The Brief.

Litigation funding insights & news

3 – May 2017

Inside This Issue

  1. Update from John Byrne and Neil Purslow, Co-Founders, Therium Capital Management
  2. Therium launches in Germany as the country’s first full service litigation funder
  3. Tipping the balance. Essar vs. Norscot; a watershed moment for litigation funding? By Timothy Mayer, Senior Investment Officer, Therium Capital Management
  4. Keynote speaking engagements
  5. Press highlights
  6. In the spotlight: Q & A with Mark Humphries, Senior Partner, Humphries Kerstetter LLP

1. Update from John Byrne and Neil Purslow, Co-Founders, Therium Capital Management

We are delighted to report that we have continued to see robust growth since we last wrote. Our offices in the US and Scandinavia, both less than a year old, have built very solid books of substantial business quickly. We are especially pleased as both were landmark developments for the industry with our New York operation being the first US office for a European litigation funder and our Oslo business being the very first litigation finance company on the ground in Scandinavia.

The firm’s activity in continental Europe remains very buoyant, especially in Spain where we are working on claims against derivatives mis-selling by several banks to renewables investors. And demand for our services in Germany, where we have been active for some time, has grown to the extent that we opened an office in Dusseldorf earlier this month. Therium Deutschland GmbH is headed by Dr. Christoph Kuzaj, a highly experienced corporate and litigation lawyer. We are very excited to break new ground for the industry again as we are the first litigation funder to launch in Germany with a full service business.

We have continued to build our capabilities in London, too, including with the appointment of corporate lawyer Tom Sibert as General Counsel and Investment Officer in November. Tom joined Therium from K&L Gates LLP, where he was a partner.

Across the firm we are financing a broad range of complex litigations, arbitrations and investor state arbitrations. The growing demand for what we offer, both from law firms and claimants, whether large companies, groups or individuals, make it clear that funding is becoming increasingly mainstream. This is not just to pay the costs of litigation but also as a corporate finance tool, turning a claim into an asset.

Thank you for taking the time to read our update, and a special thanks to Mark Humphries at Humphries Kerstetter LLP for being our ‘In the spotlight’ guest.

2. Therium launches in Germany as the country’s first full service litigation funder

Dr. Christoph Kuzaj to lead Therium Deutschland GmbH.

DUSSELDORF/LONDON, March 13, 2017 Therium Group Holdings Limited, a leading global provider of litigation finance globally with over $300 million in committed capital, is launching operations in Germany with the incorporation of Therium Deutschland GmbH, headquartered in Dusseldorf. Therium Group Holdings is one of the largest and most established litigation financing firms in the world.

Therium has identified a substantial market for litigation funding in Germany, driven by the increasing number of corporate and commercial legal disputes within a regulatory environment that has become more complex over the past few years. Litigation funding allows individuals and companies to take on litigation and arbitration cases that they might not otherwise be able to afford, and/or to hedge the costs and risks involved in such matters. Therium pays for all of the costs, including adverse costs in the event that the case is lost, and only receives payment if the case is won.

Therium sees a particular demand in Germany for funding litigation across financial services, securities disputes, cartel damages situations, insolvencies, post M&A matters and shareholder disagreements, in particular arising out of joint ventures. The firm is already engaged in Germany and has financed various significant cases, including sophisticated legal proceedings for the remuneration of infrastructure construction work against a foreign sovereign state pleading state immunity and a securities litigation against a major German bank. In addition, Therium in London is funding the first UK claim against Volkswagen for the emissions scandal.

Dr. Christoph Kuzaj is the Managing Director of Therium Deutschland GmbH and has more than 20 years’ experience in corporate and capital markets law, and complex corporate litigation. His litigation practice includes disputes arising out of private and public M&A-transactions, such as defensive actions in takeovers, and corporate special situations. Christoph is admitted to the German Bar Association and holds a degree in law and a Juris Doctor, both with distinction. He is supported by a team of corporate and tax lawyers, all with significant litigation experience.

