Litigation funding is a relatively new concept in India, but it is gaining popularity as a way for businesses and individuals to access justice. Litigation funding is the practice of a third party providing financial assistance to a litigant in exchange for a share of the proceeds if the case is successful. This can be a valuable option for those who cannot afford to pay for litigation out of their own pocket.
In the recent case of Tomorrow Sales Agency Private Limited v. SBS Holdings, Inc., the Delhi High Court considered the question of whether a litigation funder can be held liable for an arbitral award against the litigant it funded. In that case, the Claimants had instituted arbitral proceedings against SBS, alleging breach of contract. The Claimants were funded by TSA, a litigation funder. The arbitral tribunal found in favor of SBS and awarded costs. SBS then sought to enforce the award against TSA.
The Delhi High Court held that TSA could not be held liable for the arbitral award. The Court held that TSA was not a party to the arbitration agreement and was therefore not bound by the award. The Court also held that TSA did not have any control over the arbitral proceedings and therefore could not be held responsible for the Claimants’ loss.
The Delhi High Court’s decision is a significant development in the law of litigation funding in India. The decision clarifies that litigation funders are not liable for arbitral awards against the litigants they fund. This will make litigation funding more attractive to businesses and individuals, as it will reduce the risk of financial loss.
The Delhi High Court’s decision is also significant because it is the first time that an Indian court has considered the question of litigation funding in the context of arbitration. The decision is likely to be followed by other Indian courts, which will help to establish the legal framework for litigation funding in India.
The rise of litigation funding is a positive development for the Indian legal system. Litigation funding can help to overcome the financial barriers to justice that many people face. It can also help to improve access to justice by making it easier for businesses and individuals to pursue their legal rights.
The Delhi High Court’s decision is a welcome step in the development of litigation funding in India. The decision will help to make litigation funding more accessible to businesses and individuals, which will ultimately benefit the Indian legal system.
Conclusion
Litigation funding is a valuable tool that can help businesses and individuals access justice. The Delhi High Court’s decision in Tomorrow Sales Agency Private Limited v. SBS Holdings, Inc. is a positive development for the Indian legal system. The decision clarifies that litigation funders are not liable for arbitral awards against the litigants they fund. This will make litigation funding more attractive to businesses and individuals, as it will reduce the risk of financial loss.
