Landmark Decision On Third-Party Funding In Arbitration: Essar v Norscot

The full transcript of the court's recent decision in Essar v Norscot is not yet available but the High Court of England & Wales appears to have made a 'giant leap' on the recovery of litigation funding in the context of arbitration. This briefing is informed by 4 New Square's briefing on the case (in which they acted).

Background

Following a dispute relating to an operation management agreement relating to an offshore drilling platform, an ICC arbitration was commenced by Essar Oilfield Services Limited (Essar) against Norscot Rig Management Pvt Limited (Norscot). A sole arbitration awarded damages and sums due under the agreement totaling over USD 12 million in Norscot's favour. The arbitrator criticised Essar's counsel's conduct and awarded costs on an indemnity basis including GBP 1.94 million to a third party funder which had funded Norscot's defence. The arbitrator found that Essar had deliberately put Norscot in a position where it could not fund the