Top litigation financiers are pushing into the India market, and this is generating buzz and interest around opportunities in the market — particularly in the climate of the COVID-19 pandemic, where there have been more contractual disputes and bankruptcy-related cases.

Omni Bridgeway, the world’s second-largest litigation financier and Abu Dhabi-based Phoenix Advisors plan to set up operations in India soon, according to Reuters. Meanwhile, U.S. insurance broker Marsh Inc, told Reuters its executives will visit India more often to hold talks on offering funding to companies.

The concept of third-party funding (TPF) is not exactly new to India, with courts since the 1870s at least cautiously exploring its legality. But with other Asian jurisdictions such as Singapore and Hong Kong greenlighting third-party funding, perhaps the time for TPF in India has come.

A number of organisations, including law firms, have been involved in setting up the Indian Association for Litigation Finance (IALF) – due to launch on Feb. 11 – which calls itself “the industry’s ‘one voice.’”  

Prateek Bagaria of law firm Singularity Legal, one of the founding members of IALF, says he sees “massive” appetite for litigation funding, and his view is echoed by Montek Mayal of another member firm, FTI Consulting, who points out that litigation and arbitration can be expensive, particularly for cross-border and international disputes.

However, given how rarely TPF has been tried so far in India, a number of legal and regulatory question marks remain.

Among the areas which would benefit from clarity, Mayal says, are “issues of confidentiality, privilege and disclosures in the context of funding arrangements, conflict of interests that might arise through funding arrangements, penalties for duress and threat, and the right to terminate the funding agreement.”

“More broadly. it might be also necessary to provide clarity on types of disputes and forums where litigation financing might or might not be used,” Mayal adds.

For Bagaria, one area that should be under the magnifying glass for regulators is the B2C market.

“When it is a B2B market, it can be pretty much done by contact negotiation... where I do see advantage of certain best practices being adopted is in the B2C market,” he says. “In this space, I do see a potential of abuse, if not regulated, or a level playing field made between the funder and the market at large. We do identify this space as requiring immediate attention of regulations.”

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