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Litigation Finance and China’s Belt and Road Initiative

Litigation Finance and China’s Belt and Road Initiative

By Mauritius Nagelmueller China is building a multi-trillion dollar trade and infrastructure network – a new silk road – and the legal world is preparing for the disputes that will inevitably arise. What is the Belt and Road Initiative all about, and what impact will it have on litigation finance? Being one of the largest infrastructure and investment projects in history, the Belt and Road Initiative (BRI)[1] will alter the global economy and define China’s role in it. The initiative covers 65% of the world’s population in more than 68 countries, and 40% of the global GDP. An anticipated overall investment of USD 4-8 trillion will connect China with the rest of Asia, Europe and Africa, through six main geographic corridors and a Maritime Silk Road. China’s position is that BRI will improve the infrastructure along the route, providing a network of highways, railways, ports, energy and development projects for trade and cultural exchange. Chinese state-owned banks, the Asian Infrastructure Investment Bank (formed in 2015, but already encompassing 84 approved member states, and with a capital of USD 100 billion – half of the World Bank’s capital), the Silk Road Fund, and investors from the private sector are providing the necessary financing. About USD 1 trillion has already been invested. It seems likely that BRI, if successful, will shift more economic and political power to China. Major concerns surround the environmental impact of the vast project, uncertainties regarding the exact parameters and how much local economies will actually benefit. Security risks along the Belt remain constant. Some even fear a new Chinese “empire”. It remains to be seen which of these fears are justified, but it is interesting to note that China’s president Xi Jinping, who unveiled BRI in 2013 and made the initiative a central tenet of his foreign policy agenda, will likely remain in power, as the Communist Party of China just announced plans to abolish the two-term limit on the presidency. To predict that legal disputes will arise under BRI is to state the obvious, and the legal community in Asia and beyond is preparing accordingly. Jurisdictions are already competing for recognition as the prime venue for BRI related proceedings. In an effort to provide wide-ranging dispute resolution services, China plans to establish an international commercial court in Xi’an for disputes surrounding the land-based transport corridors, another in Shenzhen for the maritime route, and a central court headquartered in Beijing. All three bodies will provide arbitration and mediation services. China’s neighbors share its expectations regarding dispute resolution. In 2017, Hong Kong and Singapore permitted litigation finance in international arbitration, and the legalization for state court procedures may soon follow. Hong Kong passed its law shortly after a BRI Forum in Beijing, and partly also to strengthen its position as a go-to center for BRI related disputes, particularly for the maritime and construction fields. Arbitration institutions around the world, including the ICC (International Chamber of Commerce), SIAC (Singapore), and HKIAC (Hong Kong), encourage the adoption of their rules in BRI deals, and Malaysia’s KLRCA and Seoul’s KCAB are preparing accordingly. Chinese and Singaporean mediation centers (CCOIC and SIMC) have plans to cooperate for BRI related mediation proceedings, while Hong Kong is developing an online arbitration and mediation tool specialized on the initiative. Chinese officials have even publicly floated the concept of an innovative hybrid method combining aspects of arbitration and mediation, with courts playing a central role as well. Many legislators view litigation finance as a vital component in their jurisdiction’s status as a prime dispute resolution center, and litigation finance firms are aggressively seizing on the new opportunities presented. Select funders have already opened offices in Asia, others will soon follow, or plan to be involved from abroad. Entities who plan to invest along the Belt, including many Chinese companies, will not only face complex regulatory challenges, but also disputes with foreign governments, possibly in multiple jurisdictions. In addition to first-rate legal advice, parties will sometimes require external financing to pursue their claims under BRI. Both investors and law firms will utilize the benefits of litigation finance, and seek tailored financing solutions for their cases arising under BRI related projects. This will include single cases, as well as multiple disputes from investments being bundled into portfolios of claims. BRI will have a significant impact on litigation finance in the coming years, as a host of challenges and new opportunities present themselves. As has occurred previously, litigation finance will support meritorious claims which could not be brought without the assistance of external financing, help businesses and law firms diversify and boost their portfolios without increasing risk, and continue to promote access to justice. Litigation finance will benefit from this unprecedented trade and infrastructure initiative. It has already become part of the legal world, and it will soon be part of BRI. [1] Originally called One Belt and One Road Initiative.   Mauritius Nagelmueller has been involved in the litigation finance industry for more than 10 years.
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Burford’s Q2 Profits Surge on New Capital

By John Freund |

Burford Capital has delivered its strongest quarterly performance in two years, buoyed by a swelling pipeline of high-value disputes and a fresh infusion of investor cash.

