a defendant has not met a claim and that claim has resulted in the claim against the defendant is a relevant factor to be borne in mind. I accept that that is the position, and to the extent that a contrary indication might have been given by an observation made by Langley J in Automotive Latch Systems Limited v Honeywell International Inc. [2006] EWHC 2340 (Comm) at [17], I would respectfully disagree with what the judge there said. It is, however, whilst a factor, not a factor which can easily be approached, for the reason that Mr Edwards gave in the authority to which I have just referred.

Discussion

[20]So much for the authorities and coming now to the applications before me, I have reached the clear conclusion that the Deep Sky Claimants have gone nowhere near establishing on the evidence the suggested stifling of their claims and so the ground of opposition to the present applications.[21]I set out in some detail the evidence that was before Mr Henshaw QC in Deleclass because, as previously observed, the contrast between the quality of that evidence and the extent of that evidence, with the evidence on which the Deep Sky Claimants rely in the present case, is striking.[22]The evidence, in a formal sense, consists of the contents of the sixth witness statement of Stephen May, the Deep Sky Claimants’ solicitor, dated 26 November 2025, although I have also been taken to subsequent correspondence dated from December 2025, and indeed a letter from Fieldfisher, the firm in which Mr May is a partner, dated 25 February 2026, namely yesterday.[23]Starting with the witness statement to which I have referred, Mr May said, amongst other things, the following under the heading, “Facts and matters relevant to the question of whether Deep Sky's claim could be stifled”, at para.16:
“On the face of their accounts, none of the Deep Sky Claimants has the money to pay the security for costs sought by the WRDs. Therefore, if an order for security is made it could stifle Deep Sky’s claim as it will be unable to meet the order. Such an outcome would be manifestly unfair.”
Pausing there, it is worth noting that the statement there made is that if an order for security is made, it could “stifle” the Deep Sky Claimants’ claim. That is not evidence which is even remotely on the same level as the evidence which was deployed in Deleclass. That evidence in Deleclassspoke in terms of the impossibility of meeting the security for costs sought. What Mr May has to say in this para.16 is the language of possibility, not impossibility.[24]Mr May went on to state this in para.18:
“As indicated in the correspondence (for example, in our letter dated 13 September 2024 ...) Deep Sky has always acknowledged were a costs order for the whole or a substantial part of the Defendants’ costs in its claim made, it would be paid by one of its parent companies ... .”
That is a statement which is inconsistent with the submission now made that, in the event that security for costs orders were made against the Deep Sky Claimants, they could not be met. If the Deep Sky Claimants’ position is as stated in Mr May’s para.18 – namely that, in the event that a costs order is ultimately made against them, then one of its parent companies would meet that order – then it is impossible to see how that would not also be the case if a security for costs order were now made.[25]Mr May goes on to state the following in para.19.1:
“The relevant parts of the group structure of Deep Sky is as follows: (a) Deep Sky Leasing Holding Limited (incorporated in the Republic of Ireland) (‘Deep Sky Holdings’) owns 100% of the shares of the Deep Sky Claimants. (b) AviaAM Financial Leasing Hong Kong Limited (incorporated in Hong Kong) (‘AviaAM HK’) owns 100% of the shares of Deep Sky Holdings. (c) AviaAM Financial Leasing China Co., Ltd (incorporated in the People’s Republic of China) (‘AviaAM China’) owns 100% of the shares in AviaAM HK. (d) AviaAM China is owned by: (i) Henan Civil Aviation Industrial Fund Management Co., Ltd (incorporated in the People’s Republic of China) (‘HNCAIFM’) (41.38%). (ii) Henan Civil Aviation Development & Investment Group (incorporated in the People’s Republic of China) (‘HNCADIG’) (28.72%). (iii) AviaAM Leasing Service Centre, AB (incorporated in Lithuania) (‘AviaAM LT’) (29.9%). The shareholders of AviaAM China (HNCAIFM, HNCADIG and AviaAM LT) have appointed directors to AviaAM China’s board of directors. (e) HNCAIFM and HNCADIG are partially state-owned.”
