Security for costs orders can frustrate the pursuit of even the most meritorious 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, modern court decisions in jurisdictions like England & Wales, Australia and more recently here in Canada, are demonstrating a trend towards an acceptance by the courts of insurance policies as adequate security. Provided the policy is supported by reputable insurers, there is a reasonable prospect that ATE insurance will 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.
Members of TheJudge team brokered the first policies to be accepted as security in Canadian courts, with an ATE policy having been accepted in the Ontario Superior Court of Justice. Download the 2016 Grotz decision here, or the more recent 2017’ Frantz decision here.
In circumstances where an insurance policy is not sufficient, 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.
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 in jurisdictions around the world involved policies brokered by TheJudge. For example, see article on Eskosol regarding security for costs in international arbitration here
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