International arbitration cases are utilizing third-party litigation funding at increasing rates. As this industry grows, thorny legal issues often arise. One such decision in Tenke Fungurume Mining v Katanga Contracting Services is being hailed by funders and the clients who work with them. Overall, the decision affirms that an arbitration taking place in London is authorized to award costs for expenses relating to third-party funding.
Reversal of $1.6 Billion IBM Judgement Puts Judgement Preservation Insurance in the Spotlight
The value of litigation insurance, and the natural pairing of this coverage with litigation funding, is often highlighted as one of the core strengths of the current litigation environment. However, a significant reversal of a $1.6 billion judgement has shown that insurers must carefully balance the risks of uncertain outcomes when providing judgement preservation insurance.
Reporting by Bloomberg Law covers the ongoing impact of the decision by the US Court of Appeals for the Fifth Circuit to overturn a $1.6 billion judgement against IBM, which has left Liberty Mutual facing up to $150 million in coverage for judgement preservation insurance it provided. According to Bloomberg’s sources, Liberty Mutual has since withdrawn from “at least two potential litigation insurance deals” since the appeals court’s ruling. The $1.6 billion judgement was reportedly insured by a group of insurers to cover between $500 million and $750 million, with Liberty alone having covered between $100 million and $150 million.
Richard Angevine, a spokesperson for the insurer, said: “Liberty Mutual Insurance does not publicly discuss individual commercial insurance customers.”
Speaking to Bloomberg Law about the broader impact of this type of judgement on the litigation insurance market, Jason Goldy, a global team leader for Alliant Insurance’s Litigation & Contingent Risk Practice, said that insurers will continue to adjust their approach. Goldy said that “in the last six months you’ve seen these adjustments and I would think that you’re likely to see them accelerated if there are material losses,” but clarified that “the market will survive.”
In a similar vein of thinking, Michael Perich, head of litigation insurance at Lockton, agreed that “the market is fluid and it's proven the ability to adapt to things.”