Costs orders should ordinarily be made in the currency in which solicitors billed and were paid, without inquiry into the receiving party’s underlying loss or funding arrangements, the Supreme Court holds, distinguishing costs awards from compensatory damages.
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- An award of costs is a discretionary remedy and a contribution towards litigation expenses, not a compensatory award designed to indemnify a party against the loss suffered in funding its litigation. [11, 16, 17]
- There is a general rule that an order for costs should be made in the currency in which the solicitor has billed the client and in which the client has paid or is liable to pay, reflecting the liability incurred by litigating. [25, 27]
- The court is not required to conduct an inquiry into the currency which most truly reflects a receiving party’s underlying loss when making a costs order, as such inquiries risk disproportionate and expensive satellite litigation. [6, 20, 24]
- The court has jurisdiction to make a costs order in a foreign currency, but the choice of a currency with which neither the party nor its lawyers has a real connection could be considered abusive or inappropriate. [24, 25]
- The indemnity principle in costs prevents a party from recovering more than it has incurred as a liability to its lawyers, but an award of costs is not a full indemnity and excludes the costs of funding the litigation, such as borrowing costs. [15, 16]
