The UK high court has ordered Russian insurer Ingosstrakh to pay costs in a legal battle over the loss of a cargoship.
Law firm Clyde & Co, which acted for owner Deleclass Shipping, said of the case: "On occasion, parties engaged in court proceedings will consider procedural tactics with the ultimate intention of exerting such pressure on their adversaries that their weakened position, or even inability to pursue the proceedings, will work to their advantage."
Ingosstrakh's application for £500,000 ($694,000) security for costs became very problematic for the claimants, it added.
An unnamed Deleclass vessel had been declared a constructive total loss after it was involved in a collision and sank.
But a third party appeared and claimed they were entitled to the insurance proceeds.
The shipowner denied this and claimed the third party's case was false and fraudulent.
In view of the competing claims, the insurance company decided it would only pay the proceeds following a court order.
The third party claim was eventually struck out by the court.
But Ingosstrakh refused to pay out due to the third party's claim and both parties applied for security for costs.
Deleclass argued that if it had to pay this, it was "likely to stifle their ability to continue with the proceedings," Clyde & Co said.
"The insurers' decision to adopt the third party's claim, notwithstanding it being struck out, was highly unusual and contrary to their previously pleaded case; it was obvious that the application for security for costs was intended to stifle the shipowner's genuine claim."
Company not trading
Deleclass was not trading, had limited assets, was unlikely to raise funds from the shareholders, and faced difficulty in financing the proceedings.
The court stated in April that, although there was a dispute as to quantum, the defendant's failure to pay under the insurance policy had been a contributing factor to the claimants' financial predicament.
In addition, the defendants' adoption of the third party's claim was seen as an apparent tactic to circumvent a payment altogether.
Now judge Andrew Henshaw QC has assessed the costs of Deleclass' application at £29,000, with the Russian insurers costs £12,000.
The net sum of £17,000 was ordered to be paid to Deleclass.
Clyde & Co added: "This case illustrates the discretion available to the court when considering applications for security for costs and the many factors they will take into account to make sure that no injustice is done to a party which is in a financial tight spot, whilst still bearing in mind the other party's position."