A press release in PR Newswire reveals that the New York- and London-listed funder more than doubled revenue and profitability in the three months to 30 June 2025. CEO Christopher Bogart credited “very substantial levels of new business” for the uptick, noting that demand for non-recourse financing remains “as strong as we’ve ever seen.”

The stellar quarter follows a lightning-quick, two-day debt offering in July that raised $500 million—capital Burford says will be deployed across a growing roster of commercial litigations, international arbitrations, and asset-recovery campaigns. Management also highlighted significant progress in portfolio rotations, underscoring the firm’s ability to monetise older positions while writing new ones at scale. Investors will get a deeper dive when Burford hosts its earnings call today at 9 a.m. EDT.

Burford’s results arrive amid heightened regulatory chatter in Washington and Westminster, yet the numbers suggest the industry’s largest player is unfazed—for now—by talk of disclosure mandates and tax levies. The firm emphasised that its legal-finance, risk-management and asset-recovery businesses remain uncorrelated to broader markets, a pitch that continues to resonate with pension funds and endowments hunting for alternative yield.

For litigation-finance insiders, Burford’s capital-raising prowess and improving margins could have ripple effects: rival funders may face stiffer competition for marquee cases, while law-firm partners might leverage the firm’s deeper pockets to negotiate richer portfolio deals.

Australian High Court Ruling Strengthens Class-Action Funders

By John Freund |

Australia’s litigation-funding industry just received the judicial certainty it has craved.

Clayton Utz reports that the High Court, in Kain v R&B Investments [2025] HCA 26, unanimously held that the Federal Court may impose common-fund orders (CFOs) or funding-equalisation orders at settlement or judgment—ensuring all class members, not just those who signed funding agreements, contribute to a funder’s commission.

The Court reaffirmed Brewster’s bar on early-stage CFOs but found late-stage CFOs fall within the “just” powers of ss 33V(2) and 33Z(1)(g) of the Federal Court Act. Crucially, the bench rejected “solicitor common-fund orders,” ruling that any CFO benefiting plaintiff firms would contravene the national ban on contingency fees outside Victoria.

For funders, the decision cements the enforceability of commissions in nationwide class actions and removes a major pricing risk that had lingered since Brewster. For plaintiff firms, however, the ruling slams the door on a hoped-for new revenue channel.

The Court’s reasoning—tying funding commissions to equitable cost-sharing rather than contingency returns—will likely embolden funders to back larger opt-out claims, knowing a CFO safety-net is available at settlement. Meanwhile, plaintiff firms may redouble lobbying efforts for contingency-fee reform, particularly in New South Wales and Queensland, to reclaim ground lost in today’s judgment. Whether lawmakers move on that front will shape Australia’s funding market in the years ahead.

Locke Capital Backs Sarama in US $120 Million ICSID Claim Against Burkina Faso

By John Freund |

A junior gold explorer is turning to third-party capital to fight what it calls the expropriation of a multi-million-ounce deposit.

According to a press release on ACCESS Newswire, ASX- and TSX-listed Sarama Resources has drawn down a four-year, US $4.4 million non-recourse facility from specialist funder Locke Capital II LLC. The proceeds will pay Boies Schiller Flexner’s fees and expert costs in Sarama’s arbitration against Burkina Faso at the International Centre for Settlement of Investment Disputes (ICSID).

Sarama alleges the government retroactively revoked its Tankoro 2 exploration permit in 2023, halting development of the flagship Sanutura project. An arbitral tribunal chaired by Prof. Albert Jan van den Berg held its first procedural hearing on 25 July; Sarama’s memorial is due 31 October, and the company is seeking no less than US $120 million in damages.

Under the Litigation Funding Agreement, Locke’s recourse is limited to arbitration proceeds and the ownership chain of Sanutura; Sarama’s other assets remain ring-fenced. Repayment occurs only on a successful award or settlement, with Locke’s return calculated on a multiple-of-invested-capital basis and adjusted for timing.

The deal underscores the continued appetite of specialist funders for investor-state claims, particularly in the mining sector where treaty protections offer a clear legal framework and potential nine-figure payouts.