The Global Rise of Litigation Funding

The recent increased interest in litigation funding has been most keenly felt in the jurisdictions of England & Wales and Australia, as well as to a lesser extent, the United States. But what about elsewhere?

Well, in other areas of the world, the process of litigation funding is not so simple. Globally, the rise of litigation funding has, and continues to be, hampered by the continued prohibition of both maintenance and champerty:

  • ‘maintenance’: meaning the funding of litigation by a third party who is a stranger to the dispute
  • ‘champerty’: the funding of a litigation by a stranger third party in exchange for a percentage of the win.

Canada

Canada has seen more funding recently, since the ‘Manulife’ decision last year. The judge held that the funding agreement in that case did not violate rules on champerty and maintenance and was beneficial to access to justice.

South Africa

In 2004 the Supreme Court of Appeal of South Africa held that the need for the rules of maintenance and champerty had diminished in light of the right of access to justice enshrined in the Constitution of South Africa and the coming into force of the Contingency Fees Act 66 of 1997 which made speculative litigation possible by permitting “no win, no fees” agreements between legal practitioners and their clients.

Germany

Like England, Germany has no common law doctrine of champerty or maintenance.  Here, the litigation funding market is thriving, with particular emphasis on cartel damages cases.

Jersey

In Jersey, the litigation funding market was given a boost when the courts approved the use of funding in the Valetta Trust case.

Hong Kong

Solicitor Winnie Lo was jailed for 15 months for conspiracy to ‘maintain’ in Hong Kong back in 2009. However, hope remains for the funding market, as her conviction was overturned on appeal, where the Court recommended that reform should be considered for this area of the law.

Litigation funding has now taken its place on the worldwide stage as an invaluable tool for litigators and their clients.  The likelihood is there will be a lot more global developments in this field over the coming months and years.

This article was contributed by Laura Moulden on behalf of Vannin Capital.  To find out more about Corporate Litigation for your business, visit their website.

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