Cayman ISLANDS Law and Practice Contributed by: Sam Dawson, Peter Sherwood and Denis Olarou, Carey Olsen
2.2 Third-Party Funding: Lawsuits Even prior to the introduction of the Act, third- party funding of liquidations (with court sanc- tion) had been fairly common for some time, and third-party funding of non-insolvency proceed- ings was gradually becoming more common. It is anticipated that large institutional funders will become much more active in the jurisdiction over the coming years. 2.3 Third-Party Funding for Plaintiff and Defendant There is no specific rule of law preventing a defendant from obtaining third-party funding. However, third-party funders normally seek to fund claims rather than defences, since claims are most likely to offer opportunities to make a profit. Defendants are therefore unlikely to be able to procure third-party funding without a counterclaim of sufficient merit and value to justify investment by a third party. 2.4 Minimum and Maximum Amounts of Third-Party Funding This depends on the particular third-party funder. 2.5 Types of Costs Considered Under Third-Party Funding In principle, funding may be secured for any type of costs. 2.6 Contingency Fees Save in certain limited circumstances, the Act also permits contingency agreements between clients and attorneys. This is true whether or not the contingency fee agreement includes a success fee, and a success fee can (subject to relevant caps on recovery discussed below) be a function of either costs incurred or recoveries in the action.
opinion on a point of foreign law) or as part of an award in respect of attorney fees, save where costs have been awarded on the indemnity basis (see 11.2 Factors Considered When Awarding Costs ). However, this is only a rule of thumb: the court has a wide discretion, when it comes to the taxation of costs, to direct that any item of work be allowed, disallowed, restricted or qualified. However, a foreign lawyer may be granted “lim- ited admission” to appear before the Cayman Islands courts for the purposes of a specific pro- ceeding, if instructed to do so by a local attor- ney. In principle, such limited admission may be granted to any suitably qualified overseas senior advocate and, in practice, it is regularly granted to English King’s Counsel in proceedings that are sufficiently complex or high value to justify the appointment of such expert advocates. Junior counsel and solicitors might be granted “limited admission” in only very unusual circumstances. 2. Litigation Funding 2.1 Third-Party Litigation Funding On 1 May 2021, the Private Funding of Legal Services Act, 2020 (the Act) came into force in the Cayman Islands. The Act repealed any dis- tinct offences under the common law of cham- perty and maintenance and provided for third- party funding agreements to be used in civil litigation without court sanction, subject only to a small number of formalities and well-defined conditions. The law on third-party funding had previously developed incrementally to a point where it was fairly common outside of winding up proceed- ings; however, placing funding agreements on a statutory footing is a welcome development.
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