Syntorr LP v ArthrexInc. & Others
UPC_CoA_890/2025, order of 18 February 2026 [1]
The Court of Appeal held that a litigation insurance policy is a factor to be taken into account when determining whether security for costs should be granted.
Syntorr, a Cypriot company, sued three Arthrex companies for infringement of EP 2,670,898 in LD Munich.
Arthrex made an application for security for costs pursuant to Rule 158.1 RoP. The Munich LD ordered Syntorr to provide security for costs in the amount € 2,000,000 by deposit or bank guarantee and refused leave to appeal. It noted that insurance is not a means for providing security according to Rule 158.1 RoP. Syntorr applied for discretionary review by the Court of Appeal under R. 220.3 RoP. After considering responsive comments by Arthrex the standing judge granted leave to appeal.
According to Art. 69(4) UPCA, the Court may order the claimant to provide adequate security for legal costs and other expenses incurred by the defendants. This is to protect the defendant against a claimant who initiates an action without having sufficient means to compensate the defendant for legal costs incurred.
An order for security for costs is discretionary as is clear from the wording of R.158.1 which states that ‘the court may order’. Where the Court does decide to order security “it shall decide whether it is appropriate to order the security by depositor bank guarantee”, R.158.1 second sentence.
When exercising its discretion under Art. 69(4) UPCA andR.158.1 RoP, the Court must determine whether the financial position of the claimant gives rise to a legitimate and real concern that a possible order for costs may not be recoverable and/or the likelihood that a possible order for costs by the UPC may not, or in an unduly burdensome way, be enforceable.[1] If the Court concludes security should be awarded the second sentence of R.158.1 addresses how it should be provided.
As the CFI has discretion whether to award security, the Court of Appeal’s review is limited to errors of discretion, that is, non-use, misuse or exceeding of discretion.
In essence, the CoA did not revisit the CFI’s ruling that insurance is not acceptable as a means for providing security according to Rule158.1 RoP, but the CoA held that the CFI had incorrectly failed to consider the relevance of the insurance policy in deciding whether security should be ordered at all.
Thus, the CFI had disregarded a significant circumstance of Syntorr’s financial position and so wrongly exercised its discretion. The CFI had stated that Syntorr did not dispute the obligation to provide security, but that was an error. Syntorr had argued that it had litigation insurance from an EU based(Maltese) insurance company, which included an anti-avoidance endorsement (AAE)and that this provided adequate security for Arthrex. This was an element of the financial position of Syntorr that should have been taken into account when assessing the likelihood that an order for costs may not be enforceable, or only in an unduly burdensome way.
The insurance policy contains an obligation to indemnify the insured for the Opponents’ costs up to € 4,000,000. The Opponents are defined in the policy as the Arthrex companies. The insurance is valid and in force. The AAE states that it is ‘non-voidable and non-cancellable’ and specifies that its terms ‘are intended to benefit the Opponents and may be enforced by the Opponents directly’. It sets out a straightforward mechanism for the Opponents to make a claim for reimbursement of legal costs which the Court considered would not be burdensome.
Arthrex had also made a point about the termination Provisions. These require the Opponents to be notified; the policy cannot be terminated until 60 days after that notice;and the insurer remains liable for claims for costs incurred up until the end of that 60 day period. The Court noted that should notice of termination be given Arthrex would be able to apply afresh to the CFI for security at that point.
The Court dismissed a suggestion from Arthrex that the Maltese insurance company may not be solvent as it is EU based and must comply with the requirements of the relevant directive, 2009/138/EC.
In these circumstances, the financial situation of Syntorr did not give rise to a legitimate and real concern that a possible order for costs may not be recoverable or in an unduly burdensome way. Accordingly an order for security was not necessary. There was no need for the Court to decide whether providing an insurance policy as a form of security would comply with the second sentence of R.158.1.
The Court of Appeal set aside the order of the CFI and ordered that Syntorr’s bank guarantee be released.
[1] https://www.unifiedpatentcourt.org/en/node/182732
[2] CoA Order of 17 September 2024, UPC_CoA_217/2024, UPC_CoA_219/2024, UPC_CoA_221/2024,AUDI AG v. Network System Technologies LLC, para 7; CoA Order of 9 July2025, UPC_CoA_431/2025, Chint v JingAO, para. 10; CoA Order of 30 October 2025, UPC_CoA_8/2025, Oerlikon v. Bhagat,para. 20.