Delhi High Court Provides Favorable Ruling to Funder in Costs Liability Appeal
As litigation funding continues to expand into newer markets, a key issue that funders will be keeping an eye on is the creation of precedents from court judgements and rulings that relate to the use of third-party funding, as well as any norms that are established in these cases. In a market that has enormous potential for growth, as India does, funders who are considering entering the market will be pleased by a recent ruling which suggests a limited scope for funder liability in unsuccessful claims. An article by Bar and Bench provides an overview of a recent judgement from arbitration proceedings in the Delhi High Court, which found Tomorrow Sales Agency (TSA), a litigation funder, is shielded from liability in the case, “which they have neither undertaken nor are aware of.” This ruling related to the case of Tomorrow Sales Agency Private Limited v. SBS Holding, Inc and Ors, in which SBS Holding had asked the court to order TSA to pay its legal costs, after TSA’s client had failed in its claims against SBS Holding. SBS Transpole, the claimant which TSA had funded, was unsuccessful in its arbitration against SBS Holding. However, SBS Transpole did not have the capital or assets to pay the tribunal’s award against it. SBS Holding’s request to force TSA to cover this award was appealed and finally rejected by the Delhi High Court, which found that “there are no rules applicable to proceedings in this court for awarding costs against third parties.” The High Court’s ruling will be of further interest to funders, as it emphasized the importance of third-party funding to the judicial system and stated “A person without the necessary means would have no recourse, in the absence of third-party funders. Third party funders play a vital role in ensuring access to justice.”