UK Trends and Developments Contributed by: Jamela Collins, Sukhbir Kaur, Tadgh Kelly and Oliver White, Temple Legal Protection
The choice of forum, by contrast, determines which court has jurisdiction to hear the dispute and whether its judgment will be recognised and enforced abroad. Post-Brexit, this question is no longer governed by the Brussels I Recast Regulation but instead depends on a combination of international instruments and domestic doctrines. The Hague Convention on Choice of Court Agree - ments 2005 is jurisdiction‑specific; it obliges contract - ing states, including the EU and the United Kingdom, to give effect to exclusive choice of court agreements and to recognise and enforce resulting judgments, but it says nothing about which substantive law applies. Arbitration occupies a parallel and distinct position. Under the 1958 New York Convention, parties may choose the seat of arbitration, the governing law, and the tribunal, with arbitral awards benefiting from near‑universal recognition and enforceability. Right idea – wrong ATE cover In the context of UK Rome I, UK Rome II and the Hague Convention on Choice of Court Agreements, UK practitioners may be forgiven for assuming that litigation brought before the English courts can be insured from the United Kingdom. From a regulatory perspective, however, that assumption is misplaced. Insurance law is not concerned with where a dispute will be heard or the law governing the underlying contract. Under both UK and EU law, an ATE policy intended to protect against adverse costs must derive its regulatory validity from the jurisdiction in which the policyholder is habitually resident or established, rather than from the jurisdiction of the court hearing the dispute. It is this distinction between forum and risk location that gives rise to structurally defective adverse‑costs cover in post‑Brexit cross‑border litigation, even where pro - ceedings are brought before the UK courts. Under English law, the location of an insurance risk is determined by Schedule 7A, paragraph 8, to the Finance Act 1994, which provides that the question of whether a risk is situated in the United Kingdom is determined in accordance with the Table set out in paragraph 8 (3). As reflected in HMRC guidance IPT04320, where an insurance contract does not
relate to buildings, vehicles or short-term travel risks, the location of the risk is fixed, at the date the contract is entered into, by reference to the habitual residence of the policyholder or, in the case of a legal person, the establishment to which the contract relates. This domestic position aligns deliberately with Euro- pean Economic Area (EEA) insurance law. Article 13 (13) of the Solvency II Directive (Directive 2009/138/ EC) adopts the same residual rule for non‑localised risks, and the Court of Justice confirmed in Kvaerner plc v Staatssecretaris van Financiën (Case C‑191/99) that insurance risk must be located by reference to concrete and physical criteria, not contractual labels, internal arrangements or litigation strategy. English courts adopt a substantively aligned approach when identifying habitual residence and establish- ment. For corporate entities, central administration and real seat, rather than place of incorporation, are determinative ( Re Harrods ( Buenos Aires ) Ltd [1992] Ch 72). For natural persons, habitual residence is a question of fact, requiring stability and continuity rath - er than intention or even nationality ( R v Barnet LBC , ex p Shah [1983] 2 AC 309). The consequence is that, both as a matter of English law and EU law, an ATE policy issued from the United Kingdom to an EEA resident claimant may consti- tute the writing of an EEA‑located risk, even where the litigation is conducted entirely before the English courts. Jurisdiction determines where a dispute is heard; habitual residence determines where the risk is regulated. Confusing the two is how parties arrive at the correct forum only to discover, too late, that they have the wrong cover. Security for costs – adequacy tests Where a UK‑issued ATE policy is relied upon as secu - rity for costs by an EEA‑resident claimant litigating in England, it is exposed to an additional and distinct line of attack. A defendant may contend that, as a matter of insurance law, the insured risk is situated in the EEA by reference to the claimant’s habitual residence or establishment, and that the policy was issued by an insurer or intermediary lacking the requisite European authorisation to insure that EEA‑located risk.
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