A three-week enforcement trial started in London this week in the four-year divorce litigation between Tatiana Akhmedova and Farkhad Akhmedov.
The bitterly fought case now involves their 27-year-old son, Temur, thanks to his mother joining him to the litigation on the basis, she alleges, that he has assisted his father in frustrating the divorce award made by the High Court in December 2016. Ms Akhmedova’s claim is sustained by a litigation funding agreement signed with Burford Capital with the consequence that, in return for payment of her legal fees — rumoured to be about £19 million — the company will receive up to 25 per cent of the £453 million judgment she is seeking to enforce.
If she succeeds, her son is likely to lose all his assets, including his only home.
When my firm represented Temur Akhmedov earlier this year, we argued — unsuccessfully — before Mrs Justice Knowles that this type of litigation funding agreement was contrary to public policy in family proceedings.
This is because similar agreements — conditional fee agreements — commonly used in civil litigation are expressly prohibited by statute from applying in all family litigation. The prohibition is based, as explained in debate in the House of Lords in 1999, on policy and morality with a view to protecting the integrity of public civil justice arising from the unique nature of family proceedings.
As pointed out by Lord Meston, approaching family proceedings in terms of “winning and losing” is contrary to the whole ethos of family law. Litigation funding makes a negotiated settlement harder to achieve and, unlike a damages claim, financial remedy proceedings are seeking to achieve a fair distribution of finite assets.
The legality of permitting litigation funding in family proceedings was at the heart of a comprehensive ruling by the Hong Kong high court earlier this year. Unlike the position in England and Wales, an agreement to maintain litigation in return for a share in the award (champerty) remains a criminal offence in Hong Kong.
In rejecting the legality of a litigation funding agreement in the divorce proceedings before her, Madam Justice Ng referred to “the risk that third party litigation funding may encourage excessive litigiousness that may bring more harm than good to matrimonial litigation”.
To the surprise of many, given the novelty and general importance of the issue, Lord Justice Moylan refused Temur Akhmedov’s application for permission to appeal the decision of Mrs Justice Knowles with no further appeal possible.
Litigation funding agreements have no place in family cases since they drive couples and families apart. Already litigation funders are mobilising their resources and publicity machines to muscle in on divorce cases to make a profit for their shareholders.
In another case, on different facts, the Court of Appeal or Supreme Court may well overturn the ruling in the Akhmedov case with the result that litigation funders can no longer profit from family misery.
Read Mark‘s article in The Times.