By Iain McKenny

The Court of Appeal upholds infamous Excalibur ruling and shines a light on the difference between professional and ad hoc third party funders.

The Court of Appeal has in dismissing the funders costs appeal in the now infamous Excalibur case maintained the bright line drawn by Christopher Clarke LJ separating professional third party funders from ad hoc funders.

This reaffirms the judicial commitment to prevent cavalier practices from eroding the proper dispensation of justice. Claimants, lawyers and funders should all take note.

The courts demand that the pursuit of the compensation of loss must not undermine the judicial dispensation of justice. Those who attempt to compromise this primary function of our world class legal system will be held accountable. Lawyers must balance their obligations to their clients with their duties to the court. Woe betide the lawyer who attempts to dress up a frivolous claim as a meritorious one. Funders be warned that facilitating un-meritorious claims carry financial consequences.

This is a strong decision that (i) makes it clear that third party funding is a necessary part of the legal landscape; and (ii) all parties to a funded claim must act with professionalism.

It is this obligation to act with professionalism that will drive the evolution of third party funding in the years to come. Funders who adopt a risk pricing model where higher risks equate to greater returns is the importation of financial market strategies that have no place in professional third party funding of disputes.

Professional Funders like Vannin Capital, who are committed to funding cases based on their merits will prevail. As part of the legal community and an integral part of the legal landscape, professional funders must recognise, as Vannin Capital does, that although claims are decorrelated assets from a financial perspective they are first and foremost creatures of the courts who serve to dispense justice. Claimants may very well be judged by the company they keep. Choose your funder wisely.

Court of Appeal Decision: Excalibur Ventures LLC v Texas Keystone Inc & Ors [2016] EWCA Civ 1144 (18 November 2016)
Original Decision: Excalibur Ventures LLC v Texas Keystone Inc & Ors (Rev 1) [2013] EWHC 2767 (Comm) (13 December 2013)

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For more information on Vannin Capital, please contact: Leanne Harker, Marketing at Vannin Capital, T: +44 (0)1624 615 111, E: lsh@vannin.com