I am grateful to Charlotte de Meeûs for her summary below of the most extensive review of TPLF in the EU. It would look to me that the lack of firm support by the study for any of the 3 options it outlines (see below), probably makes it veer towards the first: which one that is, is for readers to find out at the end of this post.
Charlotte inter alia has her own comparative overview here, has also published on the use of TPLF in public interest litigation, and discusses costs recovery (one of the important elements to TPLF) in the context of the ECHR here: I am most happy that as a scholar in the know, she was prepared to write on the study for the blog.
Geert.
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European Commission publishes long-awaited study mapping the use and regulation of third-party litigation funding in the EU.
On 21 March 2025, the European Commission published the BIICL study “Mapping Third Party Litigation Funding in the European Union” (the Mapping Study). The Mapping Study provides a comprehensive examination of the legal frameworks, practices, and stakeholder perspectives on third-party litigation funding (TPLF) across EU Member States and selected non-EU countries, including Canada, Switzerland, the United Kingdom, and the United States.
Aims and structure of the Mapping Study
The EC’s initiative was undertaken in response to the European Parliament’s Resolution adopted in September 2022, calling for the Commission to regulate the TPLF market. Upon request of the Commission, the Mapping Study was conducted by the British Institute of International and Comparative Law (BIICL) and Civic Consulting, and supported by various national experts.
The extensive Mapping Study is divided into two main sections. First, a legal analysis carried out by national experts describing the regulation and practice of TPLF in the selected jurisdictions. Second, the results of the stakeholders’ consultation, gathering the opinions of various stakeholders (e.g., lawyers and law firms, businesses, litigation funders, consumer organisations, academics, public authorities, members of the judiciary) on the possible regulation of TPLF and its practical operation.
Key Findings
On the TPLF regulatory landscape, the Mapping Study finds that within the EU, specific regulation of TPLF is largely absent, except in the context of consumer collective redress following the national transpositions of the Representative Actions Directive – RAD 2020/1828.
This means that TPLF is primarily governed by national contract law and national civil procedure. In jurisdictions outside the EU, such as Canada and the UK, regulation primarily stems from case law, while TPLF in the USA is subject to an interplay of federal and state regulations. Logically, the absence of regulation at national level also means that very few countries have provisions similar or equivalent to provisions laid down in the 2022 Parliament Resolution on TPLF.
On the use of TPLF in the selected jurisdictions, the Mapping Study shows in essence that TPLF practices vary widely depending on the jurisdiction and the sector concerned. TPLF is indeed used in a wide variety of sectors. The selection of funded claims as well as the terms of litigation funding agreements diverge depending on the funder and the claim at hand.
In this context, the Mapping Study emphasises the difficulties arising from the broad diversity in funding practices and from the lack of available data. In the words of the authors of the Study, caution regarding the results of the Study is needed as
“[t]his variety makes general conclusions regarding practices of litigation funders difficult, and it also implies that the results of this consultation are not necessarily a complete picture of litigation funding in the EU, but rather provide a summary of those practices that were observed by the participating litigation funders and other stakeholders” (p. 637).
On the views of stakeholders regarding the use and regulation of TPLF, it is interesting to note that, amongst the 231 stakeholders who took part in the consultation, most views on TPLF were (at least partially) positive. Around 34% of stakeholders indeed viewed TPLF as having only positive effects, 24% considered TPLF to have both positive and negative effects and 17% only perceived negative effects.
Lawyers, litigation funders, and, importantly, consumer organisations generally viewed TPLF as having predominantly positive effects, whereas businesses (excluding lawyers and funders) perceived TPLF more negatively. The main positive effects listed by stakeholders were better access to justice, professionalism and expertise provided by funders in complex cases and filtering effect for non-meritorious cases. Among the four most cited negative effects of TPLF, stakeholders mentioned the reduced compensation for the funded party due to the remuneration owed to the funder; conflicts of interests arising from the involvement of a third-party litigation funder; the control or influence that the funder has on litigation (including on substantive and procedural decisions regarding legal proceedings and settlements); and possible frivolous claims funded by TPLF.
Regarding the question whether regulation of TPFL was needed, the majority (58%) of respondents found that TPFL should be regulated. However, among these 58%, the Mapping Study showed that there was little willingness for regulation exclusively at national level (29% of stakeholders were of the opinion that regulation should take place at EU level and 25% answered that regulation should take place at both EU and national level).
Interestingly, stakeholders also pointed out the issues that were in their view the most in need for regulation, by giving scores of “effectiveness” to the measures proposed in the 2022 Parliament Resolution on TPLF.
The issues that obtained the higher “effectiveness scores” were transparency requirements, conflicts of interests, capital adequacy and responsibility for adverse costs. However, although these issues received the highest “effectiveness score”, none of the measures envisaged in the 2022 Parliament Resolution on TPLF, except for transparency requirements, are considered to be “rather effective”.
Opinions diverged however regarding the type of regulation needed. The Mapping Study identified three possible routes for TPLF regulation namely:
No regulation: this position is based on the argument that there is no evidence that TPLF has negative effects and that overly strict regulation could drive litigation funders away from the EU market. This position adds that the existing national rules (e.g., general contract law and civil procedure, consumer protection, financial and banking rules and collective redress laws) are sufficient and should be used in parallel with courts’ supervision to address some issues linked to TPLF.
Light-touch regulation: this position, adopted by the widest number of stakeholders, is in favour of adopting basic rules governing TPLF without being too specific or too strict so as to drive litigation funders away from the EU market. Regulation would in this scenario not only increase predictability for funders and funded parties but also avoid placing an excessive burden on the courts insofar as regulation of TPFL is concerned. The issues identified as needing regulation include transparency and disclosure of the existence of litigation funding agreements, capital adequacy requirements and consumer protection.
Strong regulation: this position, which focuses on the negative effects associated with TPLF, favours the adoption of a comprehensive regulation of the TPLF market, in line with the approach proposed in the 2022 Parliament Resolution on TPLF. This position contends that while TPLF practices should not be excessively limited, the (negative) impact that TPLF may have on litigation requires some controls through regulation.
Next steps
It is said that information gathered in the context of the Mapping Study will inform the European Commission’s policy decisions regarding TPLF. However, it remains to be seen what steps the European Commission will take following the publication of the Mapping Study and whether and how it will further react to the 2022 Parliament Resolution on TPLF.
The Commission has indeed not explicitly confirmed whether it is inclined to follow one of the three possible routes for TPLF regulation identified in the Mapping Study, nor whether it will take any formal initiative in this respect.
In the meantime, one will therefore have to continue closely to monitor possible national developments viz the practices of litigation funders, starting with the final report of the UK Civil Justice Council (CJC) reviewing litigation funding and its possible regulation in the UK, which is said to be expected by summer 2025.
Charlotte de Meeûs.