Security for costs orders can frustrate the pursuit of even the most meritorious commercial disputes as well-resourced opponents seek to deter claims by insisting on security that can tie up the claimant’s capital.
The extent to which litigation insurance policies are accepted by national courts and arbitral tribunals as adequate security for costs around the world is constantly evolving. However, recent court decisions in jurisdictions like England & Wales and Australia are demonstrating a trend towards an acceptance by the courts of insurance policies. Provided the policy is supported by reputable insurers, ATE insurance should be presumed to be adequate security in the absence of specific reasons that present a higher than normal risk of a claim for adverse costs not being met.
In circumstances where an insurance policy is not enough, TheJudge can advise on alternatives to satisfy an order for security for costs – such as a Deed of Indemnity. Such instruments provide a guarantee from the insurer that they will pay an adverse costs order notwithstanding any reason why the underlying ATE insurance policy would not respond to a claim. Deeds or “Bonds” have been accepted as adequate security for costs in the English courts.
Our brokers are experts in advising on the options available to enable claimants to provide security for costs. Indeed, many of the leading precedents on ATE insurance satisfying security for costs involved policies brokered by TheJudge
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