Natasha Harrison: 'My top five international disputes trends to watch out for in 2023'
A 'perfect storm' for insolvency disputes and an uptick in securities litigation are among the trends we can expect to see in the coming year, says Pallas Partners' founder and managing partner
Last year was, without doubt, one of the most dynamic, fast-moving and unpredictable years in the international disputes markets. Dominated, of course, by the fall out of Covid-19, we also saw greater emphasis on ESG, crypto and competition disputes coming to the fore. As we begin a new year, the global landscape is shifting again with repercussions from the war in Ukraine and heightened economic turmoil set to dictate new dynamics and challenges for the international disputes markets.
Against this backdrop here are my top five trends to watch out for in 2023:
- Securities litigation will see a major uptick
Fuelled by the litigation funding market, and a shift in investor appetite, securities class actions will see a significant increase in activity in 2023. Proceedings such as the recently filed FSMA claims against Glencore will provide a welcome opportunity for the jurisprudence to be developed and procedures streamlined. Successful claims will enable the office of the general counsel to pivot from being a cost to the business to a profit centre.
- A perfect storm is forming for restructuring and insolvency disputes
The economic and social turmoil which has defined UK and international politics for the past few months has resulted in an increasing number of businesses failing and entering into insolvency. As we move into the new year, the worsening macro-outlook for the global economy is set to create a perfect storm for the contentious insolvency and restructuring market. In particular, 2023 is likely to see a marked rise in creditor-on-creditor violence as well as enforcement activity.
- An increase in fraudulent activity and associated claims will emerge
A wholesale lack of supervision together with remote working during the Covid-19 pandemic created the perfect environment in which fraudulent activity could thrive undetected. With corporates now coming under increased financial stress, we are already seeing an increase in all types of fraud being uncovered. Therefore, fraud based litigation is my third trend as the pandemic wanes and normality resumes.
- Private equity disputes are set to grow and become more contentious
Following the private equity boom of 2020/21 disputes arising from rapidly acquired companies or assets are starting to emerge. Specifically, the sheer volume of transactions which took place throughout this period and the speed with which deals were completed will inevitably result in more disputes around valuation, warranties and misrepresentation, with parties increasingly walking away from deals that are no longer attractive to them.
- Competition disputes will continue to develop and grow
It has certainly been a busy year in competition litigation and we are going to continue to see important developments in the law in this area. One particularly important case which is heading to the Supreme Court in February 2023 arises in the Trucks litigation, whereby a challenge is being made to the legality of the third party funding structures in place. This decision will ultimately have important repercussions for both the competition litigation space as well as the litigation funding market.
Although my crystal ball may not prove to be totally accurate, one thing is certain – the international disputes market is set to be significantly more active, more contentious and more turbulent than ever before.
Natasha Harrison is the founder and managing partner of London litigation boutique Pallas Partners