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Whistling to a funder’s tune?

Different types of litigation funding can influence a claimant’s choice of venue, adding to the complexity of their decision making, explain Ben Pilbrow and Ruth Manson

23 August 2017

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The recent decision in International Petroleum Limited and others v Osipov is interesting for several reasons. Osipov, the claimant, must have faced some difficult decisions about whom to pursue his claim against, what causes of action to advance, and how to fund it. Not only did the case confirm that individuals can be liable for dismissal-related compensation in detriment claims brought under section 47B of the Employment Rights Act (ERA), but it is also a rare example of a case in the Employment Tribunal that third-party funders would rush to fund.

Osipov had previously been CEO of International Petroleum Limited. After taking up his post, he discovered, and made protected disclosures in respect of, a number of corporate governance and compliance issues relating to bribery in Niger. As a whistleblower, Osipov was entitled to the company’s protection against any adverse consequences caused by those disclosures. As it was, at the instigation of the second and third defendants (non-executive directors of the company), the company prohibited Osipov from travelling to Niger and subsequently dismissed him.

Osipov, understandably aggrieved by this outcome, has been vindicated, as the ET ordered the company and its two non-executive directors to compensate him to the tune of £1.745m, an award that the Employment Appeal Tribunal has upheld. However, he must have faced some difficult choices on his journey.

First, the choice of defendants. It appears that the company was practically insolvent; if the non-executive directors (who were both wealthy individuals) had not been found individually liable for their part in Osipov’s dismissal, then he may have been left with no effective remedy. The appellants argued that claims for unfair dismissal due to whistleblowing can only be brought against the company under section 103A ERA, rather than against colleagues under section 47B. The EAT rejected this: detriment claims short of dismissal can be brought against colleagues, so it would be unjust to exempt liability for dismissal.

Second, litigation of this nature is not cheap, even in the ET. It is clear from the EAT’s judgment that the defendants spent significant sums on their defence, which in turn would have generated pressure on Osipov to do the same. This can be a very difficult decision to make – litigation is always risky and most litigants, particularly individuals, can ill afford its costs.

A decision on how to fund those costs becomes important. The decision Osipov reached is something only he and his solicitors know, but, given the quantum of his judgment, he likely had three choices: the traditional model, where he would pay all costs and take all the compensation; a contingency agreement with his lawyers, where he would probably pay for disbursements and share some of his compensation with them; or third-party funding, where a funder would pay some or all of his compensation and share some of his damages. Alternatively, Osipov may have chosen a course that blended elements from all three.

The last decision, potentially the hardest one, was where to bring his claim: in the ET or in the High Court. A key factor in this choice will have been the trade-off between costs recovery, likely compensation, and the strength of his causes of action. Osipov chose to advance two ERA claims, which mandated the ET as the forum. He has succeeded, both at first instance and on appeal, and so the ERA claims were clearly strong.

However, costs are not always recoverable in the ET. This is not an issue in the High Court, where the winner should recover (the majority of) their costs. But Osipov would have had to advance different contractual and tortious claims in the High Court, which would have had different prospects of success. The ET and the High Court would have been influenced in differing ways, depending on the type of funding, adding to the complexity of the decision.

It appears Osipov has now completed his journey. We hope that, with hindsight, he is happy with his choices along the way.

 

Ben Pilbrow is a senior associate and Ruth Manson is a trainee solicitor at Shepherd & Wedderburn

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Employment Contracts & Rights Litigation Funding

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whistleblowing Employment tribunal