John Byrne, Co-Founder and CEO of Therium, said: “We are delighted to be the first commercial litigation finance business to open an office in Germany. Christoph is a highly regarded corporate and litigation lawyer who is praised by his clients for his creativity and commercial approach. We are very pleased that he has joined Therium and we are proud that he and his team are already enabling access to justice for claimants in some very substantial legal cases.”

Dr. Christoph Kuzaj, Managing Director of Therium Deutschland GmbH, said: “Therium is the pre-eminent global litigation funding firm and I am excited to lead the business in Germany. There is a huge opportunity to fund meritorious claims across a range of complex litigation and arbitration situations and we have a strong pipeline of potential cases.”

Neil Purslow, Co-Founder and Chief Investment Officer of Therium, said: “We have been active in Germany for some time but the increasing demand for our expertise from both lawyers and claimants across financial services and other areas make this a natural point to open an office in the country. We are funding some very significant litigations and are excited about the prospects for the business in Germany going forwards.”

3. Tipping the balance. Essar vs. Norscot; a watershed moment for litigation funding?

By Timothy Mayer, Senior Investment Officer, Therium Capital Management

This article first appeared in the December 2016 edition of Litigation Funding magazine.

The conventional view under English law is that the funding costs of High Court litigation cannot be recovered from a losing party. In Essar Oilfield Services Limited vs. Norscot Rig Management PVT Limited [2016] EWHC 2361, the High Court, applying the Arbitration Act 1996 (the ‘Act’) to an English-seated International Chamber of Commerce (‘ICC’) arbitration, held that the arbitrator had not exceeded his powers in determining that the losing party, Essar, should pay the funding costs of the successful party, Norscot.

Does Essar signal the beginning of a new age for funded claimants? What implications does the decision have for funders financing both international arbitration and litigation? How will the funding market react?
The award arose from an attritional ICC arbitration that had commenced in 2008. Norscot claimed sums due to it as the operations manager of a rig. Essar asserted an extremely large counterclaim for damages for alleged breach of contract.

The arbitrator, Sir Philip Otton, found emphatically in favour of Norscot on its claims and dismissed Essar’s counterclaim. He was excoriating in his criticism of Essar’s conduct both before and during the arbitration. Essar ‘had set out to cripple Norscot financially’ by resolutely refusing to make payment, flouting its agreement to pay crew wages and withholding payments to suppliers. Norscot’s managing director had been compelled to re-mortgage his home for the best part of US$1m. Throughout the arbitral process, it had become a battle between ‘David and Goliath’.

Sir Philip found that Norscot’s ‘impecuniosity was deliberately caused, or substantially contributed to, by Essar‘, and that the former ‘had no alternative, but was forced to enter into..litigation funding’. The funding cost to Norscot was return of capital plus the greater of three-times the sum advanced or 35% of the proceeds. Sir Philip accepted that this cost was reasonable, having heard evidence from a broker, James Blick of The Judge. In exercising his discretion to award costs against a losing party (s. 63 of the Act), he construed ‘other costs’ in s. 59 (1) (c) of the Act as including the cost of litigation funding. The effect was to expose Essar to indemnity costs and an additional liability of £1.94m, being the sum owed to the funder who had advanced c. £647,000 to Norscot.

Essar applied to the High Court under s. 68 of the Act to set aside the award. Essar argued that the words ‘other costs’ in s. 59 of the Act did not cover litigation funding costs. Sir Philip’s alleged error in so determining did not simply amount to an error of law, but, it was averred, a serious irregularity under s. 68 (2) (b) of the Act.

Sitting as a deputy High Court Judge, His Honour Judge Waksman Q.C. dismissed the application:


1. he held that even if Sir Philip’s construction of s. 59 (1) (c) of the Act was wrong, it amounted to an error of law, not an excess of power under s. 68.
2. he ‘unhesitatingly’ concluded that Sir Philip’s construction was in fact correct. He held that as a matter of language, context and logic, ‘other costs’ could include the costs of obtaining litigation funding, given that they were related to, and for the purpose of, the arbitral proceedings. It was entirely a matter of discretion whether a tribunal awarded such costs in any given case; and
3. he held that in any event, pursuant to s. 73 of the Act, Essar had waived its right to challenge the award both by its pre- and post- award conduct.


