Judgment Money Has Arrived: Who Protects the Funder's Share?

If a litigation funder and the funded client disagree about judgment proceeds, neither should assume that recovery settles who may immediately receive the money. Protection of a specified fund requires an existing identifiable fund and a disputed right to it, not merely an expected future fee. Start with the funding agreement, actual fund and existing orders.

This guide addresses the custody of disputed proceeds connected with DIFC proceedings. It is not a guide to collecting a judgment from the losing defendant, negotiating a funding return or obtaining security for an opponent's legal costs. The practical problem is different: money is expected or has arrived, but the people claiming a share have not agreed who controls its release.

What does your DIFC funding agreement say about judgment proceeds?

Start with the signed version of the agreement, including amendments. A summary prepared when funding began may omit a later variation or a condition attached to payment. Identify whether the amount claimed is fixed, calculated by a formula or dependent on events still disputed. Show the arithmetic separately from the legal interpretation that supports it.

Prepare a proceeds statement using the categories in the actual contract. Record what has been awarded, what has been paid and what remains subject to challenge or conditions. These are three different figures. A total copied from the judgment may be unsuitable for a distribution instruction where only part has been recovered.

Do not assume that the expression "the funder's share" proves ownership. It is convenient shorthand for the asserted entitlement. Whether the funder has a contractual, trust or other right requires examination of the particular documents and applicable law. This article does not convert every funding promise into a proprietary interest in the recovered money.

Why can changing lawyers leave a gap in the payment arrangements?

A funding agreement may expect the solicitors who conducted the claim to receive proceeds and make specified payments. If that firm stops acting, the commercial parties need to check whether the replacement arrangements actually perform those functions. A new litigation retainer should not be assumed to reproduce a separate funding or account mandate.

In Vannin Capital v Al Khorafi, judgment of 18 February 2015, the funding documents envisaged receipt through the clients' then lawyers. A change of representation left replacement arrangements unresolved. The judgment explained the November 2014 preservation order concerning sums already awarded against the bank, although payment had not yet been made. The February judgment itself determined jurisdiction and costs, not a fresh merits test for every anticipated payment.

The lesson is operational. Before sending new bank details to the paying party, compare them with every existing instruction and order. Identify who signed the earlier mandate, whose consent is needed for the proposed replacement and what evidence the recipient requires before acting. Do not solve an apparent administrative inconvenience by sending contradictory payment directions.

Keep the handover issue distinct from the outgoing firm's own fee claim. There may be overlap in the documents, but a dispute about fees does not answer every question about the funder's interest. List each asserted claim separately, identify any agreed amount and record where the parties disagree.

Did Vannin finally decide that the funder owned the whole recovery?

No. Preservation was not a final distribution of the recovery to the funder. The November 2014 order, explained in the February 2015 judgment, required the awarded sums to be paid into court and held pending further order, including following agreement or competent adjudication. The case concerned its particular funding documents and payment arrangements.

The later history is important. An application to vary the preservation arrangements was dismissed in January 2016. Permission to appeal was refused in April 2016. That was a permission decision, not a final trial of the funding agreement's validity. The reasons recognised arguable points but did not consider the material sufficient to justify freeing the protected fund.

A consent order of 18 May 2016 then distributed the original fund between the funder, the former law firm and the clients. It also preserved specified further entitlements. Those agreed directions are not a general rule that every funder ranks ahead of every client or lawyer.

The published sequence ends with a 21 February 2018 consent order. It records payment of the preserved sums directly to the funder and former firm on joint instructions, then discontinues the case with no order as to costs. The 2016 preservation should not be described as still awaiting resolution.

When using this history in your own case, ask which decision answers the question now facing you. The first order illustrates temporary protection. The permission ruling addresses the attempt to disturb that protection on the material then presented. The consent order records an agreed distribution mechanism. Reading only the first judgment could leave you with an inaccurate picture of the outcome.

