Global and Indian companies form Indian Association of Litigation Finance to promote and self-regulate litigation finance in India

Litigation finance is gaining increasing traction among India related international disputes. Recognizing the ripe conditions in the Indian market as well as the support for it in Indian law, third-party funders and service providers like law firms, practitioners and arbitral institutions have come together to form the “Indian Association for Litigation Finance” (“IALF”). The IALF aims to be an association with a vision and mission to create self-regulations for, and promote knowledge-development of, litigation finance in India.

Sophisticated, global players such as Omni Bridgeway, Phoenix Advisors and Profile Investment are involved with the IALF. Service providers such as PSL Chambers, FTI Consulting, ICC, Grant Thornton and Singularity Legal are also involved.

Prior to transitioning in a more formal structure, the initial formation of the IALF will be spearheaded by a Working Group. The Working Group is a body of experienced jurists and thought leaders in the field of dispute resolution and litigation finance, and includes Justice Mr. AK Sikri (Judge, Singapore International Commercial Court), Mr. Tom Glasgow (Chief Investment Officer-Asia, Omni Bridgeway), Mr. Dilip Massand (CEO, Phoenix Advisors Ltd), Ms. Sindhu Sivakumar (Senior Investment Manager, Innsworth Capital), Mr. Alain Grec (Director and Head of Quantum Analysis, Profile Investment), Mr. Sanjay Desai (Senior Vice President, Head of Litigation Insurance & Litigation Funding, Marsh JLT Specialty Marsh Limited), Mr. Prateek Bagaria (Partner, Singularity Legal), Mr. Sharan Jagtiani (Senior Advocate, Bombay High Court), Ms. Pallavi Bakhru (Partner, Grant Thornton India LLP), Mr. Montek Mayal (Senior Managing Director, FTI Consulting), Mr. Abhinav Bhushan (Director, South Asia ICC), Mr. Shashank Garg (Partner, Advani & Co.) and Mr. Sameer Jain (Managing Partner, PSL Chambers).

The Working Group convened virtually on 11 February 2021 to sign the Founding Charter of the IALF and formally launch the organisation. The event involved a panel discussion by the members of the Working Group where they shared their views on the future of litigation finance in India. Over 944 participants from 26 countries including Afghanistan, Australia, Bangladesh, Brazil, China, Egypt, France, Germany, Ghana, India, Indonesia, Kenya, Korea, Malaysia, Morocco, Myanmar, Nepal, Netherlands, Phillipines, Poland, Romania, Singapore, Switzerland, UAE, UK and USA registered for the event. These participants included representatives from law firms, third-party funders, service providers and also key consumers of litigation finance in India – infrastructure companies, telecom companies, resources companies, financial companies, etc.

On the formation of the association, Mr. Prateek Bagaria, Singularity Legal LLP stated, “The Indian market has been a busy participant in the growing international litigation finance industry and in fact, there are reported examples of foreign parties being funded for claims against Indian parties. The usual focus is on the infrastructure industry which has seen significant claims and awards against Indian state-owned enterprises/ state agencies. Recognizing the ripe conditions in the Indian market as well as the support for it in Indian law, third-party funders and service providers like law firms, practitioners and arbitral institutions have come together to form the “Indian Association for Litigation Finance” where the members of the IALF will set themselves up as progressive, knowledgeable and ethical service-providers whom clients can readily engage.”

Mr. Montek Mayal, FTI Consulting opined, “The litigation finance industry is still very much in its nascency in India. But it is poised to significantly grow, enabled by increasing awareness among corporates and law firms of the use and advantages of litigation financing, in the background of increasing number, size and cost of commercial disputes. Sophisticated parties appreciate how financing can help them manage their costs and mitigate legal risk – freeing up capital for their wider business and unlocking value for their shareholders. Investors are increasingly viewing litigation financing as a separate asset class to further diversify their portfolio. This is where I see IALF playing a rather important role: providing a platform for such discussions, conversations, education and, importantly, self-regulation of the relevant market participants in, and users of, litigation financing.”

On the other hand, Mr. Dilip Massand, Phoenix Advisors said, “I see no reason that Litigation Funding in India cannot be as robust, diverse and scale to the size of the litigation funding industry in the United States or the UK. I believe that sophisticated financial investors will be attracted to the asset class in India itself. IALF will be a game changer for this move and serve as a focal point for the development of third-party funding in India and an avenue for discourse with regulators and Indian lawyers to collaboratively develop the proper structures and alignment of economic interests, as well as the avoidance of conflicts. In fact, Phoenix intends to set up a domestic vehicle in India for litigation funding and asset recovery in 2021.”

In the coming years, IALF aspires to have as its members: third-party funders, law firms, practitioners and arbitral institutions, who will abide by IALF’s Rules of Membership, Codes of Conduct and Guidelines. IALF further aspires to act as a forum for hearing complaints against member funds. In this way, the IALF will generate confidence and legitimacy among the consumers of litigation funding and promote the growth of litigation finance in India.