An extract from The Third Party Litigation Funding Law Review, 5th Edition

Structuring the agreement

TPF in the DIFC is growing in popularity but is yet to reach the levels comparable with funding available in other common law jurisdictions. As a result, the TPF agreement structure is borrowed heavily from the structures typical in other common law jurisdictions, and parties can expect to negotiate similar provisions relating to exclusivity, withdrawal, confidentiality, pricing, settlement and liability for costs.

The Abu Dhabi Global Markets Courts (the ADGM Courts) issued the Litigation Funding Rules9 in 2019 and these, together with the Civil Evidence Regulations 2015, prescribe the form of TPF agreements, among other things. The issuance of the Litigation Funding Rules by the ADGM Courts came about as a response to the growing interest in TPF in the region. These Litigation Funding Rules are the first of their kind in the whole Middle East and Africa region and aim to provide both parties and funders with greater certainty in relation to the enforceability of funding arrangements in proceedings for resolving disputes. The Litigation Funding Rules were issued after an extensive review of the TPF frameworks in other jurisdictions and a consultation stage was carried out to ensure that the views of all interested parties were received by the ADGM Courts.

The DIFC Courts have not yet had an opportunity to consider specific clauses in contractual disputes between funders and claimants. In one DIFC case,10 the claimant's funders filed a Part 8 claim with the DIFC Court of First Instance to protect and preserve its interest in the funding agreement following a change of legal representation by the claimant without finalising the replacement payment mechanism under the funding agreement. The funders obtained an order that the defendants pay the sum adjudged by the Court as due to the claimant (in excess of US$11 million) into Court and that this sum be held by the Court until the parties reach settlement or until final award or judgment. This indicates the willingness of the DIFC Courts to uphold the rights of the funders under TPF agreements, which is a positive trend in this jurisdiction.