OGH: No security for legal costs after Brexit

Jun 3, 2022 Benn-Ibler Rechtsanwälte

In the present case, the Austrian Supreme Court (Oberster Gerichtshof, OGH) addressed the imposition of security for legal costs on a British plaintiff.

The plaintiff is a British citizen. He sought a sum of GBP 27,200 from the defendant and a declaration that the defendant was liable for all claims arising in the future under an "agency cooperation agreement". The defendant, however, requested that the plaintiff be ordered to provide security in the amount of EUR 30,000 for any litigation costs (security deposit).

The court of first instance only ordered EUR 8,000 to be paid as security for the legal costs. The appellate court overturned the first decision in such a way that it dismissed the defendant's application in its entirety: Due to the withdrawal of Great Britain, well-known EU regulations such as the Brussels Regime were no longer applicable. However, the case was based on a choice of court agreement, which meant that the Hague Service Convention was applicable and therefore no security for costs of proceedings had to be imposed.

The OGH considered the following:

The defendant argued in this regard that the appellate court misapplied Section 57 para 2 no. 1a of the Code of Civil Procedure (Zivilprozessordnung, ZPO), because the actual enforcement practice is relevant for case-law countries and a new enforcement practice must first be established. If nothing else is stipulated by state treaties, the foreign plaintiff has to provide security for legal costs at the request of the defendant pursuant to Sec. 57 para 1 ZPO. According to para 2, however, such an obligation is not required if a court decision ordering the plaintiff to pay legal costs would be enforced in the state of the plaintiff's habitual residence. According to the requirements of the 1954 Hague Service Convention, the plaintiff is exempt from providing security for legal costs because of enforceability in the plaintiff's state of habitual residence.

It remained open whether, due to Brexit, the treaties between Austria and the United Kingdom prior to EU accession would have to be reapplied.

OGH 4 Ob 30/22y (29.03.2022)