Security for Costs Order granted against party who acknowledge they were operating in a very difficult market
Maxeon Solar Pte. Ltd v Aiko Energy Germany GmbH and others
Order of 14 April 2025[1]
The Claimant brought proceedings on 23 December 2024 against Aiko Energy Germany and seven other solar panel manufacturers alleging infringement of its European patent EP2297788B1 concerning solar cell fabrication.[2] Three of the Defendants, Aiko Energy Germany, Solarlab Aiko Europe and Aiko Energy Netherlands (collectively, the “Aiko Defendants”). lodged a request for security for legal costs. The panel of the Düsseldorf local division summarised that to exercise its discretion under Article 69(4) UPCA and Rule 158 RoP to grant an order for, the financial position of the Claimants must give rise to:
(i) a legitimate and real concern that a possible order for costs may not be recoverable, [or;]
(ii) the likelihood that a possible order for costs by the UPC may not, or in an unduly burdensome way, be enforceable.
The responsibility to substantiate and prove the necessity of an order for security for costs lies with the party making the request – the Aiko Defendants in this case. However, once the requesting party has presented credible reasons and facts, it becomes the opposing party’s duty “to challenge these reasons and facts in a substantiated manner, especially since that party will normally have knowledge and evidence of its financial situation. It is for the Claimant to argue that and why a security order would unduly interfere with their right to an effective remedy”.
The Aiko Defendants argued that the Claimant is not in a financial position to bear its legal costs due to incurring losses in 2023 and 2024, the need for debt and equity investment to support their liquidity needs, and an ongoing class action. The Claimant argued that the Aiko Defendant’s position was unfounded, as they made ‘substantial progress in its capital raising and debt restructuring initiative’, emphasizing that the debt does not mature until 2028.
Decision
The Defendant had argued in a substantial manner that the Claimant’s group was in a very difficult financial situation. The Claimant was found not to have provided any convincing evidence to substantiate its financial situation, indeed, it confirmed that the solar market is currently difficult for everyone in the market. The Court found this, the timeframe of the proceedings, the maturity of the debt in 2028 and ‘the unpredictability of the already difficult solar energy market’ to justify the risk that the Claimant will not have the financial resources to pay the Aiko Defendant’s costs.
Amount of Security
The Aiko Defendants base the security sought the EUR 112,000 ceiling for representation cost set by the UPC Administrative Committee at EUR 112,000, based on the Claimant’s EUR 1,000,000 valuation of the claim, with a 10% premium “in view of the costs associated with the realisation of the security”, giving a total requested security of EUR 123,200. The Claimants considered the requested amount of security to be too high, arguing that the EUR 100,000 ceiling addresses the action against all eight defendants; the Aiko Defendants constitute only three out of the eight the Defendants and therefore the security amount should be scaled accordingly to EUR 56,000-60,000.
The Court found, with reference to the Guidelines for the Determination of Court Fees and the Ceiling for Recoverable Costs adopted by the Administrative Committee of the UPC on 24 April 2023,[3] that the infringement action and counterclaim action each held a value of EUR 1,000,000 and therefore EUR 2,000,000 in total, with a ceiling for representation cost of EUR 200,000 in total, irrespective of the number of parties. Addressing the Claimant’s 3/8ths point, the Court found that the ceiling is not automatically divided by the number of parties liable to pay costs, instead “the purpose of the ceiling on recoverable representation costs is to prevent unjustified recovery of costs both in cases where one party has several representatives and in cases where one representative represents several parties”.
As the Aiko Defendants share a representative, the Court assumed that they are “economically close” and/or “do not have a conflict of interests.” The remaining Defendants (the other 5/8ths) are grouped together separately because they have a different representative and disputed relationships with each other and the Aiko Defendants. Therefore, each group, the Aiko Defendants and the remaining 5/8ths are found to be entitled to one half of the EUR 200,000 ceiling; EUR 100,000 each, with no ‘premium’ added.