Third-party litigation funding (TPLF) is a broad concept. In this master’s thesis, only TPLF in the narrow sense will be discussed in more detail. It is characterized by the fact that a third party, who is not related to the proceedings, finances the proceedings for one of the parties and in return, if the financed party is successful, is entitled to a share of the amount awarded or the amount reached in settlement.
The rise of TPLF is increasingly evident across Europe, as this form of funding plays a vital role in improving access to justice. More and more parties are turning to TPLF to pursue legal claims without the financial burden of litigation, which can be excessive, especially in complex or large-scale disputes. The growth of TPLF in Europe can be attributed to its potential to level the playing field by allowing individuals and small and medium-sized enterprises (SME) to compete against adversaries with significant resources. However, this expansion also brings to the fore the need for regulatory oversight. It is therefore essential to design a balanced regulatory framework that addresses the risks without compromising the important benefits offered by TPLF.
This master’s thesis first discusses the concept of TPLF, its different versions and the benefits and risks it brings. This is followed by the evolution of TPLF in common law jurisdictions where it first developed, and then by its development and regulation in the EU. In relation to regulation in the EU, the recent European Parliament Resolution on responsible private funding of litigation is the focus of this section. First, the content of the resolution is summarized, followed by a discussion of the two main criticisms of the proposal and possible solutions. Finally, the importance of further regulation in the EU for the development of TPLF in the Member States, in particular in Slovenia, is presented.
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