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Strike out or security for costs as sanction: a question of proportionality

In Alba Exotic Fruit Sh Pk v MSC Mediterranean Shipping Company S.A., the Circuit Commercial Court imposed security for costs as a sanction for a claimant that failed to take any substantive steps in pursuing its case for over four years, instead of ordering that the claim be struck out.

In addition to being a rare example of security for costs being imposed as a sanction, the case provides an important illustration of the court’s approach towards sanctions. It highlights, in particular, the different considerations of the court when determining whether to grant relief from sanctions or order strike out.


The claimant, an Albanian import/export company, issued proceedings in April 2014 for a claim of over US $150 million for bananas spoiled in transit. It served particulars of claimin July 2014. The defendant, a French shipping company, served its defence and counterclaim in September 2014.

Under the applicable rules (PD 59.7.2), within 14 days of service of the defence, the claimant should have applied to the court to list the case management conference (CMC) (in this case, in September 2014). However, the claimant failed to do so and in fact did not take any substantive steps in the proceedings until 2018, over four years later.

In June 2018, the claimant served a notice of change of solicitor and an application to amend its particulars of claim. In response, the defendant applied:

  • To strike out the claim under CPR 3.4(2)(b) and (c). The court has the power to strike out a statement of case where that statement of case is an abuse of the court’s process or is otherwise likely to obstruct the just disposal of the proceedings; or where there has been a failure to comply with a rule, practice direction or court order.
  • For security for costs under CPR 25.12.

The court declined to strike out the claim but did grant security for costs as a sanction for the claimant’s failure to comply with the rules.

Why not strike out?

Ultimately, the court considered that striking out a claim for failure to fix a CMC would be disproportionate.

The claimant’s delay in applying to fix the CMC was, in the court’s view, “inordinate and inexcusable”. It had been advised by its then solicitors of the need to apply for the CMC and yet seemingly had never taken any step towards this. However, it had not resulted in serious prejudice to the defendant such that it could no longer defend the claim. While the delay would have resulted in the recollection of witnesses likely being diminished, in the court’s view the documentation would probably play a key part in the resolution of the dispute at trial and there was no suggestion that the defendant would be unable to produce the relevant documents. In the circumstances of the case, the delay did not mean that a fair trial was no longer possible; therefore, it did not amount to an abuse of process.

It was relevant as well that:

  • This was not a case where the claimant deliberately chose to delay proceedings but keep them alive so that it could continue them at some point in the future if it wanted, but rather one of “mere” delay.
  • The defendant could have taken steps to fix the CMC itself (even though there was no positive obligation in the rules to do so).

Why security for costs?

The court also concluded that the test for security for costs under CPR 25.12 was not met. It found that the risk of the defendant being unable to enforce a costs award against the claimant was not sufficiently serious to justify an order for security for costs.

However, the court did consider (narrowly) that security for costs was a fair and proportionate sanction to impose for the claimant’s serious default, which had delayed and increased the costs of the litigation.

The court recognised the need to impose “some sanction” upon the claimant and justified security for costs as the appropriate course of action. This was on the basis that it would avoid the potential consequence of the defendant, if successful, being unable to enforce a costs order. It therefore ordered security representing 79% of the defendant’s estimated costs to trial.


A number of important points arise from the judgment:

  • The tests applied by the court for striking out a claim and granting relief from sanctions may be similar (and the court utilised CPR 3.9 in order to decide on a sanction here), but there is a significant distinction. The question of proportionality is not taken into account in an application for relief from sanctions under CPR 3.9, where it is assumed that the sanction was properly imposed (and the court was clear that relief would not have been granted in this case). However, the court must take into account proportionality when dealing with an application to strike out and that weighed against granting such an application in this case.
  • The court has broad case management powers when dealing with a party’s default, as demonstrated by the court’s decision to impose an order for security for costs as an alternative sanction, despite the fact that the conventional test had not been satisfied in this case.
  • Certain courts impose a requirement on the claimant to take steps to fix the CMC. This is the case in the Commercial Court as well as the Circuit Commercial Court, in contrast to the approach by the courts in the Chancery Division, Queens Bench Division and Technology and Construction Court, for example, which will usually fix the CMC.

This blog was first published on the Practical Law Dispute Resolution blog.

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