India - Part II Country Report - Handbook on Third-Party Funding in International Arbitration
Originally from Handbook on Third-Party Funding in International Arbitration
1.1. TPF Regime in India
1.1.1. Is TPF commonly used in your Jurisdiction? If yes, since when (is it a new trend or a well-established practice)?
TPF is a new concept in India. Active funding began only as recently as 2016 with only three known cases of funding– even the details of these three cases are not available in the public domain.
1.1.2. Please shortly describe the TPF market in your Jurisdiction. Is it dominated by local or international Funders, which type of Funders are active, which cases get typically funded? Is there any source on Funders (like the overview published by the German Bar)?
The TPF Market in India is still at a nascent stage. There are no Indian funders currently active. There have been a few approaches by a few international funders in the recent past. These have largely been limited to meetings with law firms and other such scoping engagements.
1.1.3. Are there any statutes or case law dealing with TPF or regulating Funders? If yes, please address these.
There are no statutes or case laws that deal with TPF in India. There are also no specific guidelines or codes that are in place to regulate funding.
1.1.4. Are there any legal restrictions? To what extent do common law concepts like champerty, maintenance, barratry, or comparable civil law concepts as usury or prohibition of pactum de quota litis affect TPF? Can a law firm act as a Funder?
There is no outright bar on contracts of champerty and maintenance in India. Though Indian contract law is based on common law principles, there are some notable areas where it makes a departure – one such area is in relation to the English law bar on practices of champerty and maintenance which has been held to be inapplicable in India. An agreement to supply funds to carry on a suit in consideration of a share of the property/compensation paid, if recovered, would not be regarded as being, per se, opposed to public policy unless the agreement was shown to have been entered into for an improper object or to encourage litigation which, on the face of it, was unrighteous, or unless the agreement was in any way, unconscionable or extortionate.