Security for costs—ATE insurance

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Security for costs—ATE insurance
  • Can After the Event insurance be used as security?
  • What test will the court apply?
  • Impact of ATE insurance on level of security
  • Conditional security for costs where ATE insurance is being sought
  • Replacing existing security with ATE insurance
  • Where the claimant is actually or potentially insolvent
  • Practical considerations
  • Claimants
  • Defendants

Brexit: The UK's departure from the EU on exit day, ie Friday 31 January 2020, has implications for practitioners considering security for costs. For guidance, see: Cross border considerations—checklist—Brexit—impact on CPR.

This Practice Note considers the use of After the Event insurance (ATE insurance) as security for costs. It is one of a suite of Practice Notes considering issues relating to security for costs under CPR 25. The other Practice Notes are:

  1. Security for costs—what is it, its use and the court's discretion

  2. Security for costs—requirements and conditions (CPR 25.13)

  3. Security for costs—making an application

  4. Security for costs—counterclaims and set offs

  5. Security for costs—additional security

  6. Security for costs—level of security

  7. Security for costs—after an order is made

  8. Security for costs—payment into and out of court

  9. Security for costs—equivalent orders

There are also other CPR provisions which provide for orders which are equivalent to a security for costs order. For more information, see Practice Note: Security for costs—equivalent orders.

Can After the Event insurance be used as security?

A claimant can take out ATE insurance to cover the legal costs payable to the defendant in the event that the claimant’s claim is unsuccessful. The question is whether such insurance can be used as security for costs. As stated by Longmore LJ in Belco Trading v Kondo, it is most unlikely that any standard form of ATE insurance could provide

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