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Case Developments Commercial

Arbitrator in Malaysia Sulu Heirs Case Found Guilty of Contempt of Court

The dispute between the Malaysian government and the Sulu heirs has been one of the most high profile international arbitration cases in recent times, raising issues around state sovereignty and the role of third-party funders in international arbitration. The new year has brought one of the biggest developments yet in the case, as the arbitrator who issued the preliminary award to the Sulu heirs has been found guilty of contempt of court. Reporting by Bloomberg Law takes an in-depth look at the ongoing aftermath of the arbitration case brought against the Malaysian government by the heirs to the Sulu sultanate, and the subsequent issuance of a multi-billion-dollar award. In a major development, Gonzalo Stampa, the Spanish arbitrator who handed down the preliminary $14.9 billion award to the Sulu claimants has been found guilty of contempt of court and been handed a six-month jail sentence. In addition, the court banned Stampa from acting as an arbitrator for one year ‘for knowingly disobeying rulings and orders from the Madrid High Court of Justice.’ The origins of Stampa’s guilty verdict date back to his issuing of the preliminary award, after which the court of justice in Madrid ‘found that the claimants did not serve the government of Malaysia properly and instructed Stampa to close the proceedings.’ When Stampa ignored these instructions and took the award to be recognized in France, the Malaysian government filed a criminal complaint with the Spanish authorities. Paul Cohen, the attorney for the Sulu heirs, described the verdict as “a disgrace to Spain and a stain on its reputation as a venue for neutral dispute resolution,” whilst Mr Stampa’s own attorney, Sofía Parada Cano-Lasso, argued that “the judgment makes an incorrect interpretation of the arbitration sphere.” The $14.9 billion award that Stampa handed down has already been the subject of appeals by the Malaysian government, with a French court indicating that it would annul the award, whilst attempts by the claimants to enforce the award in the Netherlands and Luxembourg were unsuccessful. Stampa’s guilty verdict raise fresh issues for Therium Capital Management, who reportedly provided $20 million in funding for the Sulu heirs’ case, and now have another obstacle in the way of enforcing and collecting the award. Therium declined Bloomberg Law’s request for comment.  Azalina Othman Said, the Malaysian government minister for law and institutional reform, celebrated the ruling as a “significant victory for the rule of law that will help preserve the sanctity of international arbitration as an alternative form of dispute resolution.” Azalina has long been the most outspoken representative from the government on what they call the ‘Sulu Fraud’, having previously raised the possibility of legal action being brought against Therium.
Case Developments Commercial

Argentina Asks Court to Delay Asset Seizure for $16.1 Billion Award

The $16.1 billion award in the Argentina YPF case stands out as one of the biggest events in the litigation finance world in recent memory. However, the process of actually recovering the award is proving predictably difficult, with Argentina continuing to seek court ordered holds on any asset seizure. Reporting by Reuters provides an update on the latest developments in the ongoing efforts by Burford Capital to enforce and collect on the $16.1 billion judgement in the YPF case, whilst Argentine explores every avenue to delay the process. The article details Argentina’s filing this Monday in a New York federal court, asking the judge to delay asset seizure efforts which Burford had planned to begin on Wednesday. In its filing, Argentina argued that, as the judgement was only handed down four months ago and their appeal is still underway, the planned asset seizure was “unnecessary and premature”. The filing also cited the “extraordinary and unique circumstances” of the multi-billion dollar award, with the Argentine government having already stressed the challenge of paying such a large sum. As LFJ recently reported, Argentina's new president, Javier Milei has suggested that the government could create a perpetual bond to cover the cost. The Reuters article highlights that Judge Preska has ‘agreed not to enforce her Sept. 15, 2023, judgement until the earlier of Argentina's failure to pledge assets by Jan. 10 or seek an expedited appeal by Jan. 30.’ However, as recently as last week, Burford Capital reemphasized that it was intent on pursuing collection immediately, stating that Argentina “made clear that it does not intend to post the minimal security required to continue the (stay) pending appeal, much less pay the judgement.”
Commercial Legal Innovation

EU Corporate Sustainability Directive to Create Opportunities for ESG Litigation Funding

