High Court reassures nervous litigation funder that it will get its £56m payout

Kazakhstan: Case subject to Kazak law, but heard in London

The High Court has reassured third-party funder Harbour Litigation Funding that it will receive a £56m recovery from a successful case it backed, after joining the action over concerns that it would not be paid.

If an agreement to pay the money was not fulfilled, Mr Justice Picken said the funder could come back for a court order.

Harbour invested £12m in the case, which culminated in a 13-week trial of claims that the defendants had defrauded the claimants to the tune of around $250m (£181m).

It involved Kazakh parties, was concerned with events which took place in Kazakhstan and was subject to Kazakhstan law. Picken J described it as “litigation which, in truth, has nothing to do with this jurisdiction other than the fact that it has been commenced here”.

The funding agreement provided that all proceeds should be paid to the client account of the claimants’ solicitors, Allen & Overy, and disbursed pursuant to its terms, and the claimants made an “irrevocable direction” to confirm that this would happen.

But in a follow-up judgment dealing with various consequential matters, Picken J said “Harbour has recently become concerned, however, that its rights under the funding agreement entered into with the claimants might be prejudiced”.

This was due to insolvency proceedings which have been commenced against one of the claimants in Kazakhstan, “and has been heightened by what Harbour sees as [the defendants’] failure to confirm that, if any settlement were to be reached with the claimants, payment of the settlement sum would be made in accordance with the funding agreement and the irrevocable direction”.

The judge said he did not need to come to a view as to whether these concerns were legitimate or not, since, by the time of the hearing, the parties had agreed that any sums paid in satisfaction of the judgment or by way of costs should be paid to Allen & Overy on terms that would see Harbour receive its money once any appeal was dismissed on 14 days’ notice.

He added: “Harbour is granted permission to apply for an order that the funds be paid to it by Allen & Overy without having to establish a material change of circumstances.”

Picken J ordered that costs be paid on an indemnity basis and that a payment on account of costs of £8m be made.

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