A coalition of eleven associations, spearheaded by Insurance Europe, is urging the European Commission to establish EU-wide regulations for private Third-Party Litigation Funding (TPLF).
TPLF involves private investors, unconnected to the lawsuit, financing legal action in return for a portion of any financial award. This practice, Insurance Europe highlights, currently lacks comprehensive regulation at the European level.
In a joint statement, the associations argue that the lack of regulation for TPLF could have serious consequences, as without clear rules, businesses may hesitate to invest and innovate, as well as ‘undermine’ public trust in European justice systems, a particularly concerning outcome when public faith in democratic institutions is already under pressure.
The statement emphasises the inconsistency of having unregulated TPLF while legal and financial services within the EU face strict regulatory scrutiny.
A spokesperson from Insurance Europe commented: “Europeans should feel confident that law is in place to ensure that our judicial systems and financial services are fully transparent, fair and just.
“This major gap in EU legislation allows third-party funders to invest and work in the shadows, with judges and defendants often unaware of this practice. It is time to end the secrecy, and introduce comprehensive EU regulation of Third-Party Litigation Funding.”
The group strongly supports the 2022 European Parliament resolution on responsible private financing of litigation, which similarly called for robust EU regulation to govern the activities of third-party funders operating within the European Union.
The associations and Insurance Europe’s statement emphasises that, ‘Transparency, regulatory oversight, and fair competition in the litigation funding market allowing claimants to freely choose between funders, should be at the core of an EU legislative proposal’.
The statement was co-signed by Insurance Europe together with the American Chamber of Commerce to the EU (AmCham EU), BUSINESSEUROPE, the European Chemical Industry Council (CEFIC), DIGITALEUROPE, the European Banking Federation (EBF), the European Justice Forum (EJF), the European Federation of Pharmaceuticals Industries and Associations (EFPIA), EuroCommerce, the US Chamber of Commerce Institute of Legal Reform (ILR), and MedTech Europe.
