Security for costs from a foreign claimant: cost and likely outcome depend on where the claimant is domiciled, whether a treaty or EU/EEA rule exempts it, and how quickly the Swedish defendant raises the point. If the court grants the application, the claim is paused until security is lodged and struck out if it is not lodged in time.
Who this concerns
This applies to any Swedish company or individual defending a civil claim brought by a claimant who has no domicile, registered seat or habitual residence in Sweden. It reaches trading counterparties pursuing payment claims, foreign subsidiaries suing a Swedish group company, and individual guarantors resident abroad who bring proceedings on a personal guarantee. It does not automatically apply merely because the claimant's assets sit outside Sweden, or because the contract is governed by foreign law: domicile of the claimant, not the location of its assets or the governing law clause, is the trigger.
The point is usually raised early, because a Swedish defendant who waits until deep into the substantive dispute risks the court treating the application as forfeited by conduct. For the defendant, the practical question is rarely whether the motion is available in principle. It is whether raising it is worth the cost, given that the claimant may simply post security and the case proceeds regardless, and given that the application itself consumes procedural time.
What the law says
Under Swedish law as it currently stands, a claimant domiciled outside Sweden can be required, on a Swedish defendant's motion, to provide security for the costs the defendant may be awarded if the claim fails. The rule protects a domestic party from litigating against a claimant who has no attachable assets in Sweden and against whom a Swedish costs order would be difficult or impossible to enforce. In Swedish practice the mechanism is referred to as säkerhet för rättegångskostnader, security for the costs of the proceedings.
The obligation is not universal. A claimant domiciled in another EU or EEA state is, as a rule, exempt: the underlying policy is that a costs order against that claimant can be enforced in its home state without the friction the rule is designed to guard against. Claimants domiciled in states with which Sweden has reciprocal arrangements on the recognition of costs orders fall outside the requirement on the same logic. The exemption turns on domicile at the relevant procedural moment, not on nationality and not on where the claimant happens to hold assets.
Where the exemption does not apply, the court sets the amount and the form of security, and the case does not advance to a hearing on the merits until it is provided. The mechanism sits alongside, not instead of, the court's ordinary power to order costs at the end of the case: security is collateral against a costs order that has not yet been made, not a pre-payment of damages or of the claim itself.
How it works in practice
When the motion is made
The Swedish defendant raises the application after being served with the claim, typically in its first substantive response, though the court retains discretion to allow it later if new information about the claimant's domicile or asset position comes to light. Raising it late does not bar it outright, but it invites the claimant to argue that the defendant has already engaged with the merits and cannot now treat the claimant as an unknown, unsecured counterparty.
Establishing domicile
The defendant carries the burden of showing, on the available record, that the claimant is domiciled outside Sweden and outside the exempted group of states. Company registers, the claimant's own pleadings, and correspondence addresses are the usual evidence. Where the claimant is a special-purpose vehicle registered in one state but managed and controlled from another, the court looks past the registered seat to where the claimant is genuinely domiciled for the purpose of the rule.
Setting the amount
The amount is fixed by reference to the costs the defendant can reasonably expect to incur through to a first-instance judgment, not through to a final appeal, and not by reference to the value of the underlying claim. A high-value claim with a straightforward, well-evidenced defence does not automatically produce a high security figure; a modest claim that will require extensive expert evidence or multiple procedural steps can produce a higher one than the claim value suggests.
Form of security
Security is normally provided as a bank guarantee or an equivalent instrument the court and the defendant can rely on without further enforcement action if costs are later awarded. A cash deposit into an account the court controls is accepted where a guarantee is not practical. An undertaking from the claimant's own lawyer, or a guarantee from a parent company that is itself outside the reach of a Swedish costs order, does not satisfy the requirement, because it recreates the enforcement problem the rule exists to avoid.
Consequence of non-compliance
If security is ordered and not provided within the time set by the court, the claim is dismissed. The dismissal is procedural, not a decision on the merits, and it does not by itself prevent the claimant from bringing a fresh claim if it can then meet the security requirement or if the limitation position still allows a new action. In practice, a claimant that could not post security the first time rarely returns with a stronger position the second time.
