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European Parliament Legal Affairs Committee Adopts TPLF Legislative Initiative Report

In a huge step toward regulation of third party litigation funding (TPLF) throughout Europe, today the European Parliament Legal Affairs (JURI) Committee adopted a legislative own-initiative report…

In a huge step toward regulation of third party litigation funding (TPLF) throughout Europe, today the European Parliament Legal Affairs (JURI) Committee adopted a legislative own-initiative report (the report) on Responsible Private Funding of Litigation. The report passed the Committee by a vote of 18 to 5.

The report proposes draft EU legislation (in the form of a Directive) to harmonize and introduce minimum rules to regulate TPLF and protect the interests of all parties to litigation. The report details numerous safeguards to be included in EU legislation, such as: disclosure and review of funding agreements by the court, registration of funders in the EU, a cap on fees, a requirement for claimants to be paid first, a fiduciary duty of care for funders, an obligation for funders to see a case through to the end, a capital adequacy requirement, and joint liability for adverse costs.

The report is a result of years of effective advocacy work in Brussels by ILR and the Brussels business coalition. Last month, ILR and 12 European business and trade groups released a joint statement supporting the JURI report and calling on the European Commission to act.

The report will now go to the full plenary of the European Parliament for a vote in September or October at the latest. If adopted in plenary, the European Parliament’s report will require, by EU Treaty rule, that the European Commission acts on it. 

So far, the European Commission has refused to regulate TPLF, and this initiative will force the Commission to respond. ILR will now engage to ensure passage of the report in the European Parliament’s plenary and to convince the European Commission to propose legislation.