Returning to para.18, I take, therefore, what Mr May had to say in that paragraph combined with what is stated in para.19.1 as to the group structure of Deep Sky as meaning that the various entities listed in para.19.1, by which no limitation was intended in what was stated in para.18, would meet the costs ultimately were they to be ordered in the Defendants’ favour at the end of their trial.[26]Mr May then went on at para.19.2 to say this:
“I understand from one of the directors of the Deep Sky Claimants that owing to the nature of this group structure and in particular the corporate governance of AviaAM China, matters such as the granting of security from certain of these group companies, in any of the forms sought by the WRDs, require the approval of a number of relevant shareholders and directors (including, in each case, the board of directors of AviaAM China).”
Again, nothing is said here about it being impossible that the companies further up the corporate structure would be able to meet a security for costs order. Rather, the language is more couched in terms of complexity rather than impossibility.[27]Mr May went on in para.19.3:
“Whilst my instructions are that the directors of each of the Deep Sky Claimants and Deep Sky Holdings have considered the possibility of raising the funds for security for the WRDs’ costs either through a payment into Court or an accredited bank in London (either from their own funds (which is obviously not possible) or the funds of one of their group companies), or a parent company guarantee from other group companies, that has not proven to be possible to date ... Deep Sky has been unable to procure any other form of security for costs from its group companies to date.”
Again, this is not the language of impossibility. It is, rather, the language of reporting what the state of affairs was as at the end of November 2025. It is not sufficient language to support the stifling claim that is now the basis of the opposition to the present applications.[28]Mr May went on at para.20 to say this:
“Deep Sky has actively attempted, but has been unable to, raise money from its group companies to date ... ”
. The same observation applies to this paragraph as to para.19.3.[29]Then, interestingly for present purposes, at para.21, Mr May said this:
“The security for costs sought by the WRDs totals £5,713,819.11, and each of the WRDs ask that this is provided via a payment into Court or alternatively in a form agreed by the parties. This amount significantly dwarfs Deep Sky’s costs of the proceedings to date, which were in any event for the most part invoiced on a monthly basis and paid roughly in monthly payments. Deep Sky Holdings and/or AviaAM China has paid Deep Sky’s costs of the proceedings to date. Deep Sky’s costs of the proceedings to date ...”
. This is a piece of evidence which, in my view, completely undermines the submission advanced by Mr Loxton today, which was that, in looking at the corporate structure set out in para.19.1 of Mr May’s sixth witness statement, it is inappropriate to take the view that the Deep Sky Claimants should look beyond Deep Sky Holdings and AviaAM HK, namely the entities identified in paras.19.1(a) and (b). It was Mr Loxton’s submission, indeed, that it would not be right to expect the Deep Sky Claimants to look further up the corporate chain so as to include AviaAM China, the entity identified in para.19.1(c), or any other entity further up the corporate structure. The fact, however, that AviaAM China, together with Deep Sky Holdings, have apparently been paying the Deep Sky Claimants’ costs of the proceedings to date demonstrates the unreality of that submission. It is entirely consistent with the authorities – including the observations made by Lord Wilson in Goldtrail – to expect a claimant in the position of the Deep Sky Claimants, single purpose vehicles, to look within and up the corporate structure to then explain to the Court in an attempt to discharge the burden showing that their claims would be stifling. I regard it as entirely artificial to introduce any delineation between the various entities as the corporate chain is, as it were, elevated. The fact that AviaAM China, as we learn from para.21 of Mr May’s witness statement, have been paying the Deep Sky Claimants’ costs demonstrates the complete lack of reality of the submission which forms the foundation of the opposition to the present applications.[30]Mr May went on in para.22 to say this:
“These costs are self-evidently of an entirely different magnitude to the WRDs’ costs for which security is sought. The fact that Deep Sky has been able to fund the proceedings to date is not in any way an indication that the Deep Sky Claimants will be able to procure a form of security for costs for the amounts sought by the WRDs.”
