Excalibur Ventures LLC v Texas Keystone Inc & Ors

Excalibur Ventures LLC v Texas Keystone Inc & Ors

Commercial litigation funders who invest in a claim for their own benefit are liable for adverse costs orders, including indemnity costs, to the extent of their funding (the Arkin cap), regardless of whether the funding was for the claimant's own costs or for security for costs. The court may look to the economic reality and impose liability on parent or associated companies that provided the funds and stood to benefit, even absent direct contractual relationships. The conduct of the funded party and the nature of the claim are relevant to the basis of costs, and funders cannot dissociate themselves from the consequences of the litigation they enable.

Parties
Claimant: Excalibur Ventures LLC; Defendant: Texas Keystone Inc; Defendant: Gulf Keystone Petroleum Limited; Defendant: Gulf Keystone Petroleum International Limited; Defendant: Gulf Keystone Petroleum (UK) Limited; Costs Defendant/appellant: Psari Holdings Limited; Costs Defendant/appellant: Mr Andonis Lemos; Costs Defendant/appellant: Blackrobe Capital Partners LLC; Costs Defendant/appellant: Blackrobe Aeo 1 Investors LLC; Costs Defendant/appellant: Platinum Partners Value Arbitrage Fund LP; Costs Defendant/appellant: Hamilton Capital LLC; Costs Defendant/appellant: JH Funding LLC; Costs Defendant/appellant: Huron Capital LLC; Costs Defendant/appellant: Platinum Partners Credit Opportunities Master Fund LP; Intervener: The Association of Litigation Funders of England & Wales
Jurisdiction
England and Wales
Judgment Date
18 November 2016
Procedural Posture
Civil Appeal / Judgment on Appeal From Costs Order in Commercial Court
Outcome
Appeals dismissed; costs orders against funders affirmed.
Legal Topics
Third Party Funding, Non Party Costs Orders, Indemnity Costs, Security for Costs, Corporate Veil, Arkin Cap
Civil Procedure Costs Litigation Funding Third Party Funding Non Party Costs Orders Indemnity Costs Security for Costs Corporate Veil +1 more

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Parties

Excalibur Ventures LLC

Claimant

Texas Keystone Inc

Defendant

Gulf Keystone Petroleum Limited

Defendant

Gulf Keystone Petroleum International Limited

Defendant

Gulf Keystone Petroleum (UK) Limited

Defendant

Psari Holdings Limited

Costs Defendant/appellant

Mr Andonis Lemos

Costs Defendant/appellant

Blackrobe Capital Partners LLC

Costs Defendant/appellant

Blackrobe Aeo 1 Investors LLC

Costs Defendant/appellant

Platinum Partners Value Arbitrage Fund LP

Costs Defendant/appellant

Hamilton Capital LLC

Costs Defendant/appellant

JH Funding LLC

Costs Defendant/appellant

Huron Capital LLC

Costs Defendant/appellant

Platinum Partners Credit Opportunities Master Fund LP

Costs Defendant/appellant

The Association of Litigation Funders of England & Wales

Intervener

Procedural Posture

Civil Appeal / Judgment on Appeal From Costs Order in Commercial Court

Legal Issues

  1. 1 Whether commercial litigation funders should be liable for indemnity costs when the funded claim fails and is found to be speculative and opportunistic.
  2. 2 Whether funds advanced for security for costs should count towards the Arkin cap limiting funders' liability.
  3. 3 Whether parent companies or associated entities without direct contractual nexus can be liable for costs under section 51(3) SCA.

Ratio Decidendi

Commercial litigation funders who invest in a claim for their own benefit are liable for adverse costs orders, including indemnity costs, to the extent of their funding (the Arkin cap), regardless of whether the funding was for the claimant's own costs or for security for costs. The court may look to the economic reality and impose liability on parent or associated companies that provided the funds and stood to benefit, even absent direct contractual relationships. The conduct of the funded party and the nature of the claim are relevant to the basis of costs, and funders cannot dissociate themselves from the consequences of the litigation they enable.

Court Disposition

Appeals dismissed; costs orders against funders affirmed.

Orders

  • All funders jointly and severally liable for defendants' costs on the indemnity basis, subject to the Arkin cap.
  • Funds advanced for security for costs count towards the Arkin cap.