Funder to challenge Mastercard damages distribution plan

Litigation funder Innsworth Capital has opened a new front in its fight to increase its share of the landmark Mastercard collective litigation settlement by applying for a judicial review. The application to the High Court says the Competition Appeal Tribunal erred in law last month when it approved a £200m settlement between class representative Walter Merricks and Mastercard in a claim originally valued at £14bn.

Under the tribunal's collective settlement approval order, Innsworth will receive up to £68m rather than the minimum of £179m set out in the original funding agreement with class representative Walter Merricks. 

In its submission to the court, Innsworth states that, as it was not a party in the CAT proceedings, judicial review is the only route by which it can challenge the settlement order.

Among its grounds for review, Innsworth says the tribunal misunderstood the Australian authority on which it based its decision on a reasonable award. The application also criticises the share of the settlement granted to charity the Access to Justice Foundation, the body nominated to receive any undistributed surplus of judgment awards under the Competition Act 1998. 

Rather than honouring the litigation funding contract, the tribunal 'limited the funder's return far below the contractual level and conferred a gratuitous benefit on an unrelated charity,' the application states. It seeks an order for the tribunal's decisions relating to the distributions to be quashed. 

Ian Garrard, Innsworth's UK managing director, said: 'Innsworth has identified what it regards as serious errors in this judgment, including as regards the weight to be put upon the level of return contractually agreed at the outset with the class and the extent of the CAT’s discretion to make payments of recovered damages to non-stakeholders and are requesting a judicial review which - if granted - may provide more clarity on these key issues both for itself and for others.'

While the application for judicial review names the CAT as the defendant - and Merricks and the Access to Justice Foundation as interested parties - the tribunal is not expected to contest the application. However the High Court's decision and any subsequent hearing will be closely watched by litigation funders. 

Jeremy Marshall, chief investment officer of funder Winward, said: 'It is right to pursue this judicial review and it is an important opportunity to seek clarity on how the tribunal assesses what is an appropriate return for litigation funders without whom there would be no settlement or distribution of damages.'