Recovery of third party funding costs in arbitration proceedings
A significant decision handed down by the High Court this week has potential to change the landscape for third party funding in arbitration, allowing it to steal a march on litigation.
Essar v Norscot
In the currently unreported case of Essar Oilfield Services Limited v Norscot Rig Management Pvt Limited the Court upheld the decision of the ICC arbitrator to allow the recovery of the costs of third party funding in addition to the award of costs and damages.
Having succeed in the arbitration Norscot sought it’s costs from Essar, including the costs of litigation funding which it had been forced to incur in order to pursue the claim. The funding consisted of an advance of £647,086.49 which was repayable in the event of a successful outcome, along with a success fee of either 300% of the sum advanced, or 35% of the damages, whichever was the greater. The sole arbitrator found the funding costs to be recoverable as “other costs” as provided for under the Arbitration Act 1996 and the applicable ICC Arbitration Rules.
In dismissing the subsequent appeal, the High Court accepted that terms of section 59(1)(c), including reference to “legal and other costs” was wide enough to permit the recovery of third party funding costs – the correct test involved considering what ‘other’ costs were incurred in bringing or defending a claim, according to the circumstances.
Until the full judgment is available it is difficult to fully consider the implications of this case. That said, it opens a very interesting debate about third party funding and arbitration. Some points to consider:
- The tribunal’s decision was, in part at least, based upon disapproval of Essar’s conduct, finding that they had deliberately put the Claimant in the position where it was unable to fund the arbitration proceedings themselves – but what does ‘forced to’ seek funding mean? Must a party be faced with insolvency or would the costs of a dispute imposing cash flow problems be sufficient? What if a party simply wants to litigate off balance sheet?
- If the tribunal is willing to award funders’ success fees, what impact does this have on the funder’s potential liability for costs (i.e. Arkin risk)?
- Do the rules of other arbitral tribunals allow for the award of “other costs”?
We will also wait with interest to see whether the applicant seeks to obtain permission to appeal.
Come and visit us at AvMA!
QLP will once again be exhibiting at the annual AvMA Conference in Brighton from Friday 1st July.
Whilst we come bearing Elmer’s, come and talk to us about funding and insuring your Clinical Negligence and Personal Injury claims. It’s a fast moving market and we can help in new and exciting ways…
For those who can’t make it but have a claim to discuss, give Tom Steindler a call on 020 7626 0191
The Wise man built his house on the rock, but the foolish man built his house on the sand – what do you do if there is no rock?
Whilst the parable of the foolish builder is laden with meaning, being shamelessly commercial we have brushed over the metaphysical and focussed on the earthly importance of property.
As a concept property has many more nuances than may immediately spring to mind: there is tangible property, intangible property, intellectual property, private and public property (and that’s just from the introduction on Wikipedia)
Yet there is commonality. In the abstract, property is that which belongs to or with something, whether as an attribute or as a component of said thing. And it is this concept of belonging and ownership which underpins its central importance to modern society – an Englishman’s home is his castle after all…
Given this reality, it is perhaps no surprise that being on the receiving end of property disputes is a stressful experience (eclipsed only by the cost). Yet, QLP can help!
We have a new and unique solution for those on the receiving end of property claims. In combination with a speciality underwriting agency we can provide a policy to protect against all of the potential financial downsides of a claim, including legal costs, damages and even the financial consequences of injunctions (think business interruption etc.)
So if you are defending residential or commercial property disputes – from rights to light to dilapidation claims and everything in between – we back your exit strategy and mitigate your exposure from costs, allowing you to focus on achieving the best possible legal outcome without worrying about the costs.
Contact the team on 020 7626 0191 to find out more.
PS. Why not protect yourself in advance? We also offer policies to protect against potential future disputes where any legal risks have been identified. These may arise in connection with transactions or in the context of developments, for example: discovering lack of planning and building regulations, or the risk of right to light claims during a development. We could even help to mitigate the risk of unexploded ordinances…
A victory for Disbursement Funding..!
In an important victory for disbursement funding, a claimant has successfully recovered interest and charges under a loan. (Angela Jade Powell v Shrewsbury and Telford Hospital NHS Trust, Court No OSY02236, 01.01.2016)
The claimant, who was of very limited means, utilised a disbursement funding product much like our own (click here for more information) in order to bring her claim and sought payment of interest charges under CRP 44.2(6)(G).
Interestingly, The Defendant’s Counsel said during the hearing that the NHSLA completely accepted that the Jones case (Jeffrey Jones and others v The Secretary of State for Energy and Climate Change and Coal Products  EWCH 2936 (QB)) established the principle that Claimants could recover the cost of disbursement funding, and they did not dispute the Claimant’s entitlement to interest per se. Instead, the Defendant disputed the claim for pre-judgment interest which the Claimant sought to pay the cost of the loan. They disputed the recovery on the basis that:
- The court did not have the jurisdiction to re-open the Consent Order of the parties and change the principle as to costs
- The credit agreement itself was not compliant as the Claimant had not been properly advised
- The rate of interest charges which was 13.3% in this case was excessive
In the end the defendant agreed to pay charges in full, and we see no reason why this would not apply to our unique facility – great news for those claimants needing the assistance of disbursement funding to bring their claims.
Reminder: LASPO 2012 insolvency exemption ends on 6 April 2016
In a ministerial statement published on 17 December 2015, the government announced that the reforms to litigation funding in relation to insolvency proceedings will come into force in April 2016 and the all-important date has now been confirmed as the 6th…!
(See Article 2 of The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Commencement No. 12) Order 2016 (SI 2016/345))
With the terribly close deadline in mind, Insolvency Practitioners who are considering an After-the-Event (ATE) insurance policy should get their skates on.
Despite the fact that many insurers have already shut their doors to new applications, QLP still have access to a number of underwriting options. To make an application, or discuss how we can help, contact us as soon as possible on 020 7626 0191.