Take Cover - Can ATE Insurance Be Used As Security For Costs?

Stuart Evans from our Commercial Disputes Team examines whether ATE insurance can provide adequate security for a claimant's costs, with some conclusions that may surprise you.

ATE insurance can provide some security for defendants looking to recover a costs award, but you may not be able to rely on it to the same extent as conventional security.

The classic situation where security for costs is sought is where a defendant is concerned about a claimant's ability to pay the defendant's costs if it loses the case. If it can demonstrate to the court that the claimant, through lack of funds or otherwise, will not be able to meet a costs award, then the court may order security to be provided. Often this is in the form of a payment into court or bank guarantee. The failure to provide adequate security can often result in the claim being stayed or potentially dismissed.