Offshore Litigation

Blog

Offshore Litigation

Contributors

Jonathan Addo
Jonathan Addo
  • Jonathan Addo

  • Partner
  • British Virgin Islands
Jeremy Child
Jeremy Child
  • Jeremy Child

  • Partner
  • London
Stuart Cullen
Stuart Cullen
  • Stuart Cullen

  • Partner
  • British Virgin Islands
Julie Engwirda
Julie Engwirda
  • Julie Engwirda

  • Partner
  • Hong Kong
Peter Ferrer
Peter Ferrer
  • Peter Ferrer

  • Partner
  • British Virgin Islands
Claire Goldstein
Claire Goldstein
  • Claire Goldstein

  • Partner
  • British Virgin Islands
Hazel-Ann Hannaway
Hazel-Ann Hannaway
  • Hazel-Ann Hannaway

  • Partner
  • British Virgin Islands
Nick Hoffman
Nick Hoffman
  • Nick Hoffman

  • Partner
  • Cayman Islands
Andrew Johnstone
Andrew Johnstone
  • Andrew Johnstone

  • Partner
  • Hong Kong
Paula Kay
Paula Kay
  • Paula Kay

  • Partner
  • Hong Kong
Phillip Kite
Phillip Kite
  • Phillip Kite

  • Partner
  • London
Vicky Lord
Vicky Lord
  • Vicky Lord

  • Partner
  • Shanghai
Paul Madden
Paul Madden
  • Paul Madden

  • Partner
  • Cayman Islands
Henry Mander
Henry Mander
  • Henry Mander

  • Partner
  • Cayman Islands
Ian Mann
Ian Mann
  • Ian Mann

  • Partner
  • Hong Kong
William Peake
William Peake
  • William Peake

  • Partner
  • London
Lorinda Peasland
Lorinda Peasland
  • Lorinda Peasland

  • Consultant
  • Hong Kong
Chai Ridgers
Chai Ridgers
  • Chai Ridgers

  • Partner
  • Hong Kong
Nicola Roberts
Nicola Roberts
  • Nicola Roberts

  • Partner
  • Hong Kong
  • Singapore
Paul Smith
Paul Smith
  • Paul Smith

  • Partner
  • Cayman Islands
Andrew Thorp
Andrew Thorp
  • Andrew Thorp

  • Partner
  • British Virgin Islands
Jessica Williams
Jessica Williams
  • Jessica Williams

  • Partner
  • Cayman Islands
Jayson Wood
Jayson Wood
  • Jayson Wood

  • Partner
  • Cayman Islands

Harneys breaks new ground: Third party litigation funding in the Cayman Islands

Harneys is pleased to announce that it has forged a new path in Cayman Islands law, acting for the applicant in obtaining the Grand Court’s approval of a third party litigation funding agreement.

The Grand Court’s ruling in A Company v A Funder is significant for the Cayman Islands as a jurisdiction because it has opened the door to appropriate third party funding of litigation.

The application

The plaintiff is a well-resourced Korean company that operates internationally. It was the victim of a complex fraud and obtained a New York arbitration award in its favour against the fraudsters. The fraudsters, unsurprisingly, did not comply with the terms of the award but instead dispersed the proceeds of the fraud into bank accounts across the world.

The plaintiff entered into a funding agreement with a U.K based litigation funder, by which the funder provided financing and also its specialist expertise in asset tracing. While the plaintiff was capable of funding litigation itself, it sought funding from a third party with a view to managing risk and costs.

With the benefit of the funding, the plaintiff commenced proceedings in jurisdictions across the world. Discovery in those proceedings led the plaintiff to bank accounts in the Cayman Islands.

Before commencing recognition and enforcement proceedings in the Cayman Islands, the plaintiff sought a declaration from the Grand Court to the effect that the funding agreement it had entered into was lawful, and that the commencement of legal proceedings in the Cayman Islands using the funds provided under the funding agreement would not be unlawful by reason of the torts of champerty and maintenance.

The law in the Cayman Islands regarding litigation funding

Like many other common law jurisdictions, the Cayman Islands received into its laws the English law torts of champerty and maintenance (the effect of which is to prevent any form of funding of litigation – whether by attorneys or third party funders). These torts were not tempered or abolished by legislative intervention, although minor in-roads had been made by a series of Grand Court decisions that permitted impecunious claimants to enter into conditional fee agreements with Cayman Islands attorneys. The torts otherwise prevented third party litigation funding agreements between funders and claimants. 

The significance of the Court’s decision in A Company v A Funder

The Grand Court’s decision opens the door to third party litigation funding in the Cayman Islands, bringing it into line with other international financial centres and also recognising the global trend that third party funding is sought not only by impecunious claimants but also by well-resourced ones who are looking to manage the costs and risks associated with litigation.

The Grand Court has provided useful guidance on the form of funding agreement that will be acceptable in the Cayman Islands. The Court has broad discretion to require amendments to the funding agreement before approving it. The key consideration is to ensure that the funding agreement does not risk corrupting public justice and that the integrity of the litigation process is protected. This will include considerations of whether the funder exerts improper control over the litigation (for example, by the funder’s termination rights or the right to instruct the attorney acting to the exclusion of the claimant), the identity of the funder and the profit that will accrue to the funder.

Harneys is proud to have acted for the applicant in this matter. 

Light bulb

Leave A Comment