Litigation funds eye India business as corporate tussles grow

Amid a rising number of international legal disputes involving entities and businesses in India coming to fore, a number of 'litigation funds' from abroad are sensing a niche business opportunity for them.

New Delhi: Amid a rising number of international legal disputes involving entities and businesses in India coming to fore, a number of 'litigation funds' from abroad are sensing a niche business opportunity for them.

This business of funding litigation costs of companies and individuals is in embryonic stage as yet in India, but a number of entities specialising in such kind of financing have begun their groundwork to set shop here.

These include leading global litigation funds like Harbour and Fulbrook.

Some home-grown entities are also considering entering this business of providing fund-support to the entities involved in complex commercial disputes here.

The business model works like an insurance cover against the legal disputes and involves the litigation funds bearing all the costs to be incurred by their clients in their commercial disputes.

This is in return for a share in the claim proceeds after winning the case. However, the litigation funds do not get anything if the client loses the case.

These funds pay for all costs charged by the lawyers and other experts, the coverage for any adverse development and for all the expenses necessary to win the case.

"We are seeing a real demand for litigation funding from Indian companies involved in complex commercial disputes," UK-based Harbour Litigation Funding CEO Brett Carron told PTI from London.

"The Indian market is incredibly dynamic from a commercial point of view... We are working currently with a number of Indian companies on their international disputes," he said.

Founded in 2007, Harbour is among the first litigation funders in the UK and it provides litigation funding to finance part, or all, of the costs of any type of commercial litigation in courts and tribunals besides arbitration and mediation.

US-based Fulbrook Capital Management Llc Chairman & CEO Selvyn Seidel also said his company has begun looking at the Indian market.

"I think a few commercial litigation funds from the UK and the US are starting to look at the Indian market," Seidel said, while adding that Fulbrook has already got some applications from certain Indian entities for funding.

"In my view, India is in many ways a country which will benefit greatly from funding, and funders like Fulbrook will find the market of emphatic interest," Seidel added.

Fulbrook chief further said that litigation funds are keeping an eye on India, as international disputes are growing here and this trend would continue alongside the growth of international trade and commerce.

"Moreover, India is now a focus for international arbitration, particularly since the London Court of International Arbitration has established a presence in India. International arbitration is particularly attractive to some commercial funders," Seidel said.

Litigation funders are likely to find the propensity for litigation in India to be very attractive. However there are certain constraints like the time taken for matters to go through the Court system would mean that such an investment could be "long term", experts said.

Leading Indian law firm J Sagar Associates (JSA) Partner Dhirendra Negi said the viability of such funding for domestic cases remains doubtful, given the long time it takes in India for a final decision.

"It is difficult to say if there is a market as such in India. Few instances have to come to light. Presumably, companies (claimants) opting for such funding may prefer to keep the transaction confidential," Negi said.

However, global law firm Baker & McKenzie's Asia Pacific Dispute Resolution Practice Head Mini vandePol said: "With the increase in Indian companies litigating internationally and facing significant legal costs to do so, the prospects of securing litigation funding for such matters is very attractive."

"Given the increased globalisation of Indian business, I suspect that this would be an attractive proposition for such businesses who may not be familiar with the jurisdiction and may be aided by a sophisticated litigation funder being a 'partner' in this process," she added.

Harbour's Carron said that litigation funding allows companies to diversify risks and free up capital for business development and that the Indian market understands risk sharing better than many others.

"Indian companies recognize us as a strategic partner who can help them resolve their disputes when they arise," the Harbour CEO added.