Lawsuits focusing on ESG violations by large companies have become a top priority for many of the world’s leading funders, with some firms focusing their entire portfolio around these types of cases. The next 12 months is set to continue that trend, with European funding leaders identifying a new European Union directive as a key driver of ESG litigation in the future. An article in Bloomberg provides an overview of the current state of the European litigation funding market, focusing on the impact of new EU rules and the growing appetite of investors to pursue claims against companies over ESG breaches. The article brings together insights from prominent funders, lawyers, and policymakers to analyse the driving forces behind the European funding market in 2024.  Ana Carolina Salomão, chief investment officer and partner at Pogust Goodhead, highlighted the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) as a factor that may increase the volume of funded ESG litigation. The directive, which is awaiting formal adoption from the European Parliament and Council, outlines rules for large companies to follow when it comes to their impact on the environment and human rights, along with establishing penalties and civil liability for those companies who breach these obligations.  Salomão stated that the CSDDD will ensure that there is “much more information available in the public domain,” which will help demonstrate where companies have failed to meet their ESG obligations.  Steven Friel, CEO of Woodsford, explained that his company has seen an increase in activity around investor-led claims being brought against companies over governance and corporate responsibility failings. Friel said, “We go in when there’s a catastrophic breakdown in ESG in major companies with losses for shareholders or customers. We mobilize them, engage with the company, seek a settlement or litigate.” Aristata Capital’s CEO, Rob Ryan highlighted his firm’s focus on ESG issues, stating that the current environment is presenting plenty of claims in their target area. Ryan stated that Aristata’s goal is “to change corporate behavior in the long run.” 
Announcements Commercial People Moves

Apex Litigation Finance to Appoint Timothy Fallowfield as Interim Chairman 

Litigation funding specialists Apex Litigation Finance have announced the upcoming appointment of Timothy Fallowfield as interim Chairman. Tim will commence the new position in January 2024, assuming overall responsibility for guiding Apex through its next growth stage. Tim brings a wealth of experience to the table, having honed his skills on both the buy and sell sides of the financial spectrum. His diverse background includes managing risk at Black River Asset Management and latterly for Noble Resources HK, where he managed a medium-sized absolute return Macro fund with AUM of $480mm. On the sell side, Tim has lent his expertise to financial powerhouses such as Chase, UBS, and ING, gaining valuable insights into the dynamics of financial markets. With an impressive track record spanning 35 years, Tim has consistently demonstrated his proficiency in managing risk and generating consistent returns for investors. Having built a fund business from the front to the back office, this extensive experience positions him as a seasoned professional capable of navigating the complexities of the financial landscape. Apex will look to leverage off his risk management background to build a robust investment process. Tim says: “There were three elements that attracted me to Apex: our CEO, the opportunity to generate uncorrelated returns and the focus on the small claims, which allows Apex to build a diversified investment portfolio. We do this while helping those who may perhaps not usually have access to legal recourse. With Crestline’s participation, we will look to expand our investments significantly.” In leveraging Tim's skill set, Apex is well-positioned to benefit from his proven ability to establish and manage funds successfully. Tim's strategic approach and in-depth industry knowledge make him an invaluable asset to the Apex team as they chart a course for success in the ever-evolving world of litigation finance. Apex CEO Maurice Power says: “Having recently secured investment capital from Crestline Investors Inc., Apex is expanding to position itself as the litigation funder of choice for small to mid-size commercial claims in the UK. Being able to bring in someone with Tim’s drive and experience to guide us through this period will hugely benefit the Apex team. We welcome Tim’s appointment and look forward to the exciting times ahead.” About Apex Litigation Funding: Apex Litigation Finance Limited brings together experts from the legal and finance sectors to provide third-party litigation funding to litigants (corporates, liquidators, and individuals) who are unable to pursue a claim due to the prohibitive cost of litigation. Although the claim may have merits, uncertainty over the total costs and the potential risk of being ordered to pay the defendant’s cost, should they lose the claim, prohibits access to justice for many claimants. Our process is augmented by artificial intelligence systems to assess risk. As a professional litigation funder, Apex will make available funds to pay legal and other costs associated with a claim in return for an agreed share of any successful return. If there is no recovery or the claim is lost, there is nothing to repay.
Commercial Regulatory Issues

