CFA scuppers costs of defence lawyers

Defendant lawyers involved in a unique competition case brought by a penniless former shipowner against several major shipping companies are due to return to court to fight for their £6m in fees in what is expected to be an important costs test case.

The lawyers, from Berwin Leighton Paisner, Constant & Constant and Davies Arnold Cooper, as well as their barristers, are in the unusual position of not being able to recover from the losing claimant, Yeheskel Arkin. This is because he funded his case through a conditional fee arrangement, which does not require him to take out after-the-event insurance to cover the other side’s costs.

However, the defendant lawyers’ case is not yet a lost cause, as they can pursue Arkin’s third party funder, a company called Managers and Processors of Claims (MPC).

Section 51 of the Supreme Court Act provides the courts with the jurisdiction to decide on whether an applicant can recover their costs from the funder. Recovery from MPC is not guaranteed, as the company was contracted only to pay Arkin’s experts’ costs, and so will dispute the other side’s claims.

In the substantive trial, Arkin v Borchard Lines & ors, the Commercial Court had to decide for the first time on damages for breaches of the Treaty of Rome, the legislation that established the European Economic Community.

The case also brought in precedents for claims arising out of anticompetitive behaviour.