Industry gears up for arbitration boom

Arbitration will be the main battleground for third-party litigation funders, market leaders have revealed.

The news follows the emergence of two more litigation funders: Law Assist, which is setting up a consortium of funders, and Justice Capital.

Big players in the area, such as Allianz ProzessFinanz, Calunius Capital and Global Arbitration & Litigation Services (Gals), have all said that they expect the brunt of their work to come from arbitration.

Nina Hall, the director of Gals, said her fund specialises in cross-border disputes, and with 70 per cent of this work going into arbitration that is where a lot of its cash will go.

“For us, recoverability is as important as the merits of the claim, and arbitration on an international scale is easier to enforce and cover,” said Hall.

This view is shared by Mark Wells, who co-founded Calunius with Mick Smith. Wells said there were two key points that made arbitration the likely winner of litigation funding over court work.

“First, there’s less potential for an arbitration to be appealed, so there’s a clearer view of the timeline of when the deal will come to an end,” said Wells. “Second, there’s a lower cost structure than in the court option, which is often multi-staged so more costly, which isn’t desirable for anyone.”

Wells added that, more often than not, there will now be an arbitration clause in big commercial deals, which will push litigation funders into arbitration.

Christian Stuerwald of Allianz added that the privacy of arbitration also made it more attractive than litigation.