Burford Claims $140M In Argentina Arbitration Win
Burford Capital has announced a big win in their litigation funding efforts. The case was originally brought in 2008 on behalf of the airline Aerolíneas Argentinas who had become bankrupt.
The final decision was handed down on Friday the 21st of July 2017. A three-person panel established at the International Centre for Settlement of Investment Disputes (ICSID) found the airlines were expropriated in violation of the bilateral investment treaty Spain and Argentina reached in 1991. One panel member did not agree with the final decision.
Burford Capital released a statement over the weekend. In this statement they revealed they are likely to receive roughly $140 million from a $324 million recovery against the government of Argentina.
The case, Teinver v. The Argentine Republic, was one of the very first investments Burford Capital made. It committed $13 million to help pay a portion of the legal fees for Houston-based Roberto Aguirre Luzi and his team at King & Spalding, who represented the claimants. The deal was completed in 2010. This was just one year after the company began funding litigation.
The case examined the Burford’s role in providing litigation funding. The Argentinian government sought to bring criminal charges against Burford. They even went as far as accusing some of the lawyers involved of treason. Thankfully nothing ever came to fruition from these threats.
The litigation revolved around the claim that the Argentinian government forced the owners of the airlines to sell them to the government for nothing. The owners allege the businesses were run into the ground because of how the government regulated ticket prices, restricting them to levels that were too low given the price of fuel.
Teinver’s legal team argued the loss and thus damages awed amounted to $1.5 billion. The tribunal disagreed with this point and thus the damages have fallen very short of the initial claim. That said it is still a significant recovery for both the claimant and Burford.
“We are very pleased with this result and are gratified to see justice done for Teinver and its stakeholders…Without Burford’s capital, it is doubtful that this kind of recovery could have been obtained for the claimants.” – Burford CEO Christopher Bogart.
Litigation funding arrangements are usually strictly confidential. Burford’s role was disclosed due to the bankruptcy proceedings in Spanish court surrounding the airlines’ former owners. Burford also announced the win as part of its legal obligations to its investors as a result of being a publicly traded company.
Burford’s share of the $324 million award is just over 40 percent. That is more than 10 times its initial investment.
“The cost of capital is lower than the market contingent-fee percentage for complex litigation once you take into account that our capital paid out-of-pocket costs as well as legal fees…And of course, all of the details of this arrangement were approved by the Spanish court as fair to creditors and market-appropriate given the circumstances.” – Burford’s managing director Travis Lenkner
Travis noted that Burford’s return is comparable to what a lawyer working on contingency agreement might receive. He added it is also important not to overlook the “significant binary risk associated with an international arbitration of this type.”
Burford and its shareholders won’t be celebrating yet. There is always a chance, although unlikely, that the Argentinian government could challenge the ruling. As with all cases the final hurdle is successfully securing payment. Those involved will only be able to rejoice once the funds are received.