The Fund considers the market of the judicial services as the integral part of the capital markets, we treat the investments in this sector exactly as other fund managers treat their investments in the securities or in the precious metals. The Fund invests his own funds in the carefully selected meritorious cases, being on the certain stage of the juridical process. The specialization of the Fund is the return of the alienated, disputed assets or assets being on the stage of the alienation, as well as the working with the enterprises being on the stage of the bankruptcy, if the bankruptcy arose in the result of the fraud, malfeasance of the directors, governments, raider attacks, looting and illegal withdrawal of corporate assets. In other words the assets of the Fund are not the financial instruments, but lawsuits and arbitrations, which we carefully pick up. The Fund finances one of the parties in the process in exchange for the part of the asset which is to be winning in the result of the court’s decision. That just will be the investment profit of the Fund. The separated direction of the activity of the Fund is the participation of the Fund in special situations of the companies. We acquire their problematic assets, so that to restore independently their value.
In the terms of the Western investment terminology the Fund represents very rare investment strategy - litigation financing.
There are only 5 such funds in the world, including our Fund. That is the newest direction of the financial investment, acknowledged in the West in the form of the significant growth of the assets of the mentioned funds.
Briefly – what is the litigation financing and where does the Fund invest ?
From the very beginning – where does the Fund NOT invest ? The Fund does NOT invest in the shares, bonds, precious metals, works of art. The Fund also does not invest in the derivatives and in money market transactions.
The Fund invests in lawsuits. In the commercial lawsuits. It invests on its own terms - for a combination of cash remuneration and / or a substantial stake in the company, which is won by the Fund. As is sometimes said in the Western investment community «litigation finance - this is the legalized raiding in contrariwise meaning."
As for us – we position ourselves not as the “raiders in contrariwise meaning”, we are rather the structure, correcting the injustice of the existing legal system protecting the rights of only those, who have sufficient funds to defend himself.
Well, Themis holding the scales, in addition, also a sword, her eyes are known to be tied. And that is the big question if the sword falls exclusively to a guilty one. Let us be honest - Themis does not see to whom falls the sword. Another big issue is what exactly does Themis weigh on the scales - good and evil, or something more tangible, bearing value-equivalent ? After all, she does not see what exactly is measuring on the scales. And this blind Judge does not see the person who puts on the scales that “something material” that she weighs....
And is there any protection against this blind Judge, if on one side of the scale is a significant material equivalent, and this blind Judge is a deaf in addition ?
And how one can defend himself, if one has no possibility to put this material equivalent on the other side of the scales ?
Well, the defense does exist !
The name of this defense is the “litigation financing”. Its purpose is to align this world’s injustice. In these latter days the protective actions against the blind Themis, menacing its sword to the right and to the guilty, are transferred more and more to the investment format. The litigation funds such as Juridica Investment Fund, Burford Capial and LCM Litigation Fund have already been established.
Our Fund – European Litigation Fund has also chosen this way. This year we began our operations in Ukraine. For sure, we have our own peculiarities, like any other fund.
The first peculiarity of the Fund, as the instrument is that we escalate, using our contacts and our status of the foreign fund all the lawsuits, considering in Ukraine at the international level – to international arbitration courts (London, Stockholm, European Human Rights Court), where we finalize the dispute. The percentage of Ukrainians winning in international courts exceeds 90% - it is worth to think over - are we looking for the justice in the right courts ? Generally, the refusal of the “services” of the Ukrainian Justice and the transfer of cases in European courts is the main mission of the Fund.
The second peculiarity of the Fund, as the instrument is that we, unlike other law offices do not work for the “hourly fees”, we are the FUND first of all – and our main mission is the wins in the courts as well as the increasing of the Fund’s position with the shares of the enterprises, received in the result of the wins in the courts. We always agree with the corporation the stake we receive in case of our win before we invest in the lawsuit. The stake will always be high. In some cases we shall agree to invest in the lawsuit of the company only if we receive the controlling interest in shares after the win. Albeit, we can get shares of the company in case of win, we still pefer to get money, not stakes.
One should remember the main principle of the litigation financing – “If we win – so do the client”. But in case of our failure the client does not share with us the bitterness of the defeat. The litigation financing does not suppose the invoicing of the client in case of the lost lawsuit.
The third peculiarity of the Fund, as the instrument I would say such possibilities, which could not be inherent to any other company, by virtue of the legal nature of such company and which we are going to develop, using the status of the Litigation Investment Fund. That is such avenues as the anti-raider protection at the international level, the anti-corruption control in the courts, the protection of the trademarks of the companies leveled Fortune -1000 on the territory of Ukraine and CIS, patent monetization of the Ukrainian scientists and scientists from the former USSR.
Separately we can consider the work of the Fund with the distressed assets. Working with them, the Fund shall utilize its shares, which could be considered practically as the quasi – dollars, in case of the subscription in kind. The volume of the Fund’s issue is $ 5 Bn.
So that to address the issues of investment character and issues of the management of the distressed assets, the Fund is working closely with the partner fund - EAST PROSPECT FUND. (www.epfcapital.com).