Pranav Mago, a former head of South Asia for the Singapore International Arbitration Centre, recently established a litigation finance consultancy called ELF Partners in Singapore.
According to Mago, litigation finance, or third-party funding of litigation that helps level the playing field between parties, is a relatively recent development in arbitration in Asia.
While it is relatively unknown in India, an Indian Association for Litigation Finance was launched in February, in what may be a sign of growing interest. ELF Partners has teams in Singapore and India.
“The pandemic has made this option more attractive as even well-capitalised companies are looking to keep more working capital in hand and to write off litigation costs in their accounts,” said Mago.
He said that certain states in India, by way of state amendments, had used the Civil Procedure Code to envisage a scenario where a plaintiff was backed by a litigation financier or unrelated third party.
In a March 2018 ruling in Bar Council of India v AK Balaji, the Supreme Court observed: “There appears to be no restriction on third parties (non-lawyers) funding the litigation and getting repaid after the outcome of the litigation.”