The New York Court of Appeals, New York’s highest court, upheld in
Justinian Capital SPC v. WestLB AG the trial court’s summary judgment in defendant’s favor, holding that the lawsuit violated the State’s champerty statute. This is the first time in over a century that the Court found a suit to be champertous, meaning illegally funded by a third party that would also share the potential benefit if the funded party were to prevail. The noteworthy aspect of the Court’s holding is its expansive definition of champerty, which extends beyond fraudulent suits or suits that would not have been filed but for the third party’s funding. However, the decision confirms that the New York law does not apply to those investing over $500,000.
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Summarized by James Wright