Judicial interpretation of the high court in application of the security for costs

Abstract

Security for costs is a fund of money paid into Court by a plaintiff to protect defendants from unrecoverable costs associated with the plaintiff?s action. The High Court is guided by some considerations to make order for security for costs but the considerations are not defined in detail and left the Court to interpret the meaning. This has caused the Courts to give different interpretations in making the decisions. Another issue which arise is whether the High Court has the power to grant interim measures and make security for costs under section 11(1) of Arbitration Act 2005 in support of an arbitration which is taking place or will take place outside Malaysia. Besides that, section 11(1) of Arbitration Act 2005 has stated that any party including the plaintiff may apply to the Court for interim measure which is nature is contradictory to the general rule that is the security for costs is applied by the defendant. Section 19 of Arbitration Act 2005 gives overlapping but not coextensive powers to the arbitral tribunal that is baffling whether an interim order should be sought from the High Court or the arbitral tribunal. In order to clear the doubt regarding the application of security for costs, this research project is carried out to determine the grounds for the High Court to order or dismiss the application for security for costs. Legal cases are collected from year 1986 to year 2009 from Malayan Law Journal via Lexis Malaysia website and documentary analysis was conducted on the related cases. Finally, this research has shed some light in exposing what are the possible reasons that the High Court may order or dismiss the application for security for costs. From the analysis done on the cases, it is observed that the party who apply the security for costs has to be the defendant. The High Court has to consider all the circumstances in a particular case before making any decisions. The High Court will order the plaintiff to furnish such security when the High Court believes that the security is necessary.