Arbitral Fee Funding and Respondent Funding

Arbitral Fee Funding and Respondent Funding

Woodsford Litigation Funding - the successful funder in the landmark case of Essar v Norscot - has launched a range of funding products to help parties in international arbitration make the most of the finding in that case

 

The case of Essar v Norscot [2016] EWHC 2361 (Comm) was one of the most high-profile international arbitration cases of 2016. It has been described as "landmark" by dozens of international law firms who have issued client alerts about the case.

 

It was also ground breaking for the litigation funding industry. The case was described as “a game-changer for the litigation funding market” in The Times. To summarise, The tribunal found in Norscot’s favour and that Essar's conduct had effectively caused Norscot's impecuniosity and forced it to seek third party funding, and therefore it was right and proper that Essar should pay Norscot's funding costs, including the success fee that had become payable to Woodsford

 

You can view full details of the Essar v Norscot case here.

 

Woodsford Litigation Funding has designed a range of funding products to help parties in international arbitration take advantage of the finding in the case of Essar v Norscot

 

Respondent's failure to pay institutional and arbitral fees

 

Upfront fees payable to arbitral institutions and the deposit for the tribunal's costs, which can be substantial, are in most international arbitrations shared by the parties. However, it is often the case that the Respondent, perhaps seeking to heap financial pressure on the Claimant and stymie the claim, fails to pay its share. The Claimant is usually thereby forced to pay the Respondent's share, which in some cases can be in excess of $100,000. Particularly if it would cause cash-flow difficulties for the Claimant, seeking third party funding for that unexpected liability will in many cases be a reasonable option. As the Respondent's conduct in such circumstances is demonstrably unreasonable, the Claimant will, based on the finding in Essar v Norscot, have a good argument that the Respondent should be held liable for the third party funding costs.

 

Woodsford Litigation Funding has designed a 'sliding scale' product that will allow Claimants, faced with the Respondent's failure to pay its share of the arbitral costs, to turn the tables on the Respondent, and to ratchet up the pressure through the threat of costs sanctions. 

 

Respondent funding

 

We are often asked whether we offer funding for Respondents. The answer is yes, particularly if the Respondent is also a Counterclaimant. The decision in Essar v Norscot opens up a new frontier in Respondent funding.

 

In Essar v Norscot, the Respondent was forced to pay the Claimant's funding costs. In other cases, it could be the other way around. A Respondent faced with an unmeritorious claim from a well-resourced Claimant may find it difficult to fund a defence from its own resources, and third party funding could therefore be a reasonable option. In due course, the Respondent's funding costs could potentially be recovered from the Claimant. Woodsford Litigation Funding has developed a Respondent funding product that could assist in that very situation.

 

Steven Friel, CEO of Woodsford Litigation Funding, comments:

 

"At Woodsford Litigation Funding, we are proud of our reputation as the go-to funder in David v Goliath cases, highlighted by our involvement as the successful funder in Essar v Norscot. Given our involvement in the case, we are better placed than other funders to work with parties in international arbitration (and their lawyers) to help them use the Essar v Norscot case to gain a tactical advantage. We have already had discussions with a number of international law firms about our new products, and we expect that the Essar v Norscot case will lead to a rise in the number of David v Goliath arbitrations we fund.

 

For further information contact Charlie Morris