English High Court Upholds Award For Third'Party Funding Costs In Tenke Fungurume Mining v Katanga Contracting Services

• Published date: 30 December 2021
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Willkie Farr & Gallagher LLP
• Author: Duncan Speller and Mark Feldner

I. Introduction

The use of third-party funding in international arbitration is on the rise. Third-party funding gives parties the ability to pursue meritorious claims while limiting their own legal costs. Under third-party funding arrangements, an outside investor typically covers all or part of a party's legal costs on a no-recourse basis. In exchange, should the funded party prevail in the dispute, the funder is usually entitled to a multiple of the invested amount or to a share of the proceeds. The recent High Court decision in Tenke Fungurume Mining v Katanga Contracting Services will be welcomed both by funders and funded parties: the judgment provides further confirmation that a tribunal in a London-seated arbitration has the power to award the costs of obtaining third-party funding to the successful party.1 At the same time, the judgment will be welcomed by the London arbitration community more generally as it affirms the English courts' non-interventionist approach to procedural decisions and reinforces the finality of arbitral awards.

II. Background

The underlying arbitration arose out of two commercial agreements relating to a mine in the Democratic Republic of the Congo (the "DRC"). In January 2020, Katanga Contracting Services ("KCS") commenced arbitration proceedings, governed by the ICC Rules and seated in London, against Tenke Fungurume Mining ("TFM"). The arbitral tribunal comprised Mr Charles Kaplan, Mr Jeffrey Gruder QC and Dr Achille Ngwanza (the "Tribunal").

The emerging COVID-19 pandemic and the resulting government mandates affected the conduct of the arbitration in several ways. First, in January 2021, TFM requested an adjournment of the merits hearing, contending that travel restrictions had prevented the parties' mining experts from visiting the site. Moreover, in the same month, TFM's leading counsel contracted COVID-19, rendering him unable to appear at the merits hearing scheduled for March 2021. TFM thus applied for a two-month adjournment to the hearing to allow it to instruct alternative counsel. By two procedural orders issued in January and February 2021, respectively, the Tribunal dismissed TFM's applications and ruled that the hearing should proceed as planned.

Following the hearing, in late March 2021, the parties exchanged submissions on costs and interest. In the course of its submissions, KCS revealed that it had obtained a shareholder loan, described as a "litigation funder agreement", to fund the arbitration. KCS...