Snapshot: litigation funding costs and insurance in British Virgin Islands

Costs and insurance

May the courts order the unsuccessful party to pay the costs of the successful party in litigation? May the courts order the unsuccessful party to pay the litigation funding costs of the successful party?

Yes. Under Civil Procedure Rule (CPR) 64.6 the general rule is that where the court decides to make an order about costs, the court must order the unsuccessful party to pay the costs of the successful party. However, the court has wide discretion and may order the successful party to pay all or part of the unsuccessful party’s costs or make no order at all. As for the costs liability of a funder, while the issue remains untested, it is likely that the British Virgin Islands (BVI) court will adopt the position in England that an unsuccessful party in litigation cannot be ordered to pay the costs of third-party funding.

Can a third-party litigation funder be held liable for adverse costs?

The issue of whether a third-party funder can be made liable for the costs of a funder is yet to be considered by the BVI court. However, English precedent is persuasive authority in the BVI, and it is therefore arguable that the court may have the discretion to order a funder to pay adverse costs (see Davey v Money [2019] EWHC 997 (Ch)).

May the courts order a claimant or a third party to provide security for costs? (Do courts typically order security for funded claims? How is security calculated and deposited?)

By Civil Procedure Rule 24.3, the court may order the claimant to pay security for costs if it considers that it would be just to do so having regard to all the circumstances of the case, and if any of the following applies:

• some person other than the claimant 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;
• the claimant:
  • failed to give his or her address in the claim form;
  • gave an incorrect address in the claim form; or
  • has changed his or her address since the claim was commenced, with a view to evading the consequences of the litigation;
• the claimant has taken steps with a view to placing the claimant’s assets beyond the jurisdiction of the court;
• the claimant is acting as a nominal claimant, other than as a representative claimant under Part 21 of the Civil Procedure Rules, and there is reason to believe that the claimant will be unable to pay the defendant’s costs if ordered to do so;
• the claimant is an assignee of the right to claim and the assignment has been made with a view to avoiding the possibility of a costs order against the assignor;
• the claimant is an external company; or
• the claimant is ordinarily resident out of the jurisdiction.

In Dr Martin Didier et al v Royal Caribbean Cruises Ltd, SLUHCVAP 2017/0051, the Court of Appeal (for the Eastern Caribbean Supreme Court) held that the court would not order security for costs solely because the claimant was ordinarily resident outside the jurisdiction. That said, a non-resident claimant without any assets in the jurisdiction will, in all likelihood, be required to put up security for the defendant’s costs.

The amount and nature of the security shall be such as the court thinks fit (CPR 24.2 (4)). The court should ensure that the amount ordered to be paid is not oppressive or disproportionate and will consider such factors as the value of the claim and the costs incurred to date. Security may be in various forms, including a payment into court, bond or guarantee.

If a claim is funded by a third party, does this influence the court’s decision on security for costs?

Under CPR 24.3(a), one of the circumstances under which the court may order security for costs is if some person other than the claimant has contributed or agreed to contribute to the claimant’s costs in return for a share of any money or property that the claimant may recover. This would include most if not all third-party funding arrangements.

In Hualon Corporation (M) SDH BHD (in receivership) v Marty Limited, BVIHC (COM) 2014/0090, Justice Farara held that the claimant’s refusal to provide the defendant with a copy of the funding agreement was one of the factors weighing in favour of granting security for costs, because it ‘raises the serious likelihood that the Claimant is either unable or unwilling to pay or to meet any costs awarded to the Defendant in these proceedings’. However, while there are no decided cases in the BVI, it is unlikely that the existence of funding alone would warrant an order for security for costs, particularly if the funding is being provided by an established funder.

Is after-the-event (ATE) insurance permitted? Is ATE commonly used? Are any other types of insurance commonly used by claimants?

There are no rules prohibiting the use of after-the-event insurance. However, there are no published statistics detailing how common its usage is in the BVI.