Non-Party Cost Orders: An Inevitable Consequence Of Funding Litigation?

As has been widely reported, the litigation funding landscape in the Cayman Islands is changing to keep pace with the UK, Australia and other common law jurisdictions.¹ The Caymanian judiciary acknowledge that provided adequate protections are in place, a funding arrangement can facilitate better access to justice and the Legislative Assembly is in the process of enacting legislation to reflect that position. Whereas formerly claims with merit may not have been able to be pursued in Cayman due to a lack of funding, the potential to access third party funding is likely to lead to the rapid development of a sophisticated funding environment.

Funding a claim as a third party carries the potential to be made liable for the opponents' costs by way of a non-party costs order ("NPCO"). It is important that funders and their advisors consider how best to protect themselves from any exposure to a NPCO, as the use of external funding increases in Cayman.