Mr Duffy, in his submissions, asked rhetorically, “Why not?” I agree. The simple fact is that the evidence before the Court is wholly insufficient to justify the Court reaching a decision that, notwithstanding the applicability of CPR 25.7(a) and (b)(ii), the present application should fail. In all the circumstances, and having regard to the state and quality of the evidence before the Court, the opposite conclusion is plainly the appropriate conclusion in this case.[31]I leave to one side for these purposes the fact that security has been offered to the war risk Defendants in the form of a guarantee from AviaAM HK, namely the entity identified in para.19.1(b) of Mr May’s witness statement, which itself entails an acknowledgement, as I see it, that it is, indeed, appropriate to expect the Deep Sky Claimants in this case to explain the financial position not only of themselves and their direct owners – namely Deep Sky Holdings – but also of AviaAM HK and AviaAM China and, indeed, other entities further up the corporate structure. That guarantee has been rejected for different reasons, namely relating to concerns over the financial viability of AviaAM HK, but that is a different point. The relevance of the offer having been made is the one that I have identified.[32]I mentioned previously that, in addition to Mr May’s sixth witness statement, there has been subsequent correspondence, including most recently correspondence from yesterday. That correspondence includes a letter written by Fieldfisher to the War Risk Defendants’ solicitors on 16 December 2025, in which, amongst other things, the following was stated in para.7:
“The reason why our client has not been able to obtain alternate proposals for security for costs from its group companies other than Deep Sky Leasing Holding Limited (‘Deep Sky Holding’) (except for the limited parent company guarantee from AviaAM HK in July) is because ... (e) We are instructed that the board of AviaAM China (and AviaAM HK) has been unable to agree on the provision of further offers for security of the WRDs’ costs of these proceedings, beyond the proposals already made by firstly AviaAM HK and secondly Deep Sky Holdings.”
Then in para.8, this was stated:
“During the course of these proceedings, we have explored the possibility of obtaining alternate sources of funding. Our firm spoke with representatives of Burford Capital and Omni Bridgeway, both of which provide litigation financing. However, neither pursued the opportunity to finance Deep Sky’s claims. We understand that many funders are conflicted owing to virtually all of the aviation reinsurance market being Defendants in these proceedings.”
Then in para.8, this was stated:[33]As to this latter point, Fieldfisher sent a further letter yesterday, having had sight of the skeleton argument submitted by the War Risk Defendants, in which the point was made that the evidence concerning efforts to obtain litigation funding or ATE insurance have not been adequately explained in the evidence.[34]In that letter, reference was made to what was described as the “unconstructive conduct” displayed by the War Risk Defendants, and then various points were made as follows. At para.3:
“(b) The possibility of obtaining ATE insurance formed part of our clients’ discussions with third party funders (it being a condition of any such funding that ATE insurance would have to be procured). (c) As explained in our letter dated 16 December 2025, those discussions were unproductive, we believe because many funders are conflicted given the Defendants to the proceedings. (d) Any standalone ATE insurance policy (rather than part of a package of funding) would have encountered the same conflict and we are not aware of any such policy being available, based on our discussions with Burford and Omni Bridgeway. We also consider that any available standalone ATE policy would likely be unaffordable to our clients given their impecuniosity and the exorbitant and duplicated nature of the Defendants’ costs (most recently demonstrated by the HFW and KLS Shoosmiths’ N260 forms in connection with this application).”
