The UK case of Cherkasov & Ors v Olegovich, the Official Receiver of Dalnyaya Step concerns an application for security for costs against a liquidator.
A Russian court appointed a liquidator to the Russian subsidiary of a Guernsey unit trust. The liquidator applied for recognition of the liquidation proceeding as a foreign proceeding in the UK under the Cross-Border Insolvency Regulations 2006. The application for a recognition order was granted.
The applicants for costs in Cherkasov were involved in the management of both the Russian subsidiary (in liquidation) and companies advising or managing the Guernsey unit trust. The applicants alleged that the liquidation of the Russian subsidiary was unlawful and part of an abusive campaign by the Russian Government against them. They applied to set aside the recognition order on public policy grounds and sought security for costs.
The Court held that when applying to set aside the recognition order, the applicants should be treated as effectively the defendants to the application for the recognition order. They were entitled to apply for security for costs. The liquidator was ordered to provide security for costs of £1m.
See the full judgment here.