UPC: Local divisions disagree on approach to security for costs

Two separate requests for the provisions of security for costs from a claimant domiciled in China has highlighted differing approaches of two UPC local divisions. 

Defendants Chint New Energy Techology and Astroenergy have requested that the claimant JingAo Solar provide a security for costs, on the grounds that the claimants domicile in China may mean that a costs decision would be unduly burdensome to enforce. There are parallel proceedings in the Munich and Hamburg Local Divisions, and each Judge Rapporteur reached a different decision. 

The Munich Local Division granted a request for security, holding that enforcement of a costs decision against the claimant may be unduly burdensome or even not possible. Judge Rapporteur Pichlmaier cited the difficulty that the UPC has encountered in serving statements of claim and other documents on parties domiciled in China in the past (see some of our reports here: https://www.marks-clerk.com/insights/latest-insights/102j7ku-upc-service-on-defendants-a-discrepancy-in-approach-between-local-divisions/, here: https://www.marks-clerk.com/insights/latest-insights/102k10s-upc-when-is-attempted-service-good-service/) in which service on the parties domiciled in China was unsuccessful even after the UPC achieved service on the appropriate Chinese authority. 

On the other hand, the Hamburg Local Division denied a corresponding request, citing a lack of legitimate concern about the financial position of the claimant or that enforcement would not be possible, based on the arguments provided by the defendants. Judge Rapporteur Klepsch specifically referred to the Munich order in her reasoning, and countered that past difficulties are not sufficient grounds to order the security, adding that the Court must assume that enforcement would be as likely in China as in any EU state. It remains to be seen if the parties will appeal these orders, and whether the Court of Appeal will provide a guideline on how to address litigants’ concerns in this regard.