[35]I note everything there stated. The fact, however, remains that, even without having to resort to litigation funding or ATE insurance, I am wholly unpersuaded, for reasons previously explained, that the evidence before the Court is sufficient to justify the stifling objection by reference to the efforts made to obtain the security for costs funding from within the Deep Sky Claimants’ corporate structure. It follows that the hurdle and the burden which the Deep Sky Claimants have faced is not one that I consider is even remotely near being overcome.[36]There is just one further submission that I ought to acknowledge. This was Mr Loxton’s submission that, in circumstances where the War Risk Defendants have obtained, through agreement, security for costs against other Claimants, so there would be no injustice, taking into account all the circumstances of the case, if the present applications against the Deep Sky Claimants were to be rejected. That is a submission, which is unrealistic. The costs that are covered by the present security for costs applications are costs that are estimated to be incurred against the Deep Sky Claimants. They are costs, therefore, in the event that the Deep Sky Claimants fail against the War Risk Defendants, which will be irrecoverable on the assumption that the Deep Sky Claimants are not, as it were, good for the money. They are not costs which, accordingly, will be recoverable from any other claimant. It follows, therefore, that for the Deep Sky Claimants to point to the position of other Claimants and their having provided security for costs is an irrelevance and not an appropriate factor to have regard to in the present context.[37]For all those reasons, I am wholly satisfied that it is appropriate that security for costs is awarded in this case, and we must now turn to the quantum of that security. LATER[38]I have had an interesting discussion over the last hour or so about quantum, that is, the amounts of security claimed. I am quite satisfied, having listened to the respective submissions, that the amounts ordered should be as sought. There is a methodology put forward by Holman Fenwick and adopted by, as I understand it, all other Defendants, with the exception of the CMS War Risk Defendants for a reason I will come to in a moment. It is a methodology which has not been countered with an alternative methodology, other than the suggested adoption of a different percentage. That is not a different methodology. It is simply a question of percentage. I am satisfied that the methodology which apparently forms the basis of the agreement between the Defendants and all other Claimants is a viable and appropriate methodology.[39]So far as the CMS War Risk Defendants are concerned, a different approach has been adopted because they are in a slightly different position, and yet actually that methodology is very similar in result terms because it amounts to something like a 0.4 per cent difference then applying the methodology adopted by the other Defendants, including Holman Fenwick Willan Defendants. Accordingly, I am satisfied that there is no meaningful distinction between the slightly different methodology adopted by the CMS War Risk Defendants.[40]I resist the temptation, if that is the appropriate word, to adopt a line-by-line analysis of the amounts that have formed the total figures put forward by the various War Risk Defendants. I do not regard it as appropriate to get into a type of costs budgeting or summary assessment of costs type analysis at this stage. A broad-brush approach is what is required, and I am heartened and strengthened in that conclusion by the knowledge that, as I have mentioned, all the other Claimants have agreed to the same broad-brush and methodology-based approach that is now forming the basis of the present applications. I see no reason, in those circumstances, to depart from it in this instance.[41]When I stand back from matters and I consider the following, I conclude that it cannot be said that the amount of security sought is too high. The following consists of this: the Holman Fenwick Willan Defendants are facing claims brought by the Deep Sky Claimants in the region of $114 million. The security they seek, which represents a 60 per cent discount on the proportion of the total costs which they estimate will be incurred, is slightly over £1.3 million. There is no disproportion there at all. When one then factors in that the total claims brought by the Deep Sky Defendants are in the region of $680 million and the total costs estimated to be incurred by Holman Fenwick Willan are £17.7 million, it is impossible to detect any disproportion.[42]Turning to the CMS War Risk Defendants, the total claim in broad terms brought against them by the Deep Sky Claimants is $73.4 million, and the security for costs is sought in the amount of just over £2 million, again representing a 60 per cent deduction. Again, there is no conceivable disproportionality there, and again the equivalent figures for the totals are £26.4 million costs across the whole of the claims faced by the CMS War Risk Defendants in circumstances where, to repeat, the total claims are over £8 billion.[43]Turning then, lastly, to the Shoosmiths Defendants, the total claim faced by them in respect of the Deep SkyClaimants is some $183 million or so, which I am told amounts to more than the totals faced by the HFW Defendants and the CMS Defendants. But, in any event, it is a very substantial figure, and yet the security for costs sought, representing a 60 per cent reduction, is a mere £1.619 million. Again, there can be no disproportionality argument there.[44]Nothing I say, of course, impacts on any ultimate assessment of costs if that stage is reached. But at the stage that I am currently addressing the matter, namely security for costs, I am quite clear that the costs sought are appropriate. I repeat that there is no alternative methodology that has been proffered, and indeed the debate today has focused around a document produced by Mr Loxton only this morning in circumstances where there has been plenty of time for the Deep Sky Claimants to put forward a different methodology or different figures so that the Court could be persuaded otherwise. In those circumstances, the security for costs will be in the amounts ordered.