The Supreme Court has dismissed an appeal by two companies seeking to avoid a €1 million security for costs order in their competition case against Irish Distillers Ltd.
The court upheld the Court of Appeal’s order requiring Protégé International Group (Cyprus) Ltd and Avalon International Management Inc to provide security while their underlying proceedings continue. The Supreme Court judgment, delivered by Chief Justice Frank Clarke on 22 March 2021, addressed the security application only; it did not decide whether Irish Distillers abused a dominant position or whether the companies are entitled to damages or other relief.
Protégé and Avalon allege that Irish Distillers unjustifiably refused to provide a long-term supply of mature and new-fill Irish whiskey for the Wild Geese brand, placing them at a competitive disadvantage. Irish Distillers denies the claims and says its refusal was justified, including by capacity constraints and the continuation of supplies to other traders. The appellants accepted that Irish Distillers had established a bona fide defence and that they would be unable to pay its costs if unsuccessful. Their appeal therefore turned on whether special circumstances justified refusing security.
The companies argued that their financial difficulties stemmed from the alleged refusal to supply whiskey and that the case raised public-interest issues. The Supreme Court found that the evidence did not establish, even on a prima facie basis, that the alleged wrongdoing caused their present inability to pay. It cited gaps in financial and business information, including a lack of evidence about Avalon’s finances and the relationship between the companies, as well as the absence of sufficiently clear evidence connecting alleged losses to the appellants’ current position.
The court also found no evidence that requiring security was likely to stifle the proceedings. It said that without such evidence, the claimed public interest in the case proceeding did not provide a basis to refuse security.
The appellants also argued that the security requirement impaired their right to an effective remedy under European Union law. The Supreme Court concluded that Irish security-for-costs rules did not violate that right or require a different result in this case. It said the rules pursued legitimate aims, including protecting defendants’ rights of defence, and were proportionate.
The court dismissed the appeal and upheld the Court of Appeal’s order. The underlying competition proceedings were not determined by this judgment.