Insurance Europe, together with ten other associations, have called on the European Commission to urgently introduce EU regulation for private Third-Party Litigation Funding (TPLF). Currently, the practice whereby private investors who are not party to the legal dispute, finance legal proceedings in exchange for a share of any financial award, is not properly regulated at European level.
In a joint statement published today, the associations argue that the absence of regulation not only deters businesses from investing and innovating, but could also, ‘undermine public confidence in the European justice systems at a time when maintaining faith in our democratic institutions is so critical’. The statement also highlights the stark contrast between the unregulated nature of TPLF and the rigorous oversight applied to legal and financial services across the EU.
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 expresses its strong support for the 2022 European Parliament resolution on responsible private funding of litigation, which similarly called for robust EU regulation to regulate the activities of third-party funders operating in the EU. Today’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.