As LFJ reported in July of last year, a claim funded by Litigation Capital Management (LCM) and brought against the Tanzanian Government had achieved a landmark victory, after Indiana Resources was awarded $109 million in damages. Nearly a year later, the parties have come to an agreement which will see the claimant receive 82.5% of the original award.

Reporting by the Cairns Post covers the outcome of an annulment hearing conducted by the International Centre for Settlement of Investment Disputes (ICSID), with a settlement that will see the Tanzanian Government pay Indiana Resources $90 million over its unlawful expropriation of Ntaka Hill base metals project. Whilst the claimant has already received one payment of $35 million, it has now been agreed that Tazania will pay a further $25 million by October 25, 2024 and $30 million before March 30, 2025.

Commenting on the outcome of the ICSID hearing, Indiana Resources’ executive chairman, Bronwyn Barnes said that “this settlement clearly demonstrates Tanzania’s commitment to work with international mining investors to resolve the historical dispute between the parties.” Barnes went on to add that he is confident “Tanzania will fully abide by the terms of the settlement and that the remaining instalment payments will be made by Tanzania in compliance with the agreed terms.” 

The settlement contains provisions to ensure that if Tanzania does not fulfil these agreed payments, then proceedings can be recommenced before ICSID, which would include the enforcement of the award and seizure of Tanzanian assets to do so. Whilst the initial $35 million payment has been set aside to repay LCM’s funding and legal costs, identified to be approximately $23 million, the remainder of this payment has been retained to cover any of the proceedings that would ensue under such a breach of the settlement agreement.

The original July 2023 decision by an ICSID ad hoc arbitral panel, found that Tanzania had breached the UK-Tanzania Bilateral Investment Treaty when it cancelled a mining retention license and seized the Ntaka Hill Project which had been held by a trio of three companies under majority ownership of Indiana Resources. As the manager of the joint venture, Indiana Resources had led the claim of arbitration against the Tanzanian government since 2019 and according to an announcement in August 2020, had secured $4.65 in funding from Litigation Capital Management.

Investor state treaty disputes have often represented a valuable investment opportunity for litigation funders, such as the claim brought by Rockhopper Exploration against the Italian government that LFJ reported on in 2022. However, a report by an environmental group argues that the high volume of these claims will result in states taking a more cautious approach when it comes to combatting climate change.

An article on BNN Bloomberg highlights a new report from climate think tank E3G which examines the use of Investor-State Dispute Settlement (ISDS) claims against national governments, and argues that the fossil fuel industry is claiming billions of dollars in damages whilst having a “chilling effect” on climate action. Using data from the International Institute for Environment and Development, the report found that 20% of the 1,700 public cases have involved companies in the fossil fuel industry, with at least $80 billion recovered in damages. 

The Rockhopper Exploration claim is highlighted as an example of this trend, with the firm being awarded €190 million ($206 million) in damages from the Italian government, over the state’s denial of a production concession from its ban on oil and gas exploration. The Rockhopper claim was financed by Harbour Litigation Funding, and whilst the Italian government is attempting to have the award annulled, Rockhopper’s CEO has stated that they expect the “the annulment request will be rejected in due course.”

Lisa Sachs, director of the Columbia Center on Sustainable Investment, spoke with Bloomberg and said that as long as funders are willing to back the companies making these cases, “states that take necessary climate-related measures may be exposed to increasing risk of abuse of ISDS claims.” Tai-Heng Cheng, a partner at Sidley Austin, argues that investors and states may eventually find a pragmatic common ground on these treaty disputes, “but until we get there, there is a period of instability that we’re going through.”

As LFJ reported in May, the impact of the decision by the US Court of Appeals for the Fifth Circuit to overturn a $1.6 billion judgement against IBM had led to insurers reconsidering their exposure around litigation insurance deals. However, new reporting suggests that one of the ways insurers are adapting to this environment is through a product offering that specifically targets patent infringement matters.

An article in Bloomberg Law examines a growing trend of patent monetization insurance, where insurers are offering new types of policies that will guarantee a portion of the payout that patent holders would receive in their patent infringement lawsuits. CAC Specialty is highlighted as one insurance broker that has already been involved in this type of product, with CAC’s Megan Easley arguing that “this serves as a really good alternative for folks with valuable intellectual property who are looking for lower cost financing”.

As part of this trend, insurers are looking to move away from single-case insurance towards insuring a portfolio of patent infringement cases, reflecting a longstanding movement in the litigation funding space. However, as the article points out, a growth in the number of insurers offering patent monetization insurance could represent a new form of competition for litigation finance providers.

Gaston Kroub, partner at Markman Advisors, commented on this trend and explained that “there’s a wider network of institutional investors that will dabble in litigation funding if there’s insurance involved because it becomes less binary.” Whilst Michael Gulliford, managing partner of Soryn IP Capital Management, highlighted that there are certain litigation funders who “an’t do an insured deal because the insured cost of capital is much lower than what they need to return to their investors.”

Omni Bridgeway Limited (ASX: OBL) (Omni Bridgeway, OBL, Group) announces the key investment performance metrics for the three months ended 30 June 2024 (4Q24, Quarter) and for the 2024 financial year (FY24).

Summary

• Investment income of A$391 million in FY24; A$65million provisionally attributable to OBL, excluding management and performance fees.
• 76 full and partial completions and one secondary market transaction in FY24, delivered an overall multiple on invested capital (MOIC) of 2.7x.
• A single Funds 2&3 investment had a partial completion resulting in A$43.7 million in gross income, with a MOIC of 8.6x.
• The 34 full completions during 2H24 had a combined fair value conversion ratio of 118%, providing a first validation of the fair value of the overall portfolio.
• A$631million in new fair value added from A$484million of new commitments in FY24.
• Pricing at materially improved levels, up 28% for FY24 compared to FY23.
• Strong pipeline going into FY25, with agreed term sheets outstanding for an estimated A$148million in new commitments.
• OBL cash and receivables of A$123million at 30 June 2024.
• A$0.8 billion of fair value in potential completions over the next 12 months.
• Full transition from EPV to fair value has been completed.
• Good progress on cost management and strategic initiatives.

The full investment portfolio report can be read here.