Third-Party Funding of Litigation

The ELI is currently assessing the potential to embark on another project strongly linked with the area of procedural law. The Third-Party Funding of Litigation project takes as a basis the fact that third-party litigation funding, both for profit and not-for-profit, has emerged as an increasingly viable alternative to traditional methods of funding litigation. As such, it can increase access to justice for those who would not otherwise be able to fund litigation.

For instance, the recent phenomenon of crowdfunding illustrates the potential of third-party funding to assist in bringing cases of public interest to the fore. Crowdjustice’s funding of the ‘People’s Challenge’, a case against the UK Government to determine parliamentary rights in the context of Britain’s exit from the EU, is one such example.

At the same time, however, there are many challenges with regard to procedural law in connection with third-party funding of litigation, resulting from the current lack of regulation of the latter. Issues such as malicious litigation, the participation of funders in proceedings, possible conflicts of interest between the parties and the funders, ensuring the fairness of the agreement reached and the financial viability and trustworthiness of funders are of utmost importance and should be addressed by the legal community urgently. Even more intricate problems arise in the context of collective redress, as illustrated by the Maximilian Schrems v Facebook Ireland Limited case (Case C-498/16, to be decided by the CJEU), which concerns the issue of the rights and legal standing of a consumer who collects donations for the enforcement of his claims.