Does the recent affirmation that commercial litigation funders could face unlimited costs liability mark the effective end of the Arkin cap? Thomas Wingfield reports
- The ‘Arkin cap’ limits a third-party funder’s liability to pay a successful defendant’s costs to the sum that the fund paid to its unsuccessful claimant.
- The Court of Appeal recently confirmed an order for a third-party funder to pay all of the defendants’ costs. The court refused to apply the Arkin cap, which may now become the exception and not the norm.
At the risk of teaching my grandmother to suck eggs: commercial third-party funding is when an entity finances a claim in return for a share of any money recovered. Some funders prefer the term ‘legal finance’. It has long been legal, encouraged even, here in England for an unconnected business to fund another’s litigation or arbitration in the hope of profit, provided that the third-party does not meddle in the claimant’s conduct
