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.
*****
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.
If you do use the blog for research or database purposes, citation would be appreciated, to the blog as a whole and /or to specific blog posts. Many have suggested I should turn the blog into a paid for, subscription service however I have resisted doing so. Proper reference to how the blog is useful to its readers, will help keeping this so.
Advocate-General Kokott opined last week in Joined Cases C-672/23 and C-673/23 Electricity & Water Authority of Government of Bahrain ea v Prismiian ea .
After her Opinion in Athenian Brewery, where the CJEU itself was less claimant friendly than the AG had opined, it is the second Kokott AG Opinion on the use of anchor defendant mechanism in follow-on antitrust damages claims in quick succession.
Case C‑672/23 concerns the determination of the joint and several liability of the defendants for damage claimed as arising from an infringement of the prohibition on cartels under EU law in the form of a cartel in relation to underground and submarine cables and related products, works and services. The claim in the main proceedings is directed not only against the companies mentioned in the relevant Commission Decision but also against other companies that fall into three groups of undertakings. These have at their centre Prysmian Cavi e Sistemi Srl, ABB AB and Nexans France SAS. Of all the defendants, only Draka Holding BV, which is a subsidiary of Prysmian Cavi e Sistemi and itself holds all of the shares in the capital of Prysmian Netherlands BV, is established in Amsterdam, Netherlands. All of the other defendant companies (collectively ‘Draka and others’) each have their registered office in other locations within and outside the Netherlands. Claimants in the main proceedings in this case, the Electricity & Water Authority of the Government of Bahrain and others (collectively ‘EWGB and others’), operate high-voltage networks in the Gulf States. Damage arguably took place outside the EEA.
Case C‑673/23 likewise concerns the determination of the joint and several liability of the defendants in the main proceedings at first instance for damage which is alleged to have arisen as a result of two infringements of the prohibition of cartels under EU law, in this case not established by the European Commission, rather by the Italian national competition authority. The claim in the main proceedings at first instance was directed not only against the companies mentioned in that decision but also against other companies that fall into two groups of undertakings. These have at their centre, on the one hand, Smurfit Kappa Italia SpA, and, on the other hand, Toscana Ondulati SpA. Of those defendants, only Smurfit International BV is established in Amsterdam, Netherlands. All of the other companies (collectively ‘Smurfit and others’) each have their registered office in other locations within and outside the Netherlands.
The questions referred are very detailed indeed (see (17) of the Opinion). They essentially request from the CJEU a roadmap to determine the justifiable use of the anchor mechanism in cases like these. Particularly after Athenian Brewery, national courts arguably have enough material to make that assessment themselves, however the courts at Amsterdam had of course referred these cases prior to Athenian Brewery having been held.
The AG first of all and succinctly recalls
“in order for it to be found that the parent company and the subsidiary company form an economic unit, the claimant must not only establish the economic, organisational and legal links between these companies, but also prove that there is a specific link between the economic activity of that subsidiary company and the subject matter of the infringement by the parent company”
“fulfilled where several undertakings that participated in an infringement of EU competition rules, established by a decision of the Commission, are the subject of claims based on their participation in that infringement, despite the fact that they participated in that infringement in different places and at different times” (reference to CJEU CDC); and
” The same is also true of claims based on a company’s participation in an infringement of the EU competition rules which are directed against that company and against its parent company and in which it is alleged that those companies together form one and the same undertaking” (reference to CJEU Athenian Brewery).
The AG then entertains the referring court’s question on whether the prospect of success of the claim against the anchor defendant must be taken into account. ‘Prospect of success’ is a better translation than the translation elsewhere in the Opinion of the questions referred, where the Dutch term ‘toewijsbaarheid’ is translated as ‘admissibility’. The referring court clearly seeks guidance on the relevance of the merits of the claim.
The AG concludes on this section
“account is to be taken of the prospects of success of the claim against the anchor defendant, but only as an indication that the claimant has not artificially fulfilled the conditions for that provision’s applicability, which may be true in the case of a manifestly unfounded claim.”
