Recovering TPF Costs in Arbitrations: The Current Approach
Five years ago, Essar vs Norscot brought about a landmark decision. The English High Court upheld a ruling requiring that the defendant cover the claimant’s costs associated with legal funding in the arbitration. Now it appears that arbitral tribunals are increasingly likely to award costs associated with procuring third-party legal funding. Omni Bridgeway explains that third-party funding costs may refer to the funder’s success fee, which is one of many payouts funders receive when a claim is successful. Plus, the costs can include reimbursing funders for costs paid over the course of the arbitration itself. In Essar, courts cited three reasons for awarding WPF costs:
- The respondent engaged in “reprehensible conduct” well beyond typical breach of contract—thus spurring the arbitration.
- The claimant’s lack of resources
- The respondent’s actions, intended to take advantage of the claimant’s lack of financial resources.