Arkin v Borchard Lines Ltd
A commercial litigation funder who funds a claim that fails can be ordered to pay the other side's costs, but only up to the amount of its funding.
Facts
Mr Arkin brought a competition law claim against several shipping lines, alleging that they had driven his shipping business out of the market. He could not afford the litigation, so a professional funding company, MPC, agreed to fund the costs of the expert evidence in return for a share of any damages. The claim failed, and the defendants sought to recover their costs, which ran into millions of pounds, from MPC.
Legal principle
The Court of Appeal held that MPC was liable to pay the defendants' costs, but only up to the amount of funding that it had provided. Lord Phillips MR said that litigation funding promotes access to justice, and that funders should not be discouraged by the risk of unlimited liability for costs, but that it would be unjust for a funder who stood to benefit from a successful claim to escape all liability for costs if it failed. This approach, known as the Arkin cap, was intended to balance access to justice against fairness to defendants, although later cases have held that it is not a rigid rule.
Related cases on civil justice and procedure
- American Cyanamid Co v Ethicon Ltd [1975] AC 396
- Anton Piller KG v Manufacturing Processes Ltd [1976] Ch 55
- Barton v Wright Hassall LLP [2018] UKSC 12, [2018] 1 WLR 1119
- Biguzzi v Rank Leisure plc [1999] 1 WLR 1926
- Callery v Gray [2002] UKHL 28, [2002] 1 WLR 2000
- Churchill v Merthyr Tydfil County Borough Council [2023] EWCA Civ 1416
- Denton v TH White Ltd [2014] EWCA Civ 906, [2014] 1 WLR 3926
- Dunnett v Railtrack plc [2002] EWCA Civ 303, [2002] 1 WLR 2434
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