Judge Waksman expressly distinguished the position under the Civil Procedure Rules (r. 44 et seq.), in which there is no parallel provision to that of s. 59 (1) (c) of the Act enabling a court to order a losing party to pay ‘other costs’ (in contradistinction to legal costs) of the successful party.




Essar has piqued the arbitration world. Jamie Curle, a partner with DLA Piper LLP, commented: ‘Inevitably there will be an increase in the number of applications by successful claimants in funded arbitrations seeking recovery of funding costs following the decision in Essar. Indeed, following the decision it would be surprising if those acting for funded claimants did not consider making such applications; whether they will be successful will of course depend on the facts of a given case and the conduct of the parties’.

The wording of article 37 (1) of the 2012 ICC Rules paves the way to an application, as indeed does (expressly) the ICC Commission Report of 2015 (para. 87). Similar wording is found in other arbitral rules too, such as the 2010 UNCITRAL Rules (art. 40), and Article 61 (2) of the ICSID Convention, to mention but two.

A more egregious set of circumstances than Norscot is perhaps hard to imagine. However, one can see how successful claimants in investor-state arbitrations who have had investments expropriated by governments could make a persuasive case for their funding to be picked up in a costs award, a fortiori where the acts complained of have caused the claimant’s impecuniosity.

But do hard cases make bad law? Some commentators have suggested that the outcome in Norscot is unjust, that it is a strong deterrent to arbitration, and is even potentially damaging to the third party funding industry (Duarte G. Henriques, BCH lawyers).

With respect to fairness, while those commentators accept that the actual costs of the arbitration paid for by the funder are potentially recoverable (cf. Kardassopoulos & Fuchs vs. The Republic of Georgia ICSID case no ARB/05/18 and case no ARB/07/15), they maintain that the uplift or success fee ‘is neither a party’s cost, nor the damage suffered by the funded party…[but is] a result of a contract privy to the funder and the funded party’ (Henriques). The ICCA – Queen Mary Task Force on Third Party Funding in International Arbitration (Draft Report Nov. 2015) describes the success fee as a ‘trade-off’ between the funded party and the funder, an agreement ‘not linked to arbitration proceedings as such’ and accordingly a cost that ought not to be payable by the unsuccessful party.

Suggestions that Essar gives rise to uncertainty amounting to a deterrent to arbitrate are, with the greatest respect, misconceived and overly defendant/respondent focussed; there is little certainty in the outcome of an arbitration per se.

Of greater weight, and practical import to funders (and funded claimants), are the potential consequences with respect to disclosure of the funding, a further point raised by Henriques.

Given the potential additional liability, there is a persuasive case for the early disclosure of funding, and Essar may see claimants voluntarily disclosing that they are funded at an early stage, but what of the extent of the disclosure? Should the funder be identified? Should the terms of the funding be revealed? Quite possibly, but would this hand the defendant/respondent a strategic advantage knowing the precise amount of the funding – it could encourage frivolous applications in order to exhaust a claimant’s ‘war chest’. Indeed, one might consider that a well-resourced defendant/respondent equipped with knowledge of the funding per se would be able to assess the extent of its potential downside based on the broker’s evidence as to market pricing in Essar as accepted by the arbitrator (and implicitly by Waksman Q.C.).

Is this damaging to funding? Not so according to Jamie Curle: ‘Essar confirms the growing relevance of third party funding to claimants in arbitration and its inexorable march into the mainstream. Indeed, advisers ought to be talking to their clients about funding both in the context of litigation and arbitration at an early stage’.



The common law draws a distinction between notional interest on costs incurred (which is recoverable) and actual interest (or funding costs) on borrowed money (which is not). Costs experts argue persuasively against retention of the status quo. Indeed, Norscot’s Bar team argued against the distinction in the arbitration, a point whose ‘force and logic’ Sir Philip Otton agreed with ([33] 2016 EWHC 2361). Alas for funded claimants, Motto vs. Trafigura [2012] 1 WLR 657 is the last common law word on the matter, but watch this space.


