NEW YORK—The Open Society Foundations, through their impact investment arm, the Soros Economic Development Fund (SEDF), have committed £5 million to Aristata Capital, a litigation-financing fund that will be the first of its kind to focus on driving positive social and environmental change.
SEDF is joining Capricorn Investment Group, the anchor investor, and several family offices, to bring Aristata’s first round of fund raising to £40 million.
Litigation financing is an established model in many jurisdictions, in which investors fund the legal costs of litigation against the promise of a share in the proceeds of any eventual damages award.
Aristata is the first fund set up specifically to support social impact litigation by individuals or groups that would not otherwise have the financial resources necessary to bring a complaint to court, especially against well-funded corporate or business malefactors.
It will invest in a diversified portfolio of commercially viable litigation cases across a range of issues—including the environment, human rights, and combatting discrimination and corruption. As another key distinction from traditional litigation funders, Aristata will return a majority of the proceeds to the claimant.
SEDF’s engagement in Aristata was developed with the Open Society Justice Initiative, which itself pursues human rights litigation and other legal action in support of Open Society’s mission.
James A. Goldston, executive director of the Justice Initiative, welcomed the closing of the transaction: “Aristata’s funding will test the viability of a new financing model for litigation on behalf of groups often denied court remedies because they cannot afford the legal costs.”
Under the investment agreement, Open Society will be represented on Aristata’s Advisory Committee, which will provide independent expert advice on impact assessment monitoring and reporting, as well as on case-related communications.
Catherine Cax, acting chief executive officer of SEDF, said: “This investment builds on Open Society’s many years of experience leading strategic litigation work. By using investment capital for Aristata we are hoping to augment the ways in which we strive to bring accountability to human rights abuses and environmental infractions through an innovative commercial model.”