How to Obtain Security for Costs in UK Civil Fraud Claims (2026): Requirements & Strategy

Security for costs civil fraud UK applications have become one of the most important tactical tools available to defendants facing high-value, cross-border and increasingly crypto-driven fraud litigation in England and Wales. As litigation costs continue to climb and litigation funding attracts closer scrutiny, defendants are more frequently seeking court orders that protect them against the risk of an unrecoverable costs bill if a poorly funded or foreign claimant loses. This 2026 guide sets out the procedural basis under the Civil Procedure Rules, the evidential threshold defendants must meet, the tactical timing of an application, and the strategies claimants use to resist it or arrange after-the-event (ATE) insurance and fortification.

It is written for defendants and their solicitors weighing an application, and for claimants and in-house counsel preparing their response.

Executive summary and quick checklist for security for costs civil fraud UK applications

Security for costs is a discretionary remedy that requires the court to be satisfied both that one of the specified conditions is met and that it is just, in all the circumstances, to make the order. In fraud litigation, where costs frequently run into seven figures and claimants may be impecunious companies, foreign entities or funded vehicles, the stakes are high on both sides. The checklists below capture the essential steps.

For defendants:

• Identify the gateway. Confirm whether the claimant is resident outside the jurisdiction and outside the enforcement reach of the court, or an impecunious company that would be unable to pay costs if the defence succeeds.
• Gather evidence early. Assemble corporate accounts, filed financial statements, asset-tracing results and any evidence of opaque ownership before drafting the application.
• Choose the right moment. Consider whether to apply after service, at the case management conference (CMC), or urgently where dissipation or delay is a risk.
• Quantify realistically. Prepare a costs estimate that reflects incurred and future costs, with an appropriate margin, aligned to any approved costs budget.
• Specify the order sought. Payment into court, a bank guarantee or a stay pending security are the usual forms.

For claimants:

• Test the merits argument. A strong claim can weigh against ordering security, particularly in borderline cases.
• Evidence your means. Provide credible, up-to-date evidence of the ability to meet an adverse costs order.
• Consider ATE and funding. A properly worded, fortified ATE policy or third-party funding arrangement can answer the defendant’s concern.
• Negotiate staged security. Partial or phased security tied to costs-budget phases is often preferable to a single large payment.

Legal basis and where to start: CPR Part 25 and the security for costs rules

Security for costs in England and Wales is governed by the Civil Procedure Rules. The applicable rules are found in CPR Part 25, which deals with interim remedies and security for costs. Under the current structure of Part 25, the conditions for making an order and the discretionary framework are set out in the rules dealing specifically with security for costs. Practitioners should read the relevant provisions alongside the associated Practice Direction, which explains the procedural detail for interim applications. Getting the rule basis right is the foundation of any successful security for costs civil fraud UK application.

CPR Part 25 security: the mechanics and the conditions

Under CPR Part 25, the court may order a claimant to give security for the defendant’s costs where it is satisfied, having regard to all the circumstances of the case, that it is just to make the order and that one or more of the specified conditions applies. The conditions most commonly relied upon in fraud litigation are:

• The foreign claimant condition. The claimant is resident outside the jurisdiction (and not resident in a state against which enforcement of a costs order would be straightforward).
• The impecunious company condition. The claimant is a company or other body (whether incorporated inside or outside Great Britain) and there is reason to believe that it will be unable to pay the defendant’s costs if ordered to do so.
• Conduct-based conditions. The claimant has taken steps in relation to its assets that would make it difficult to enforce an order for costs against it, or has changed address since the claim commenced with a view to evading the consequences of the litigation, or has given an incorrect address in the claim form.

The two-stage analysis is important. Establishing a condition does not entitle the defendant to security as of right; it merely opens the door to the court’s discretion. The court then asks whether, weighing all the circumstances, an order is just. This is where the merits of the claim, the risk that an order might stifle a genuine claim, and the reasons for any impecuniosity all come into play.

Practice Direction highlights and procedural forms

The Practice Direction supporting Part 25 addresses how interim applications must be made and supported. In practice, a security for costs application is made by application notice supported by evidence, usually a witness statement, setting out the condition relied upon and the material justifying an order. The defendant must show the court not only that a gateway is satisfied but also the amount of security sought and the basis of its calculation. Security for costs is most commonly determined inter partes at or around the CMC.