‘Prospect of success’ must be an echo of common law CPR (a ‘real issue to be tried’), although we do not quite know: the AG, as is her MO, refers to no scholarship in her Opinion.
On this point I do not think the authorities support the conclusions which the AG draws from it. She writes (37)
“Article 8(1) of the Brussels I bis Regulation must not be abused by bringing a claim against several defendants for the sole purpose of removing one or more of them from the jurisdiction of the courts of the State in which that defendant or those defendants is or are domiciled. That would be the case if there were firm evidence to support the conclusion that the claimant artificially fulfilled, or prolonged the fulfilment of, the conditions for that provision’s applicability.” (references omitted)
References were to CJEU CDC, and what the AG writes (37) is correct.
However the AG then jumps to the claim being ‘manifestly unfounded’: (38)
“For that to be the case, however, it is not sufficient that the claim against the anchor defendant should (possibly) appear to be unfounded. Rather, the claim must be manifestly unfounded or contrived or be devoid of any real interest to the claimant at the time when it is brought.”
In the original German, the Opinion uses ‘unbegründet’, which clearly refers to substantial merit of the case, not procedural or other inadmissability (and indeed this is also how the referring court has intended its question).
In support of her position in (38) the AG refers (other than to her Opinion in Athenian Brewery and to Mengozzi AG in Freeport) to CJEU Reisch Montage para [33]. This CJEU para does not however talk about the claim being unfounded, manifest or not. Rather it is summary of the judgment, right before its operative part and it addresses procedural inadmissability (due to a pending bankruptcy proceeding). In Reisch Montage the CJEU does not address meritorious prospect of success at all.
Whether the likelihood of success of an action against a party before the courts of the State where it is domiciled (some kind of merits review, therefore) is relevant in the determination of whether there is a risk of irreconcilable judgments for the purposes of A8(1), was raised in Freeport but not answered by the CJEU, for such answer was eventually not necessary for the preliminary reference at issue.
The issue was discussed in England, pre Brexit. In the first instance judgment in Sabbagh v Khoury, Carr J’s extensive merits review hinged on the CJEU instruction ‘to take account of all the necessary factors in the case-file’ per CJEU Freeport at [41]. The Court of Appeal on majority confirmed the need for a rather extensive merits review.
I do not think this is what A8(1) either requires or indeed sanctions, and I agree with Lady Justice Gloster, who dissented in the Sabbagh appeal, [178]:
‘the operation of a merits test within Article [8](1) does give rise to risk of irreconcilable judgments, which can be demonstrated by reference to the present facts’,
and [179]
“the overwhelming tenor of the CJEU authorities is to emphasise the fundamental aim of eliminating, rather than simply reducing, a risk of irreconcilable judgments. This aim is achieved if Article [8](1) does not incorporate a merits test and is undermined if it does do so.”
Article 8(1)’s ‘so closely connected’ test clearly requires some appreciation of the facts and the legal arguments, as well as a certain amount of taking into account the defendant’s arguments, however only with a view to assessing relatedness with a view to avoiding irreconcilable judgments. This in my view does not amount to a merits test, whether a wide or a narrow (‘manifestly unfounded’) one and this remains an important difference with the common law ‘real issue to be tried’ requirement.
(40) ff the AG then zooms in on some issues related to the prospect of success (in my opinion the CJEU will not follow on prospect of success and, practising judicial economy, will not entertain these questions).
As she notes, these questions are only raised viz the exercise of jurisdiction, and they are (43) “a complex legal question calling for in-depth examination” – a question which I suspect may be referred again if and when the Dutch courts do exercise jurisdiction. This includes [(44) ff) how attributability of damage to an adverse effect on competition in the internal market, must be interpreted where damage arguably occurred outside of the EEA, and the general issue of territorial scope of A101 TFEU. (In my view the answer may be much more straightforward perhaps than seemingly suggested in the submissions, by focusing on the claims essentially being in compensation for damage following breach of statutory duty). This section also discusses substantive issues of presumption of control in competition law.
