Law Weblog

Another example of a conditional fee arrangement and the problems of recovering costs

Saturday 10 January 2004 at 8:52 pm | In News | Post Comment

Arkin v Borchard Lines [2003] Commercial Court
[Conditional fees – access to justice – public policy in conditional fee cases] 
The case was a maritime dispute, where the former shipping company director Arkin brought an £80 million case under a conditional fee agreement. He arranged a complex contingency fee agreement with professional claims funders who paid for experts in return for 25% of any damages.
Mr Arkin claimed loss of profits on the basis that the defendants were in breach of Article 82 of the EC Treaty.

Held: Although Mr Arkin lost the defendants had to pay their own legal costs of £6million.
Defendants who succeed in commercial disputes should not be able to claim back their costs from professional claims funders as it would hinder access to justice.

“The fact that it is the policy of the law to give effect to access to justice permitting an impecunious claimant to sue and so to expose an ultimately successful defendant to shoulder the burden of his own costs…”

First, there was no infringement of Article 81 and Article 82, the ‘irrational’ behaviour of the claimant would have prevented damages being awarded.
Secondly, strong evidence would need to prove predatory price-setting.
Thirdly, lowering the prices only in areas where there was competition was held to be an acceptable response to a new entrant. It was only intended to win back customers.

Claims dismissed
Whole case here

Comment: The court had to decide whether to deter weak claims or accept the widening access to justice. The court decided that access to justice was such an important consideration that it should prevail, which was hard on the defendant who had done nothing wrong.