Former MP Praises PACCAR Ruling, Says Litigation Funding is a ‘Destructive Industry’

Within the litigation finance industry, the consensus reaction to last year’s UK Supreme Court PACCAR ruling was largely one of disappointment. However, for those individuals and lobby groups that are opposed to the widespread use of third-party litigation funding, it has been warmly welcomed as an important corrective measure. In an opinion piece on Law.com, the executive director of Fair Civil Justice, and former MP, Seema Kennedy argues that the Supreme Court’s decision in the PACCAR case ‘should mark the beginning of steps to rein in this destructive industry.’ She describes the ruling as having been a desirable outcome for the UK’s legal system, and one that ‘clips the wings of investors gambling on the outcome of competition class actions.’ At the core of Kennedy’s column is the argument that in a fair legal system, any lawyers or third parties representing a claimant must share their interests. In her view, ‘allowing an outside third party to have a financial stake in any case’s outcome inherently creates conflicts of interest.’ Kennedy delineates between the system of ‘strict legal and professional standards’ that lawyers operate within, and the world of litigation funding, which she argues is ‘ripe for exploitation and abuse.’ Kennedy argues that the Supreme Court’s decision should only be considered a first step in the process of increasing oversight and regulation of third-party litigation funding. She goes on the suggest that, ‘safeguards could include licensing of funders, disclosure of funding agreements to the court, and making sure claimants get a fair payout.  As LFJ has previously reported, Kennedy has been a regular critic of litigation funding in the past, having previously blamed third-party funders for contributing to what she describes as the UK’s shift towards an ‘aggressive profit-driven litigation culture’.
Commercial Fundraising

Danny Kinnear Launches EAKO Capital

In a post on LinkedIn, Danny Kinnear announced the launch of his new company: EAKO Capital. The new venture is designed to provide a variety of solutions across foreign exchange (FX), litigation funding, and trade finance. According to EAKO’s website, the company ‘partners with leading FX solutions providers to offer currency management and payment solutions to law firms and their clients, across all industries.’ As part of its litigation funding services, EAKO offers portfolio funding, monetisation of claims and awards, judgement enforcement, early stage finance, and assignment of officeholder and company debt claims. In the announcement post, Kinnear said, “I am excited about this new chapter in my life and look forward to reconnecting with former clients and colleagues and creating new relationships to explore how EAKO’s solutions can deliver value to their businesses.” Kinnear brings a wealth of experience in FX and funding to EAKO Capital, having most recently served as the Global Head of Corporate Origination at Litigation Capital Management. Prior to his time at LCM, Kinnear has also held senior positions at Deutsche Bank, JB Drax Honore, and Nomura.
Commercial Special Features

Member Spotlight: Michael Volpe

Michael Volpe brings a decade of nonprofit fundraising experience to his role as Executive Director. His passion for making a positive impact on the world is evident in his history of success in securing funding and developing innovative fundraising strategies. Mike is committed to leveraging his experience and expertise to expand the Milestone Foundation’s fundraising efforts and amplify its mission of providing life-changing support to those who need it most.   Company Name and Description:  The Milestone Foundation provides financial assistance to people pursuing a lawsuit while facing financial hardships. Being a nonprofit organization enables us to advance settlement funding to plaintiffs at low-cost and simple interest – a unique model in the plaintiff-funding industry. Since our founding, the Milestone Foundation has empowered more than 700 individuals & families totaling more than $5 million advanced to plaintiffs in need. Company Website: https://themilestonefoundation.org/ Year Founded:  2016 Headquarters:  Buffalo, NY Area of Focus:   Increased Awareness and Assistance for Litigation Funding Member Quote: "I am honored to be entrusted with leading The Milestone Foundation," said Volpe. "The Foundation's steadfast commitment to providing critical support to plaintiffs during their most challenging moments is inspiring. I'm eager to leverage my experience to amplify our impact and empower even more individuals to fight for justice."
Announcements Commercial Legal Innovation

Lexolent Announces Groundbreaking Launch of LexHub: A Revolutionary Platform for Legal Finance Professionals

