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An ATE policy can be sufficient security

26 April 2013. Published by Rebecca Birkby, Senior Associate

In Geophysical Service Centre Company Ltd v Dowell Schlumberger (Middle East) Inc, the claimant was successful in defending a security for costs application on the basis that, ...

… although there was evidence that trading conditions had been difficult for the overseas claimant, it had the benefit of an ATE policy which meant that the threshold conditions for a security for costs application were not met.

Mr Justice Stuart-Smith considered that the court's starting position should be that a properly drafted ATE policy provided by a substantial and reputable insurer is a reliable source of litigation funding.  He particularly considered Mr Justice Akenhead's judgment in Michael Phillips Architects Limited v Rilkin (2010) EWHC 834, in which the defendant was successful in its application against a similarly worded ATE policy.  Mr Justice Stuart-Smith found that the policy wording in this case, although similar to that Rilkin, differed in material respects.  In particular, the avoidance and cancellation provisions were different and he thought that the defendant could show no more than a theoretical risk that the insurer may seek to avoid or cancel the policy.  This meant that the threshold conditions for security for costs were not met.

The full RPC article and analysis on this case can be found at the following link:
http://www.internationallawoffice.com/Newsletters/Detail.aspx?g=3a66a809-509f-414c-9e24-f4b7f051bfb1