Leading authorities on the operation of these rules are available through the judgments repository at BAILII, and practitioners should always confirm they are relying on the most recent binding decisions of the Court of Appeal and High Court.

When to apply: defendant tactical timing for security for costs

Timing is one of the most consequential tactical decisions in any security for costs civil fraud UK strategy. Apply too early and the defendant may struggle to justify the sum sought or to demonstrate the claimant’s inability to pay; apply too late and the court may treat delay as a reason to refuse or reduce security, particularly where the claimant has already incurred substantial costs in reliance on the litigation proceeding.

The natural window for most applications is after service of the defence and around the CMC, when the pleadings define the issues, directions are being set, and costs budgets are before the court. Applying at this stage allows the security sum to be aligned with the approved or anticipated costs budget, which strengthens the credibility of the figure sought. In cases involving suspected dissipation of assets, opaque corporate structures or foreign claimants who may become harder to pursue, an earlier or expedited application may be warranted.

Drafting the application

The application notice should identify precisely which condition under CPR Part 25 is relied upon and should be supported by a focused witness statement. The evidence must do three things: establish the gateway, justify the quantum sought, and address the justice of granting the order. A common failing is to advance a bare assertion of impecuniosity without documentary support; the court expects to see filed accounts, evidence of failed enforcement or asset tracing, and a reasoned costs estimate. The draft order should specify the form of security, the amount, the timescale for provision, and the consequence of non-compliance, typically a stay.

Without notice versus on-notice applications

Security for costs is ordinarily determined on notice, giving the claimant the opportunity to put forward evidence of means and to argue the merits. Without-notice applications are exceptional and reserved for genuine urgency. Even then, an applicant proceeding without notice owes strict duties of full and frank disclosure, and any order made without notice will be reviewed at an on-notice hearing.

Service on foreign claimants

Where the claimant is based abroad, service of any documents out of the jurisdiction must comply with the applicable rules, and the defendant should build in realistic timescales. The foreign element frequently underpins the gateway itself: if a costs order could not be readily enforced in the claimant’s home jurisdiction, that is a powerful basis for security. Defendants should be ready to explain, with evidence, why enforcement in the relevant country would be uncertain, expensive or impractical.

Sample timeline checklist:

• Pre-action to service: monitor claimant’s corporate filings and residence.
• Post-defence: assess merits and gather financial evidence.
• Pre-CMC: finalise costs estimate and draft the application.
• At CMC: seek security aligned to the costs budget, or a directions timetable for the application.
• Urgent scenarios: consider expedited relief where dissipation is a live risk.

Evidence and the bundle: what to show the court

The evidence bundle is where security for costs civil fraud UK applications are won or lost. The court will not order security on suspicion alone; it requires a coherent, documented case that a condition is satisfied and that the sum sought is reasonable. In fraud litigation, where corporate structures are frequently deliberately opaque, the evidential effort can be significant but is often decisive.

A well-constructed evidence bundle for a security application typically includes:

• Witness statement of the applicant’s solicitor setting out the condition relied upon, the chronology and the basis of the costs estimate.
• Corporate accounts and filings for a company claimant, including the most recent audited or filed financial statements and any evidence of insolvency indicators.
• Bank and financial records where available, or evidence of attempts to obtain them.
• Asset-tracing reports and enforcement assessments, particularly where the claimant is foreign or where enforcement abroad would be difficult.
• Corporate ownership and beneficial-ownership checks to expose hidden control or nominee arrangements.
• Litigation funding disclosure, where the existence and nature of any funding arrangement is relevant to the claimant’s ability to satisfy a costs order.
• The costs estimate or approved budget, showing incurred and estimated future costs.

Proving impecuniosity: individual versus company claimants

The impecunious company claimant gateway under CPR Part 25 is available against companies and similar bodies, not against individual claimants. For a company, the defendant must show a reason to believe the claimant would be unable to pay costs if ordered to do so. Filed accounts showing negative net assets, a history of unpaid debts, or dormant status all help. The claimant may respond with evidence of trading recovery, shareholder support or funding, so the defendant’s evidence must be current and robust. Against individual claimants who are resident within the jurisdiction, the impecuniosity gateway is unavailable, and defendants must generally rely on the foreign residence or conduct-based conditions.

