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Third party costs order obtained against a designated terrorist

27th Oct 2022


Charles Holroyd acted for the successful claimants in a claim for a third party costs order against Mr Abdul Jalil Mallah.  The background to the claim was that the claimant shipowners had succeeded at trial before Sir Andrew Smith in March 2022 (neutral citation [2022] EWHC 452 (Comm)).  That claim had been against the bareboat charterers of two vessels and the vessels’ managers.  The shipowners had succeeded in obtaining declarations that the bareboat charters had been validly terminated, and an order requiring possession of one of the vessels to be surrendered.

The termination of the bareboat charters had been precipitated by the United States authorities’ designation of Mr Mallah as a “Specially Designated Global Terrorist” on 10 June 2021 and the consequent application of the U.S. sanctions regime to the bareboat charterers and managers.  Mr Mallah was at the time the sole shareholder and sole director of the charterers and the managers.

Mr Mallah subsequently purported to divest himself of any interest in the charterers, and one of the issues at trial (in the context of an application by the charterers for relief from forfeiture) was whether such divestment was genuine, or whether Mr Mallah remained the beneficial owner.  Sir Andrew Smith held at trial that Mr Mallah had not genuinely divested himself of his interest and that the charterers’ case to the contrary had been a dishonest attempt to mislead the court.

The claimants obtained a costs order against the bareboat charterers and managers, but it was not complied with.  The charterers had no known assets and the managers had been dissolved.  The owners therefore applied for a third party costs order against Mr Mallah.

Sir Andrew Smith held that Mr Mallah was so closely connected with the proceedings that there was no injustice in holding him bound (for the purposes of costs) by the factual findings in the judgment given at trial.  The judge held that Mr Mallah had funded the charterers’ defence of the proceedings, that the litigation had been defended for the personal benefit of Mr Mallah, and that there had been impropriety or bad faith by Mr Mallah in connection with the litigation.  Applying the guidance in Goknur v Aytacli [2021] EWCH Civ 1037, the judge held that this was an appropriate case for a third party costs order.

Charles Holroyd was instructed by Reed Smith LLP (Charlie Weller and CJ Kim).

To view a copy of the judgement, please click here