Funding – pricing

Sir Philip heard from and accepted the evidence of a reputable broker (James Blick at The Judge) who explained that the terms agreed in Essar were in his view reasonable and in line with pricing in comparable cases (size, economics, timings etc). To that extent, the decision could be said to be a useful marker for both claimants and funders as to what is a reasonable funding return. But will Essar herald the beginning of commoditised pricing? Not in the considered view of Mr. Blick:

‘I don’t think we can say that this means 3x is standard pricing. A difficult case and only one funder willing to support it seeking a 4x, 5x or more return for doing so wouldn’t in my view be unreasonable. On the other hand, a case with very attractive features and a short timetable for resolution may attract offers well below 3x, meaning that 3x may be too high. Ultimately, the market should dictate what a reasonable pricing structure may be; we are a long way away from funding becoming sufficiently commoditised to enable us to talk seriously about standard market pricing.’

By the same token, it is unlikely that funding costs will necessarily reduce overnight merely because Norscot was able to recover them.

4. Keynote speaking engagements

Therium is regularly invited to speak about litigation funding at law firms, barristers’ chambers and industry events. Do get in touch if you are interested in us speaking to your colleagues, or at one of your events.

Our recent speaking engagements include the following:

23 November, Madrid
Ignacio Delgado spoke about litigation funding for companies in bankruptcy and receivership at a seminar with Spanish law firm Perez-Llorca.

14 November, New York
Neil Purslow spoke at Serle Court’s International Trusts and Commercial Litigation Conference.

15 September, Berlin
John Byrne spoke at the Third Party Litigation Funding seminar in Berlin.

5. Press highlights

The media follows Therium’s news and views. Below is a selection of recent press highlights.

24 March.
Expansión. Therium featured in Spain’s Expansión.

13 March.
The Global Legal Post. News item about Therium launching in Germany as the country’s first full service litigation funder.

9 January.
The Lawyer. Therium mention as funder of the first UK action against Volkswagen for the emissions scandal.

5 December.
City AM. News item about the appointment of Tom Sibert as General Counsel and Investment Officer of Therium.

22 November.
Bloomberg Markets. Feature about litigation funding referencing Therium’s £200 million raised in 2015, the funding industry’s largest single investment, globally.

18 November.
Finansavisen. Feature about Therium in Norway’s Finansavisen.

14 November.
Windpower Monthly. Feature about Therium funding windpower industry claimants against Spanish banks for mis-selling derivatives.

1 September.
Sky News. Therium referenced as funding a claim by PCP Capital Partners against Barclays regarding the bank’s alleged $3bn ‎loan to Qatar to fund shares.

6. In the spotlight

Q & A with Mark Humphries, Senior Partner, Humphries Kerstetter LLP

What is the most important trend that you are seeing in litigation finance?
The focus of funders on law firms rather than underlying claims, thereby creating an overarching relationship between lawyer and funder.

Do you think that Brexit or the new US administration will have an impact on the amount or type of litigation that we are likely to see in the next five years?
Certainly Brexit will have an impact on litigation. Experience tells us that, whenever change occurs, there are winners and losers, which results in disputes. So Brexit is likely to give rise to a wave of litigation.

What is the most prevalent reason that your firm or your clients decide to work with a funder?
The impossibility of getting a claim off the ground without third party finance. There are many meritorious claims that cannot be pursued without recourse to the funding and insurance markets.

Biggest surprise or disappointment in the legal industry in recent times?
The biggest disappointment was certainly the repeal of the recoverability of claimants’ success fees and insurance costs under CFAs, which effectively killed CFAs as a viable approach to commercial claims.

Your most important regular read: columnist, journalist, blogger or newspaper?
The Times, for all its faults, remains the only way to get hold of reliable news, as far as I can see.

Best book you read recently?
Red Notice by Bill Browder. This is a true and continuing story that will appeal to lawyers, bankers and politicians alike. I couldn’t put it down.

Best film?
I’m going to pull one from the archives and recommend El Cid. The film shows how honour is or should be more important than anything else, even life itself.

And your favourite London lunch spots are?
Lunch is not high on my list of priorities; but, when a big new case comes in, we tend to celebrate by visiting The Chancery which is just around the corner from HK’s offices. Let’s hope we’ll be lunching there even more in the coming years.