Litigation funding has become increasingly popular throughout the world, especially in England and Wales,Australia and the US. And other parts of the world appear to be following suit.
Unfortunately, litigation funding in other countries isn’t as easy a process as it can be in the UK. There are laws against maintenance and champerty in many other countries, which can make litigation funding illegal. For those that are unaware:
This is when a third party individual or business that is a stranger to the other party funds litigation.
If a third party that is unconnected to the claimant and funds the litigation in exchange for a percentage of the damages, this is champerty.
How has litigation funding developed around the world?
Litigation funding is a relatively new option in this part of the world, and has only really just been legalised. Beforehand, maintenance and champerty were illegal but after the Manulife decision, it is now allowed. This is because the judge ruling on the Manulife case decided that maintenance and champerty would be beneficial to Canada’s legal system.
Litigation funding has been allowed in South Africa since 2004. Once the Contingency Fees Act of 1997 came into effect and permitted the use of ‘no win, no fee’ contracts, this created speculative litigation. At this point the South African courts decided that maintenance and champerty laws could no longer stand.
Germany is quite similar to the UK in terms of THE LAW relating to litigation funding. There, no maintenance or champerty laws exist and so the market is booming. In particular, a lot of cartel damages cases are being fought with litigation funding.
The Valetta Trust case in Jersey approved the use of funding; meaning anyone from then on could apply for it.
Litigation funding is still progressing in Hong Kong, as reform is being considered. In 2009 Winnie Lo, a solicitor, was put in prison for 15 months after she was charged with conspiracy to maintain (to receive funding), but her conviction was overturned in 2012.
Litigation funding can be invaluable to solicitors and big business clients, and there will certainly be more worldwide changes within this area of law in years to come.
This article was provided by Aurora Johnson on behalf of Vannin Capital, a company offering litigation funding for insolvency and other claims.