Lexolent, the trailblazing force in the legal finance industry with offices in Dubai and London, is thrilled to announce the forthcoming launch of LexHub, the world's first online platform for legal finance professionals. Scheduled to go live on Monday, January 8th, LexHub represents a seismic leap forward for the industry, offering a unique one-stop-shop experience for legal professionals worldwide. About Lexolent: Lexolent stands as the world's first globally coordinated network for legal finance professionals. This community of professionals is dedicated to generating investment opportunities and benefiting from referrals of work. Lexolent provides its members with access to a suite of services through LexHub, LexInvest and LexTrade, including SaaS, e-learning, conferencing, legal finance accreditation, recruitment and commissions for referrals. The online marketplace facilitates primary, secondary and syndicated investments in legal assets, offering investors access to origination from the network and the option for secondary or syndication of Lexolent’s executed investments. LexHub: LexHub, the crown jewel of Lexolent's offerings, is the world's first online platform for legal finance professionals. Positioned at the forefront of the industry, LexHub constantly evolves through cutting-edge technology and innovative solutions. Members gain access to SaaS in case management, Customer Relationship Management (CRM), Artificial Intelligence and predictive analytics. LexHub serves as a one-stop shop, leveraging advanced technology to connect capital with origination, providing a legal finance marketplace for primary, secondary, and syndicated transactions. LexInvest: Within the LexHub portal, LexInvest offers a dedicated marketplace for primary investments. Network Members upload their origination and in just three simple steps, a case is created and triaged by the Lexolent underwriting team. The case is then matched with a global network of Investor Members who can bid on the cases they wish to view. All case activity is recorded in the members' dashboard, ensuring transparency, efficiency and efficacy. LexTrade: Lexolent's commitment to swift execution of investments is embodied in LexTrade, the trading platform for secondaries, syndication, and 'copy' trading. Every investment made by Lexolent is immediately available for syndication or secondary trading on the LexTrade platform. LexTrade provides access to pre-qualified, underwritten and fully assessed legal finance investment opportunities, catering to a vast number of investors who are new to the asset class and were previously unable to access the market. Lexolent’s CEO and legal finance veteran, Nick Rowles-Davies stated, “I am beyond excited about the launch of the most innovative and  ground breaking project I have ever worked on.  The Lexolent platform will positively disrupt and elevate the legal finance space in a way we have never before experienced. I would also like to take this opportunity to thank the team who have worked tirelessly to turn my initial ideas into a Lexolent reality.” About Lexolent: As the first ever legal finance business to be based in Dubai, Lexolent is a pioneering force in the legal finance industry, dedicated to fostering collaboration, innovation, and global connectivity among legal finance professionals. The company's comprehensive suite of services and platforms aims to redefine the landscape of legal finance, making it accessible to a broader audience.
Consumer

Personal Injury Claimant Sues his Former Lawyer and Funder

Consumer litigation funding for personal injury lawsuits rarely make the headlines, with these small cases happening largely out of public sight. However, a dispute between a claimant and his former lawyer and funder is bringing attention to those calling for greater regulation of consumer legal funding. Reporting by Bloomberg Law provides insights into the case of Sean Murtaugh v. Robert S. Goggin, III, Esquire, in which Mr Murtaugh is suing his former lawyer and litigation funder over claims that he is having to pay for legal funding costs that he did not agree to. The lawsuit originated from a personal injury claim that Murtaugh brought against his employer, having received legal representation from Goggin and financing from Jordan Litigation Funding. However, when the case was settled for $475,000, Murtaugh says that Goggin billed him for interest on additional funding ‘to cover the costs of experts, Murtaugh’s medical bills, and depositions.’ In the lawsuit brought against his lawyer, Murtaugh stated that he “had no idea that Mr. Goggin had received litigation funding to cover case costs,” and had “never agreed to pay interest on any of those case costs.” Murtaugh claims that whilst he did agree to funding for six months of personal expenses whilst he was out of work, he never agreed to any funding from Jordan to cover the personal injury lawsuit. Murtaugh reported that the additional bill for costs totalled over $81,000, with the accrued interest bringing the sum owed to almost $137,000. Speaking with Bloomberg Law about the case, the president of the Alliance for Responsible Consumer Legal Funding, Eric Schuller stated that “this is a good example why proper regulation on the industry is needed.” He went on to explain that such regulation could “ensure that both consumers and attorneys are fully understanding as to what their roles are and what the funds can be used for.”