India is currently one of the world’s top five economies. That’s good news. But like most top economies, Covid is causing disruption and discord. The pandemic may also lead to a flurry of new litigation as it has in much of the developed world. Will India be joining the likes of Germany, Australia, UK, Singapore, and others in their acceptance of litigation funding?
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
India is currently one of the world’s top five economies. That’s good news. But like most top economies, Covid is causing disruption and discord. The pandemic may also lead to a flurry of new litigation as it has in much of the developed world. Will India be joining the likes of Germany, Australia, UK, Singapore, and others in their acceptance of litigation funding?
Bar and Bench explains that with trying financial times comes a need for creative solutions. Litigation Finance is not as well established in India as it is elsewhere, but the practice is poised to catch on. The recent success of the Indian economy has made it a desirable destination for international investors.
In 2016, the Indian Government was involved in over $9 billion in arbitration disputes relating to infrastructure. As businesses find themselves with dwindling resources and limited access to credit, the idea of third party funding becomes increasingly attractive.
Indian courts seem to be moving ever-closer to widespread acceptance of litigation funding. In one case, the Privy Council approved the practice of one party funding a case for another in exchange for a share of the reward. This is predicated on the arrangement being fair and the case being meritorious. A later case established that champerty rules did not apply in India, and that there was no public policy prohibition against the practice.
Still, the acceptance and use of the practice in India promises to be complex. Public policy, for example, is not a written law, but a generally understood set of principles. The ‘right to sue’ is more complicated in India, and issues of conflict of interest and even confidentiality are more convoluted. This may impede or slow the widespread use of litigation funding as legal precedents are set to refine the practice.
Finally, there’s the question of qualifications for third-party funders. Australia and elsewhere have stringent rules about who can provide funding and how they must conduct themselves. India seems headed toward a similar regulatory path.
