The potential cost of making or defending a claim is often a concern for anyone involved in litigation or arbitration. AG has since 2008 been at the forefront of sharing the risk with its clients, and the litigation funding market has responded with a variety of different options and opportunities. And it's also a developing topic for the courts. Our Control Update newsletter reports all the latest developments, both commercial and legal.

Litigation funders – extent of their involvement and liability for costs

The Court of Appeal has confirmed that commercial litigation funders must contribute to a winning defendant's costs on the indemnity basis (rather than the standard basis for costs assessment) and that sums paid by a funder as security for a defendant's costs should be included in calculating the total amount of funding. (Excalibur Ventures LLC v Texas Keystone Inc).

Disclosure of identity of funder to enable security for costs application

Mr Wall did not appear to have the financial resources himself to finance his very large (£700m) claim against RBS, so RBS inferred that he was using a commercial funder to pay his legal costs. (Wall v RBS).

The Civil Procedure Rules (CPR) give the court power to order that a funder, who "has contributed or agreed to contribute to the claimant's costs in return for a share of any money or property which the claimant may recover in the proceedings" (CPR 25.14 (2) (b)), provide security for the defendant's costs. But there is no express power in the CPR for the court to order disclosure of the name and address of a funder if a claimant has refused to provide them voluntarily. Relying on a 2007 High Court decision, (Reeves v Sprecher) in which the judge concluded that there must be an ancillary power to make such an order, RBS asked the court to order Mr Wall to disclose the name and address of any third party funding his claim; they also wanted him to confirm whether the funding fell within the scope of CPR 25.14 (2) (b).

Security for costs not available because of insolvent claimant's ATE insurance

In the case of Premier Motorauctions Ltd (in liquidation) and another v Pricewaterhousecoopers LLP and another [2016] EWHC 2610 (Ch), an application by the defendants for security for costs made under CPR Part 25 was before the High Court at the first Case Management Conference. A key point of interest is the consideration of the significance that should be attached to the After The Event insurance that the claimants had in place (insurance in respect of their potential liability for the defendant's costs).

Litigation funding in Asia and Dubai – new developments

Asia

TPF provides access to justice for parties that do not have the finances to pursue a meritorious claim. It also opens up commercial choices for parties by enabling them to transfer some or all the financial risks of legal proceedings to the Funder, and to free up capital that may otherwise be tied up in the dispute.

The use of TPF in international commercial arbitration is growing in major arbitration centres around the world, including London, Paris and Geneva. Until now parties interested in using TPF in Singapore and Hong Kong have been hindered by local legal prohibitions. However, in what is a significant development for the region, both jurisdictions are now opening up their arbitration market to TPF.

Dubai

The DIFC Courts are in the process of drafting formal guidance in relation to litigation funding in the jurisdiction. The very existence of such guidelines suggests third party funding is here to stay as far as the DIFC Courts are concerned. This, coupled with a recent landmark English judgment on funded international arbitrations, points to an expected increase in the use of litigation funding in the GCC.

Contingency arrangements with lawyer for FCA Redress Scheme approved

Permission to appeal a judge's decision approving a contingency fee arrangement between an applicant to the Financial Conduct Authority's redress scheme and his lawyers, has been refused. (Bolt Burdon v Tariq)

Supreme Court to decide on compatibility of recovery of additional costs liabilities with ECHR rights

Permission to "leapfrog" appeal has been granted to newspapers in two "publication" cases which will go straight from the High Court to the Supreme Court on the question of whether the winning claimants' right to recover "additional liabilities" (success fees payable under conditional fee agreements with their lawyers, and after the event insurance premiums) infringe the newspaper defendants' Article 10 ECHR rights to freedom of expression. (Miller v Associated Newspapers Ltd ; Frost &Ors v MGN).