Court of Appeal orders indemnity costs against third-party funders

Excalibur Ventures LLC v Texas Keystone Inc; Texas Keystone Inc and others v Psari Holdings Ltd and Others [2016] EWCA Civ 1144, 18 November 2016

This landmark decision follows a string of recent High Court decisions dealing with the role of third party litigation funders. The background of the funding agreements was somewhat convoluted, but the essence was that the funders variously advanced £14.25 million to Excalibur to meet the legal fees and disbursements, and £17.5 million for the purpose of enabling Excalibur to comply with an order for security for costs. The funder would share in the recovered proceeds if Excalibur won. Unfortunately, Excalibur suffered what was described as a “resounding defeat” because the claim was “spurious”, and costs were ordered against Excalibur on an indemnity basis.