Litigation Trends 2024

56 | Weil, Gotshal & Manges LLP LITIGATION TRENDS 2024 | 57 T O C E M P A N T I I P C A P R O W C C O N T A C T I N T A P P P A T C C L S E C Litigation Funding AIC v Bugsby Property [2023] EWHC 2627 (Comm) in November 2023. The decision in Therium will provide some comfort to the third-party funding industry, as the Court held that it was arguable, notwithstanding PACCAR, that certain parts of an LFA were severable and therefore enforceable. Consequently, the Court granted Therium (the funder) an asset preservation order by way of interim relief, thereby provisionally preventing Bugsby (the recipient of the funding) from exploiting the uncertain legal position arising from PACCAR and avoiding payment of proceeds that were due under the LFA, from the successful litigation. Expected Developments In January 2024, the Government pledged to protect the third-party funding industry. Alex Chalk, the UK Justice Secretary, stated that he planned “at the first legislative opportunity” to reverse “the damaging effects” of PACCAR. The Government had already attempted to mitigate those effects via an amendment to the Digital Markets, Competition and Consumers Bill tabled in November 2023. Calls have since been made to expand the scope of reform (whether through this amendment or new legislation) to cover other third-party funding arrangements, besides the opt-out collective proceedings initially provided for. This attitude reflects similar approaches taken by a number of other jurisdictions which have sought to further develop third-party funding in their legal industries, particularly in relation to arbitration. Ireland is in the process of easing current restrictions on third-party funding for international arbitration. In India, the Delhi High Court has recently implicitly recognized the validity of thirdparty funding for arbitrations (Tomorrow Sales Agency Private Ltd v SBS Holdings, Inc and others [FAO(OS)(COMM) 59 of 2023]), and the PRC courts have also recently held that PRC law does not prohibit third-party funding for arbitration ((2022) Su 02 Zhi Yi No 13 (30 May 2022) and (2022) Jing 04 Min Te No 368 (4 November 2022)). Arbitral institutions, too, have shown greater acceptance of third-party funding, as evidenced by the incorporation of third-party funding in a number of institutional arbitration rules (see, for example, the 2022 DIAC Arbitration Rules, 2021 ICC Arbitration Rules and 2018 HKIAC Administered Arbitration Rules ). Concluding thoughts Despite the initial alarm triggered by PACCAR, the continued viability of third-party funding in arbitration and litigation in England appears less in question than it was six months ago. Recent indications from the English courts and current Government attention to third-party funding issues are encouraging. Over time, statutory changes should help resolve the present uncertainties and lead to a clearer and better developed legal environment for third-party funding to continue to grow. In the meantime, funders and funded parties can (and should) take steps to review and protect their existing funding arrangements, ensuring that future agreements comply with the current English regulatory regime. Czech Republic vs Diag Human and ors [2023]: Determining Security for Costs in Englishseated Arbitration Proceedings In Czech Republic v Diag Human [2023] EWHC 1691, the Commercial Court provided helpful clarification regarding the correct approach to the determination of applications for security for costs in English-seated arbitration proceedings. Czech Republic concerned an application for security for costs under section 70(6) of the Arbitration Act 1996 (the “Act”), brought by Diag Human (a blood plasma company) and Josef Stava (Diag Human’s sole shareholder) (the “Defendants”) in relation to the Czech Republic’s (the “Claimant”) jurisdictional challenge under section 67 of the Act to an English-seated arbitral award that had been granted in favor of the Defendants. Section 70(6) of the Act provides that the “court may order the applicant or appellant to provide security for the costs of the application or appeal, and may direct that the application or appeal be International Arbitration I N T

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