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International Arbitration

Increasingly, risk transfer enquiries are being presented to us in the context of international arbitration. Such cases will often need insurance cover or Third Party Funding for own side’s lawyer’s fees and expenses in the event that the case is lost. A claim for expenses may specifically include the arbitrator’s fees. However, because the “loser pays” costs rule does not usually apply to international arbitrations, the risk of incurring liability for an opponent’s costs is not so common, although where this is a possibility, we can obtain insurance cover for the same.

We regularly receive enquiries in respect of international arbitrations from firms that are based abroad and for this reason we have experienced the issues that can exist with such applications. We have successfully explored all of these issues and innovate where new jurisdictions and arbitrations present more challenges.

In jurisdictions such as the US, there may be a contingency fee arrangement in place between the law firm and the client. In such circumstances, it may be that it is the firm, and not the client, that is applying for insurance to hedge their risk, or applying for funding in order to bridge their cash-flow.

We have been instructed by applicants heading towards Tribunals under investment protection treaties, as well as applicants arbitrating pursuant to a commercial arrangement.

The premiums are frequently deferred and contingent upon success in the same way that they are in most cases in this jurisdiction, albeit that it is safer to assume that the cost of the ATE insurance premium is not recoverable from the opponent.

One of our senior brokers, James Blick, recently participated in a webinar hosted by K & L Gates LLP to discuss the role of ATE insurance and third party funding in the context of international arbitrations. To access the recording and presentation materials, please click here.

To discuss any international arbitration matters, please contact .(JavaScript must be enabled to view this email address).

Q and A

How does the ATE Premium Work?

Although ATE premiums vary significantly, there are certain common features:

The premiums brokered through TheJudge are generally deferred and contingent upon success, meaning that the premium is only payable if and when the dispute is resolved in the client’s favour.
TheJudge is typically able to negotiate premiums which increase the closer the case gets to Trial or which are discounted significantly if the case settles early.
For litigation pursued in England and Wales, the ATE premium is a recoverable cost under s.29 Access to Justice Act 1999, subject to a test of reasonableness.

Is ATE only relevant to financially distressed litigants?

ATE is relevant to any party involved in or contemplating litigation. Whilst it can be used to level the playing fields between unevenly matched opponents, many of the world’s largest companies also regularly use ATE to hedge their legal cost exposure and bring increased certainty to the legal spend, especially at a time when legal budgets are under pressure.

Does the instructed solicitor need to act on a CFA in order to secure insurance for the client?

There is no requirement to act on a conditional/contingency fee basis.

What is the role of TheJudge?

As an independent broker, it is our role to work for the client in sourcing and negotiating suitable insurance. To do this, we identify and approach a number of potentially suitable markets. Our aim is to obtain several offers where possible, which is important to increase the chances of securing terms, whilst ensuring that any premium incurred is competitive.

For cases being litigated in England & Wales, our market search is vital to provide evidence of market comparables, should the reasonableness of the premium be challenged by the opponent at a costs assessment. We are market leaders in providing premium recoverability support and have had our evidence accepted at numerous costs assessments, including SCCO hearings.