Litigation funders beware — Excalibur v Gulf Keystone

By Harvey Rands

In a scathing judgment on the claimant’s conduct of the Excalibur v Gulf Keystone litigation, the Commercial Court has given a stern warning to those who fund litigation for profit and the lawyers who advise them. The defendants were awarded indemnity costs. Excalibur was ordered to pay further sums of £3.2m to Gulf and £2.4m to co-defendant Texas Keystone as security for costs, on top of £10.7m and £6.8m, respectively, previously provided by Excalibur’s funders. Proceedings will be also pursued against the litigation funders, and in one case against the individual behind the Cayman Islands vehicle used to provide the funding.

It has been well recognised since the train-crash trial of Three Rivers District Council v The Governor & Company of the Bank of England that indemnity costs will be awarded against an unsuccessful party whose claim or conduct is a departure from the norm. It is an increasingly common feature of commercial litigation in London that speculative, opportunist and weak claims of massive size are brought by impecunious claimants, backed by litigation funders and after-the-event insurance, with the intention of bullying a defendant into settlement to avoid years of litigation and millions of pounds of costs.

This judgment is unlikely to turn the tide, but might bring some moderation to the current appetite for excess…

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