The aspect of third-party litigation funding will require consideration by the top court.
The Supreme Court said so in an appeal filed by SBS Holdings Inc. against a decision of the Delhi High Court, which said that a third-party funder that is not a party to the arbitration proceedings cannot be held liable for discharging the awarded amount merely because it has funded a party in the proceedings.
Third-party funding is when an unconnected party takes care of the costs of defending a party in a court or arbitration proceeding in return for a contingent share of the win.
The concept helps level the playing field in cases with high litigation costs and encourages settlements based on the merits of the case and not on a difference in the risk appetite of the parties.
The apex court said that this issue is bound to arise again in the future, and it is a matter that demands the attention of the court.
What would be the cost and other liabilities of a third-party funder, and whether or not the funder would have any liability at all, will have to be considered, it said.
The case is set to be heard in February next year.