In November the long-running Excalibur litigation came to a head as London’s Court of Appeal (CoA) found the third-party funders who bankrolled the case liable for the successful defendants’ £20m indemnity costs.
The dispute stems from the original litigation in 2013, a $1.6bn energy battle brought by Excalibur Ventures against Gulf Keystone Petroleum and Texas Keystone where it was alleged it was entitled to a 30% share in the rights of four oil fields in Kurdistan.
At the end of the dispute, the litigation funders Psari, controlled by Greek shipping magnate Andonis Lemos, and New York-based hedge funds Platinum Partners and Blackrobe, were ordered to pay indemnity costs up to the total amount that it had funded Excalibur. Psari had funded Excalibur to the tune of £13.75m, Platinum Partners’ three vehicles provided funding of £7m, £6m and £1m respectively, while Blackrobe paid £4m.
Heard over two days in the CoA in July 2016 the appellants were joined by the Association of Litigation Funders in arguing the decision should be overturned.
However, the court said it expects a ‘responsible funder’ to conduct a rigorous analysis of the law, facts, witnesses and proportionality issues at appropriate intervals. Had the funders done so in this case then they could have realised that the claim had no sound foundation in fact or law, despite Clifford Chance (CC)’s positive assessment of the litigation.
The court also criticised CC for its role in the dispute, stating it had ‘an acute conflict of interest’ on the case.
Funders have welcomed the clarity arising from the decision. Therium Capital Management co-founder Neil Purslow told Legal Business: ‘It’s interesting to see the way the court is thinking about the funder’s role – whether it’s providing another measure of due diligence and check and balance on the process. We’ve been enjoying a supportive judiciary here for a long time and this demonstrates that.’
Concerns over funding have always surrounded the issues of undue influence and the limits of funders’ involvement in UK litigation which they bankroll. Purslow added: ‘It shows the courts expect us to be diligent. We won’t be exposed if we’re appropriately diligent. This isn’t carte blanche but its helpful clarification nonetheless.’
sarah.downey@legalease.co.uk