Key takeaway. Keeping money available for a later decision is different from deciding who ultimately receives it. A preservation order should not be described as a final victory on the funding contract.

The published history also shows why the latest operative order belongs at the front of the payment file. Earlier reasons explain the dispute, but the person administering an account needs the directions currently governing a transfer. Have the proposed release checked against those directions, not merely against a favourable passage in an earlier judgment.

Can the court preserve the disputed fund without deciding the entire contract?

RDC 25.1(12) provides for a specified fund to be paid into court or otherwise secured where a party's right to it is disputed. RDC 25.6 permits interim remedies at different stages, including after judgment, subject to the qualifications in RDC 25.7. This identifies an available type of remedy, not an automatic entitlement to it.

The limit matters. In Houlihan Lokey v SP International, 19 December 2025, the court refused to use RDC 25.1(12) for a contingent fee from prospective refinancing. It required an actual identifiable fund and a right to that fund. It distinguished Vannin, where the relevant remedy had not been challenged on that basis and the funding documents included trust rights. An ordinary damages claim or future payment obligation does not become a specified fund merely because payment is expected.

Identify the existing fund, who possesses or controls it and the legal right asserted over it. Explain why it needs protection. If the problem is only fear that an ordinary debt will not be paid, do not relabel the debt as a fund. Obtain advice on the correct remedy instead.

The court's jurisdiction requires separate attention. The presence of an interim-remedy rule does not establish that the DIFC Courts can determine every funding dispute or direct every account worldwide. Ask your adviser to check the parties, governing documents, dispute-resolution provisions, location of the fund and the current jurisdictional framework before selecting the application route.

Vannin arose under its own contractual and arbitration arrangements in 2015. It should not be used as proof that a historical institutional reference remains an available present-day appointment mechanism. Nor does it remove the need to identify the proper forum for the final dispute under today's documents and law.

A focused proposal should explain what remains undecided. The parties might disagree about the agreement's validity, the calculation of the return or whether a particular receipt falls within the definition of proceeds. Put those questions in a separate list. This helps prevent a temporary custody application from being presented as if it already resolves them.

What should an agreed holding arrangement actually cover?

An agreement to "hold the money safely" leaves too much unanswered. As a practical drafting exercise, specify the account, its holder, the amount or receipts covered and the authorised release events. State how later instalments and interest are to be handled. These are suggested questions for the documents, not a universal prescribed escrow form.

Separate the disputed portion from any amount the parties agree may be released. Ask whether a partial distribution is possible without prejudicing the unresolved claims and whether an existing order must first be varied. Do not assume that one person's consent is enough where another claimant or a court direction also affects the fund.

Consider an illustrative proposal under which the client receives an agreed undisputed amount while the balance remains held. The useful questions are who confirms the calculation, what happens if the payer sends less than expected and what evidence authorises release. No particular percentage or priority follows merely from calling the balance a reserve.

Ask who bears account charges, currency conversion costs and any expense of administering the arrangement. Establish how statements will be supplied and how an error will be corrected. Those details can matter even where everyone accepts the headline distribution figures.

Before execution, compare the proposal with existing court directions and the actual account provider's requirements. A commercially attractive draft may be unusable if the proposed holder has not accepted the role or cannot operate the requested mandate. Obtain that confirmation before relying on the arrangement as a substitute for court protection.

What evidence and funding disclosure should you prepare?

Prepare a short chronology supported by the relevant agreements, amendments, payment correspondence and orders. Include the proposed account arrangements and the actual responses to them. Distinguish an agreed term from an unanswered proposal. In Vannin, the failure to conclude replacement arrangements was a material part of the problem, not merely a missing administrative detail.

RDC 25.9 requires evidence supporting an interim-remedy application unless the court orders otherwise. If relief is sought without notice, RDC 25.8 and 25.10 require good reasons for that course and evidence explaining why notice was not given. Urgency should be established from the payment timetable and concrete circumstances, not asserted simply because money is involved.