Dealing with opaque ownership and crypto assets

Modern fraud claims increasingly involve digital assets and layered corporate vehicles designed to frustrate scrutiny. Where a claimant’s assets are held in cryptocurrency or through offshore structures, the defendant should be prepared to explain to the court why the apparent value of such assets does not provide reliable comfort that a costs order would be met. Volatility, the ease of transfer across borders, and the practical difficulty of enforcement against wallet holders all support the argument that security is necessary. Expert or investigative evidence of asset opacity strengthens the application.

Cross-border enforcement concerns

The foreign claimant security for costs gateway turns on enforcement risk. The court is concerned not merely that the claimant is abroad, but that a costs judgment could not be readily enforced against them. The defendant should provide evidence on the enforcement regime in the relevant jurisdiction, the practical obstacles, the likely cost and delay, and any history of non-cooperation. The stronger the enforcement difficulty, the stronger the case for a substantial order.

Remedies sought: amounts, undertakings and stay options

Once a defendant has established a gateway and persuaded the court that security is just, attention turns to the form and amount of the order. The court has a broad discretion over how security is provided and can tailor the remedy to the circumstances of the case.

Common forms of security include:

• Payment into court of a specified sum, the most straightforward and commonly ordered form.
• A bank guarantee or first-class banker’s undertaking, which avoids tying up cash but requires the court’s confidence in the guarantor.
• A charge or other security over identified assets, where appropriate.
• A stay of proceedings pending security, so that the claim cannot advance until the claimant complies.

Calculating the sum and interim quantification

Quantifying security requires a realistic assessment of the defendant’s recoverable costs. The court will often award a proportion of the estimated costs rather than the full amount, reflecting the standard basis of assessment on which costs are ultimately recovered. Where costs budgets have been approved, they provide a natural anchor for the calculation. Defendants should distinguish incurred costs from future costs, and may seek security in stages tied to the phases of the litigation. A margin for the costs of any appeal is sometimes appropriate, though this should be justified rather than assumed.

Stay of proceedings pending security

The stay is the principal enforcement mechanism for a security order. If the claimant fails to provide security by the date set, the claim is stayed, and continued default may ultimately lead to the claim being struck out. This gives the order real teeth: a claimant who cannot or will not provide security faces the practical end of the litigation. The court will set a proportionate timetable and will generally give the claimant a genuine opportunity to comply before more serious consequences follow.

Responding as a claimant: resisting security applications and funding options

For claimants, a security for costs civil fraud UK application is a serious threat that can, if unanswered, stifle a meritorious claim. A well-prepared claimant has several routes to resist or mitigate an order, and the earlier these are considered the better.

The core strategies are:

• Evidence of means. The most direct answer is credible, current evidence that the claimant can meet an adverse costs order, undermining the impecuniosity or enforcement argument.
• Merits of the claim. Where the claim is strong, the court may be reluctant to impose a barrier to a genuine action, particularly if security would stifle it.
• ATE insurance. A properly structured after-the-event policy can provide the defendant with comfort that costs will be paid.
• Third-party funding. Litigation funding arrangements can address the claimant’s ability to pay, though funders will assess the security risk carefully.
• Undertakings and staged security. Offering partial or phased security can neutralise the application while preserving the claimant’s cash flow.

ATE policy wording and enforceability (fortification)

An ATE policy will only satisfy the court if it genuinely secures the defendant’s position. Defendants routinely scrutinise the policy for cancellation rights, exclusions, and circumstances in which the insurer could avoid paying. A bare policy that the insurer could readily rescind offers little real protection. This is why fortification, an arrangement that binds the insurer more firmly or provides an anti-avoidance endorsement, is often required. The claimant seeking to rely on ATE in answer to a security application should be prepared to disclose the material terms and to address enforceability head-on.

Negotiating partial or staged security

Rather than fighting an all-or-nothing battle, claimants frequently negotiate a proportionate outcome: security in tranches linked to the phases of the costs budget, or a reduced sum reflecting the strength of the claim or the availability of ATE. Staged security aligns the burden on the claimant with the progress of the litigation and can be an efficient compromise that both parties and the court will accept.

Disclosure obligations about funding

Where a claim is funded, questions of disclosure can arise. The existence of funding may be relevant to the security application and to the possibility of a non-party costs order against the funder. Claimants and their advisers should approach disclosure carefully, balancing the strategic case for revealing robust funding against the confidentiality of funding terms, and should have regard to professional conduct guidance from the relevant regulators and representative bodies on disclosure, undertakings and costs-related conduct.

