Funder slams tribunal’s “unlawful” funding cut, demands judicial review—charity got the windfall
Innsworth Capital has launched a fierce legal challenge against the Competition Appeal Tribunal’s approval of a £200m settlement between Mastercard and class representative Walter Merricks. The dispute centres on whether the tribunal drastically slashed Innsworth’s cut—from an expected £179m to just £68m.
In a High Court application filed this week, Innsworth argues the tribunal erred in law when it ratified the settlement last month. According to Innsworth, as an absent party in the CAT proceedings, judicial review constitutes its only avenue to contest an allegedly unfair outcome.
The original funding contract between Innsworth and Merricks guaranteed a minimum return of £179m. Instead, the tribunal capped Innsworth’s recovery at £68m, redistributing the remaining £111m to charity via the Access to Justice Foundation. Innsworth describes this redistribution as a “gratuitous benefit” granted to an “unrelated” third party.
In its written submission, Innsworth asserts that the tribunal misinterpreted a leading Australian case on “reasonable award” levels for litigation funders. The funder further contests the tribunal’s legal authority to divert funds away from the contracted party and into a charity. Innsworth’s counsel requested that the High Court quash the CAT’s distribution decisions.
Ian Garrard, Innsworth’s UK managing director, stated: “We have identified serious errors in the CAT judgment—especially the disregard for the contractually agreed return and the extent of its discretion to allocate recovered damages to non‑stakeholders. We are seeking a judicial review which—if granted—could clarify these issues for ourselves and for others.”
Embed from Getty ImagesThe judicial review names the CAT as defendant and lists Walter Merricks and the Access to Justice Foundation as interested parties. However, insiders expect the tribunal not to oppose the move. The High Court’s ruling—and any subsequent hearing—will likely be a turning point in litigation funding jurisprudence.
Industry observers are watching closely. Jeremy Marshall, chief investment officer at funder Winward, backed Innsworth’s move: “It is right to pursue this judicial review. It’s an important opportunity to seek clarity on how the tribunal assesses what represents an appropriate return for litigation funders—without whom there would be no settlement or distribution of damages.”
The implications are far-reaching. Collective litigation in the UK has surged in recent years, with third‑party funders underwriting high‑value consumer claims. But disputes over how much they can recover — especially when surplus funds are diverted — threaten to unsettle the model.
For Innsworth, this case is existential. The funder injected significant resources in support of Merricks’s claim, firmly expecting contractual returns. Instead, the tribunal’s decision to reroute excess damages to charity transformed the fate of the agreement. Innsworth now contends that the tribunal’s action undermines confidence in funding contracts, creating uncertainty for litigators relying on external backing.
Analysts predict the High Court will consider whether the CAT overstepped its statutory powers under the Competition Act 1998. The Act allows tribunals to award damages collectively, but its language is vague on whether and how surplus funds may be reallocated. Innsworth argues the CAT exceeded its authority by redistributing funds to a non‑party.
Next steps hinge on whether the High Court agrees to grant the judicial review. If it does, a full hearing could follow later this year. A successful challenge could restore Innsworth’s expected £179m outcome, reshape CAT settlement rules and curb judicial discretion over third-party returns.
Yet a ruling in favour of the tribunal would endorse the redistribution model, potentially limiting funders’ bargaining positions and shrinking payouts. Such a precedent could chill future collective actions, as funders may demand tighter guarantees or higher fees to offset risk.
Whatever the outcome, this dispute marks a critical flashpoint. At issue is not just millions in funds, but broader trust between funders, claimants and oversight bodies. With the High Court review pending, every legal watcher will now track how far contractual certainty can survive under tribunal discretion.