Funding disclosure is a separate issue. Practice Direction No. 2 of 2017 requires disclosure of the fact of qualifying third-party funding and the funder's identity within its applicable procedure. It does not ordinarily require the agreement or its terms to be disclosed unless the court orders otherwise. The direction also preserves questions about the validity of a funding agreement.

That limited routine disclosure requirement is not a promise that contractual terms will never need to be produced in a dispute about the fund itself. Ask what evidence the proposed application requires and how any legitimate confidentiality concerns should be addressed. Do not omit the very payment clause on which relief depends merely because routine funding notice normally contains less information.

Common mistake. A notice identifying the funder does not approve the funding contract or establish the amount payable. Disclosure, contractual entitlement and permission to release money are separate questions.

What should happen before anyone sends the distribution instruction?

1. Reconcile the actual receipts with the judgment, payment records and contract definitions.
2. Identify every person asserting an interest in the proposed distribution.
3. Check the latest court orders and the authority needed for the intended release.
4. Record the agreed and disputed amounts without treating a proposal as consent.
5. Resolve the account mandate and release mechanism, or obtain advice on appropriate interim protection.
6. Retain the final instruction, supporting authority and confirmation of each completed transfer.

Give the account administrator one consistent set of instructions supported by the relevant authority. If competing instructions have already been sent, disclose that problem to the adviser handling the release rather than assuming the newest email silently replaces everything earlier.

After a transfer, reconcile the remaining balance and any continuing restrictions. A partial distribution may leave later receipts or another person's claim unresolved. The closing record should show what was paid, why it was permitted and what still requires a decision. Winning the underlying case does not make this final accounting step optional in the practical management of the recovery.

Sources checked on 1 October 2026. The appropriate custody and release arrangements depend on the actual funding documents, current law and operative orders.

Frequently Asked Questions

Does a litigation funder automatically own part of a DIFC judgment? No universal ownership rule follows from funding alone. The asserted entitlement must be analysed under the actual agreement, applicable law and relevant orders.

Can disputed proceeds be held before the contract dispute is finally decided? RDC 25.1(12) concerns an existing specified fund and a disputed right to it. Houlihan Lokey rejects its use to secure a merely contingent future payment. Jurisdiction and justification also require assessment.

Does changing lawyers cancel the funding payment arrangements? Do not assume so. Examine the existing agreement and determine how its receipt and distribution provisions operate after the change.

Was Vannin a final ruling that the funder should receive everything? No. The preservation was followed by agreed distribution directions in 2016. The 2018 consent order recorded payment of the preserved sums and discontinued the case.

Was the April 2016 Vannin decision a full merits appeal? No. It refused permission to appeal against the refusal to vary the preservation arrangements. It should not be described as a final trial of contractual validity.

Must every funding agreement be disclosed in full under the funding direction? Not ordinarily. Practice Direction No. 2 of 2017 requires the relevant funding fact and identity disclosure, while allowing the court to order disclosure of the agreement or terms.

Can the undisputed amount be released while the balance remains held? It may be possible through an appropriate agreement or order, but check every relevant interest and existing restriction before treating a partial release as authorised.

Does an interim-remedy rule give the DIFC Courts jurisdiction over every funding dispute? No. The jurisdictional basis, contractual forum and location and circumstances of the fund need separate analysis.

This article is for general information and does not constitute legal advice. Consult a qualified advocate about the funding documents, court orders and disputed proceeds in your case.

Related Guides

See the Dubai and DIFC legal guides, the guide to a lawyer ceasing to act, the guide to an opponent's legal costs bill and the guide to an unpaid settlement agreement.

Related Guides

Our judgments, awards and enforcement page treats recognition and enforcement as separate stages, and covers freezing orders and asset disclosure.

• The Debtor Still Will Not Comply: Can a DIFC Receiver Help?
• The Freezing Order Was Discharged: Can I Recover My Losses?
• You Won a DIFC Judgment but Cannot Find the Debtor's Assets