Fortification, ATE and litigation funding: practical mechanics

The interaction between security for costs, ATE insurance and litigation funding is now central to how these disputes are managed. Understanding the mechanics allows both sides to position themselves effectively in any security for costs civil fraud UK dispute.

Fortification of a cross-undertaking in damages arises most commonly in the context of interim injunctions, where a party giving an undertaking may be required to back it with security so that the undertaking has real value. In the security for costs context, the equivalent concern is whether an ATE policy or funding arrangement is genuinely dependable. Fortification, in the broad sense of shoring up the protection offered to the defendant, is what turns a paper promise into effective security.

Following the Jackson reforms implemented by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, ATE premiums are generally no longer recoverable from the losing party in most civil litigation, which changes how claimants and funders price and structure their arrangements. Funders assessing a case will factor in the likelihood of a security order and the cost of meeting it, and will often require contractual terms addressing who bears that cost. Defendants, for their part, should treat the mere existence of a funder or an ATE policy with caution and probe whether it provides real, enforceable protection.

Model fortification wording

Effective fortification wording addresses the defendant’s core anxiety: that the protection could evaporate at the moment it is needed. A robust endorsement will typically confirm that the insurer will not avoid or cancel the policy on grounds of non-disclosure or misrepresentation, will pay adverse costs directly, and will notify the defendant before any lapse. Precise wording should be settled by counsel in the specific case, but the principle is constant: convert a conditional promise into an unconditional, enforceable commitment.

Working with funders and insurers

Early engagement with funders and ATE insurers pays dividends. A claimant who can present the court with a dependable funding and insurance package is far better placed to resist or limit a security order. Coordination ensures that the ATE policy dovetails with the funding agreement, that any security requirement is anticipated in the commercial terms, and that disclosure to the defendant can be made confidently.

Case studies and short precedents (anonymised)

The following anonymised, illustrative vignettes show how security for costs civil fraud UK applications can play out in practice.

Vignette one: defendant obtains security against a foreign claimant. A defendant company faced a substantial fraud claim brought by an offshore vehicle with no assets within the jurisdiction and an ultimate ownership structure that resisted scrutiny. The defendant applied at the CMC, supported by evidence of the claimant’s foreign residence, an enforcement assessment showing that a costs judgment would be difficult and costly to enforce in the relevant jurisdiction, and a costs estimate aligned to the budget. The court ordered payment into court in stages, with a stay pending each tranche. The learning point: pairing a clear gateway with a disciplined, budget-anchored costs estimate produced a proportionate and enforceable order.

Vignette two: claimant resists via ATE and partial fortification. An impecunious company claimant faced an application arguing it could not meet an adverse costs order. The claimant responded with a fortified ATE policy containing an anti-avoidance endorsement and offered partial security in tranches tied to the costs-budget phases. The court accepted that the fortified policy, combined with staged security, adequately protected the defendant and declined to order the full sum sought. The learning point: a robust, disclosed and fortified ATE package can substantially reduce the burden of a security order.

Comparison table: security for costs versus other remedies

Conclusion and next steps

A security for costs civil fraud UK application is a powerful but discretionary tool that rewards preparation on both sides. For defendants, success depends on identifying the correct gateway under CPR Part 25, building a documented evidence bundle that proves impecuniosity or enforcement risk, choosing the right moment to apply, and quantifying the sum realistically against the costs budget. For claimants, the answer lies in credible evidence of means, the strength of the claim, and dependable ATE or litigation funding arrangements, supported where necessary by fortification. As cross-border and crypto-driven fraud disputes continue to grow, both defendants and claimants should treat security for costs as a strategic priority to be addressed early, with expert advice, rather than an afterthought.

Practical next steps include preparing an evidence bundle index, settling a draft order and costs estimate, and, for claimants, reviewing ATE policy wording and funding terms for enforceability. Those facing or contemplating an application should seek specialist civil fraud and costs advice before proceeding.

This article is guidance only and does not constitute legal advice. Readers should consult qualified counsel on the facts of their case.

Sources

1. Civil Procedure Rules, Part 25 (Interim Remedies and Security for Costs)
2. Civil Procedure Rules and Practice Directions (Ministry of Justice)
3. BAILII (British and Irish Legal Information Institute), judgments repository
4. Judiciary of England & Wales, guidance and judgments
5. The Law Society
6. The Bar Council
7. Legal Aid, Sentencing and Punishment of Offenders Act 2012 (legislation.gov.uk)