THIRD PARTY LITIGATION FUNDING: PURCHASING A CONTENTIOUS CLAIM AS A FORM OF INVESTMENT
THIRD PARTY LITIGATION FUNDING: PURCHASING A CONTENTIOUS CLAIM AS A FORM OF INVESTMENT

Author(s): Marius Brănici
Subject(s): Politics / Political Sciences, Economy, Law, Constitution, Jurisprudence
Published by: Editura Universităţii »Alexandru Ioan Cuza« din Iaşi
Keywords: investment; litigation; finance;
Summary/Abstract: This paper analyzes the institution of third party litigation funding, which is virtually unknown in Romanian law but is constantly evolving and frequently used in other states. This institution refers to cases in which a specialized funding company provides funds to a party that pursues a financial claim against another party in a national or cross-border litigation or arbitration case so that upon the successful conclusion of the case the funder gets a share of the damages awarded to the funded party. The issue of litigation funding is not a new one. However, using third parties to fund the pursuit of financial claims is a relatively new phenomenon, increasingly common in the world of litigation. This fast- paced growth – from a procedure specific only to certain areas of practice and certain jurisdictions to a phenomenon that has become a part of everyday activities – has motivated us to analyze and explore the way in which third party litigation funding works, focusing on elements related to the contentious claim as a financial asset and its purchasing by the professional funder as a form of investment, on the stages leading to the formation of the parties’ – the funder and the beneficiary – binding decision, as well as on the actual content of the funding agreement. Among the issues debated in relation to this institution there stand out the recent European Parliament resolution of 13 September 2022 with recommendations to the Commission on Responsible private funding of litigation, as well as the draft Directive annexed to the Resolution, which could lead to a considerable increase in the use of third party litigation funding in Europe.

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