Group structures and foreign parents
Where the claimant is the foreign subsidiary of a group with a Swedish operating company, the domicile of the claimant entity itself is what matters, not the group's overall footprint in Sweden. A Swedish parent cannot lend its domicile to a foreign claimant subsidiary to defeat the application, and a foreign parent cannot be substituted as the real claimant to avoid it. Where the claim has been assigned from a Swedish entity to a foreign one shortly before proceedings started, the timing and commercial rationale of the assignment become relevant to whether the application should succeed at all.
What to check
- Where the claimant is actually domiciled, not merely where it is registered
- Whether an EU/EEA exemption or a reciprocal arrangement applies to that domicile
- Whether the claimant has posted security in a related earlier proceeding that could be reused
- Whether the claim has been assigned to a foreign entity shortly before proceedings were issued
- Whether raising the application now forfeits the point later if new domicile information emerges
- Whether the value of the claim justifies the procedural cost of running the application at all
Can a foreign claimant avoid security for costs by suing through a Swedish subsidiary?
Not if the Swedish subsidiary is not the real party bringing the claim. The court looks at who actually holds the substantive right being litigated and who will actually receive any judgment. Interposing a Swedish entity as a nominal claimant while a foreign parent controls and funds the litigation, and would receive the proceeds, does not on its own defeat an application, because the domicile that matters is the domicile of the party genuinely pursuing the claim.
Does security for costs apply to counterclaims brought by the Swedish defendant?
No. The mechanism protects a defendant against a claimant it did not choose to litigate against and who may be unreachable for costs. A Swedish defendant that brings its own counterclaim is not exposed to a security application on that counterclaim merely because the original claimant is foreign; the rule runs in one direction, from defendant to claimant, not the reverse.
What happens to the security once the case is decided?
If the defendant is awarded costs, the security is applied against that award, up to the amount the court fixed. If the claimant succeeds instead, or no costs order is made against it, the security is released back to the claimant once the judgment is final and any appeal period has passed.
The numbers
There is no fixed statutory scale for the amount of security, and none is given here, because the figure is calculated case by case against the costs the defendant can reasonably expect to incur to a first-instance judgment. What can be said with confidence is the shape of the calculation: it tracks anticipated procedural cost, not claim value, and it is reassessed if the scope of the dispute changes materially, for instance when new claims or new parties are added.
Timing works the same way. There is no universal number of weeks between the application and the court's decision on it, and none is given here, because it depends on the court's caseload and on how quickly the claimant responds to the application. What is fixed is the sequence: the court decides the application before the case advances to a hearing on the merits, and it sets a deadline for lodging the security once it grants the application. Missing that deadline, not missing some external calendar date, is what produces the dismissal.
Where it usually goes wrong
The application is not available against every foreign claimant, and treating it as a reflexive response to any cross-border claim is the most common misstep. A claimant domiciled in an EU or EEA state, or in a state covered by a reciprocal arrangement, sits outside the rule regardless of how difficult enforcement against it might in fact turn out to be; the exemption is about domicile, not about the practical strength of the defendant's later costs order.
It also stops working once the defendant has engaged substantively with the merits without raising the point. A defendant that files a full defence, participates in case management, and only later discovers or remembers the claimant's foreign domicile faces a real risk that the court treats the application as forfeited by conduct, even though nothing in the underlying domicile has changed.
The mechanism does not reach arbitration. Where a dispute is being run under an arbitration agreement rather than before the Swedish courts, security for costs in this sense is not available in the same way; any equivalent protection has to come from the arbitration agreement itself or from the tribunal's own procedural powers, which follow a different logic entirely.
Finally, an application that succeeds does not end the case. A claimant that can post security, even one with genuinely thin assets, simply does so and the proceedings continue exactly as before. The application is a cost and delay lever, not a way to make a foreign claim disappear, and defendants who expect it to do more than that are usually disappointed by the outcome.
What to do next
Reading this far establishes whether the application is available in principle and what it is likely to cost the defendant in procedural time to run it. It does not establish the claimant's actual domicile on the facts of a live claim, the strength of an assignment argument if one is available, or whether the value at stake justifies raising the point at all: that requires looking at the claim documents, the claimant's corporate structure, and the correspondence trail.
For a defendant facing a disputed claim from a foreign counterparty where security for costs is one option among several procedural responses, the summary route question is often the one worth resolving first, because it determines how much of the dispute the defendant will actually have to fund before any security decision matters. Lodline's debt recovery and enforcement practice works through both questions together on a case's own documents; an assessment of the position is the next practical step.