Jurisdiction(s):
United Kingdom

ATE insurance as security for costs: drafting gaps and AAE fraud-avoidance risk render policy inadequate; court grants time to amend (Lloyds v Accor, England and Wales)

Published on: 05 June 2025

Published by a LexisNexis Dispute Resolution expert

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Article summary

Lloyds Development Ltd v Accor Hotelservices UK Ltd [2025] EWHC 1238 (TCC)

What are the practical implications of this case?

At its heart, the decision confirms that an ATE policy only suffices as security for costs if the court is persuaded there is no real prospect that it will fail to pay out in full. That assurance can be achieved by deploying an AAE to resolve doubts about the sufficiency and wording of the cover. Any claimant intending to rely on such a policy must be prepared to disclose it and, where required, to renegotiate or reprocure it so that the court is satisfied it can stand in place of a payment into court. Defendants who harbour reservations about the policy should engage constructively with the claimant and set out their objections with full particulars as early as possible, enabling the claimant to address them and furnish the necessary security through the ATE policy. Early cooperation can avoid satellite disputes and secure proportionate protection for costs during litigation.

What was the background?

The underlying dispute concerns agreements between the parties connected to the construction of a 290‑bedroom hotel situated in Glasgow. The total security paid prior to this hearing was...

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