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ARTICLE · 03 MARCH 2020

The Cap Which No Longer Fits All

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The administrators obtained a non-party costs order against ChapelGate, the commercial litigation funders who had financed Ms Davey's claim.

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Tim Shepherd
Tim Shepherd
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In a Judgment of significant importance to commercial litigation funders and professional defendants alike, the Court of Appeal has upheld a decision not to apply the so-called "Arkin cap" to limit a litigation funder's exposure to adverse costs.

The Arkin cap takes its name from the decision in Arkin v Borchard Lines Ltd (Nos 2 and 3) [2005]).  In that case, the litigation funder was ordered to pay costs incurred by the successful defendant, but only up to the amount of funding it had provided to the claimant.

Commercial litigation funders have since drawn comfort from this, in the belief that if they commit funding to an unsuccessful claim, and become exposed to the successful defendant's costs, they will not be held liable for more than they have paid out.

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