International litigation financers to enter India soon

International litigation financers to enter India soon

Although a new concept for India, they finance the total cost of litigation or arbitration and earn from the shares of the monetary awards. To start with, they will target company disputes in India

There is a piece of good news for companies who have a genuine business dispute but lack finances to seek redressal. Some of the leading international litigation financers are at the advanced state of preparation to set shop in India.

Australia's Omni Bridge way and a unit of the American insurance broker Marsh Inc. besides the Abu Dhabi based Phoenix Advisors are eyeing to enter in the Indian market and tap into the unchartered territory which holds huge potential.

Litigation financers take care of legal fees and other associated costs of commercial lawsuits, arbitration and shareholder disputes and in return charge a pre-agreed sum from the settlement awards. However, they get nothing if the complaining party's appeal is rejected or they lose the case.

Litigation financing is unheard of concept in India. Despite the Covid-19 having a direct impact on the growth of the business, the Indian economy is expected to grow at a much faster pace once the pandemic-induced situation gets normalized. And therein lies the potential. Booming financial activities, India's expected amalgamation with the global economy and the resultant increased exports of Make in India goods are bound to bring with it some amount of disputes. And business disputes is what the litigation financers like and cash in on. They minutely scrutinize the dispute and ascertain winning chances before entering into an agreement under which they take care of all litigation-related costs and charge a percentage from the award.

Even before recovery of the Indian economy, they see a huge scope since several companies have failed to fulfil their contracted obligations or there are companies which simply lack funds to go in for litigation as a direct impact of the Coronavirus pandemic on the Indian businesses.

To start with, the litigation financers will focus on international arbitration cases in which Indian firms are involved due to quicker redressal compared to cases filed in Indian courts which at times drag on for years due to the huge backlog of cases. Subsequently, they plan to start financing domestic litigation as well simply due to the large volume of disputes.

Litigation financing is quite popular and prevalent in western countries like the United State, United Kingdom, Australia and several other countries. According to reports, Australia's Omni Bridge way, which with $1.5 billion funds at its disposal is ranked as the world's second-largest litigation finance firm, is already in talks with some prospective Indian clients to ascertain their caseload while explaining to their potential clients about how they can earn a hefty sum without investing a single penny by signing an agreement with a litigation financer. Simply put, all that an aggrieved company does is to outsource their litigation and arbitration.

The arrival of the international litigation financing firms may benefit the Indian legal community greatly as these firms are expected to take legal consultants and legal firms as partners before a full-fledged launch to promote their business in India.