(Reuters) – Some of the world's leading dispute financiers such as Australia's Omni Bridgeway and a unit from US insurance broker Marsh Inc. plan to exploit the Indian market by financing the legal costs of disputes that confuse companies, executives told Reuters.
The concept of litigation is common in Australia, the United Kingdom and the United States where such financiers pay legal fees and other costs for commercial lawsuits, arbitration or shareholder disputes and in return receive part of the price from a settlement or profit.
So far in India, however, it has been a little known concept, with few and far apart.
While companies stand to gain by protecting themselves against the costs of fighting big ticket claims, financiers and their investors have a chance to get a higher return on their investment when a decision benefits those they support.
Omni Bridgeway, the world's second largest dispute financier with more than $ 1
"We are talking to various Indian companies about their downfall and how we can help clear it up or make money from it," Tom Glasgow, Omni's head of Asia, told Reuters. refused to name any of these companies.
Marsh, who runs his financial arm from his London office, said that its executives will start visiting India more often to hold talks on offering financing to companies.
The coronavirus pandemic has paralyzed. economic growth in India and hit companies hard, leading to more contract disputes and bankruptcy-related cases.
"The pandemic only accelerated things," says Sanjay Desai, Marsh's Dispute and Finance Manager. are more disputes. Financing provides the answer. "
The financiers said they originally planned to focus on international arbitration involving Indian parties, as these have a much faster solution to me than traditional court cases, which can take several years in India.
Mr. Desai added that he hopes that within a few years, as financiers become more comfortable with local issues, they can then "start looking at financing local Indian arbitration and litigation."
In one case, as part of its economic turnaround, India's Hindustan Construction Co. last year raised $ 238 million by selling its arbitration rights to a consortium of investors led by BlackRock.
Omni, Marsh and Phoenix said they will also join hands with consultants and law firms to set up an Indian Litigation Finance Association to promote their activities in the country.
The association also aims to resolve complaints against its members and create a framework for self-regulation, says Prateek Bagaria, a partner at the Indian law firm Singularity Legal, which is part of a group.