(68) ff then returns to the issues of jurisdiction, addressing ia the topic of groups of undertakings, taking into account that in one of the cases it is the downstream liability of a subsidiary company for an infringement committed by its parent company that is at stake. Intense reference here of course to CJEU Athenian Brewery.
(79) ff addresses the role of the foreseeability of the co-defendant’s being sued in the jurisdiction of the anchor defendant.
I wholly agree with the AG’s view (81) that “foreseeability is not.. an independent criterion that is examined alongside the other elements defining the fulfilment of the provision at issue.” And, (82)
there is no requirement under Article 8(1) of the Brussels I bis Regulation for the co-defendant him or herself to have specifically foreseen that he or she would be sued in the jurisdiction of the anchor defendant. Rather, abstract foreseeability, in the form of the ability of an informed and reasonable defendant to foresee before which courts he or she might be sued outside his or her State of domicile, is sufficient.
(83) a ‘close connection’ with the defendant, such as here through the group undertaking issue, is particularly relevant in this respect.
I have seen many instances recently where opposing counsel banks on lack of predictability to propose rejecting jurisdiction. I would welcome a finding by the CJEU that brings that interpretative rule back to its true nature.
(87) ff then addresses territorial jurisdiction under A8(1). Statutory interpretation as the AG argues, points to a strong yes (reference ia to FTI Touristik) as does linguistic comparison and the report Jenard, despite the CJEU not having yet ruled on the issue viz A8(1) specifically. If there are two anchor defendants in the same Member State, and subject to the effectiveness of EU jurisdictional law not being impaired, national CPR ought to be allowed to join the case against both, but only I assume in one of the courts where the conditions of A8(1) are fulfilled (see (97) “a court which considers itself to lack jurisdiction may take up the option to make a reference to another court available under its national procedural law, provided that the effective enforcement of the Brussels I bis Regulation is not restricted as a result”).
All in all a very relevant Opinion, CJEU judgment is one to watch!
Geert.
EU Private International Law, 4th ed. 2024, 2.516.
https://bsky.app/profile/gavclaw.bsky.social/post/3lm7gymxlkk24
The remaining defendant has defied the anti-suit injunction. It has continued its claim in the Netherlands. On 23 October 2024, the Rotterdam District Court gave an interim judgment in which it declared its competence to adjudicate upon the claim. I have not been supplied with the judgment itself. But in a witness statement of 4 February 2025 from Mr John Strange of Penningtons Manches Cooper, the claimants’ solicitors, I have been informed that the reasoning was that the jurisdiction agreement was not enforceable on the ground that it was “too vague as it specified the jurisdiction as ‘London’ rather than the English courts”.
Relevant Dutch judgment is Elise Tankshiffahrt AG and Beresina UG v SD Rebel BV and Boluda Towage Rotterdam BV ECLI:NL:RBROT:2024:10435. In that judgment, the Rotterdam court held it has jurisdiction on the basis of Article 4 Brussels Ia despite aforementioned clause in the certificate of safe delivery: “Any dispute arising out of the services performed by the tug, will be settled in London, in accordance with English law.” The Rotterdam court held that this clause is neither valid choice of court in accordance with A8(2) of the Dutch CPR, nor a valid arbitration clause in accordance with A1074 of the Dutch CPR. [4.6] it argued that for both, the clause needs to be ‘sufficiently clear and specific’ and that [4.5] the clause at issue simply refers to a place, not a medium: whether in courts in ordinary or indeed arbitration. I am not privy to submissions in the case and I do not know how extensively the issue was argued. Of note is all lack of reference to either the Hague Choice of Court Convention, Brussels Ia (with A25 arguably not covering choice of court away from the EU) or the 1958 New York Convention. [4.7] The Dutch court holds that the requirement of clarity and specificity is a procedural requirement covered by Dutch CPR as the lex fori, and not a substantive requirement in which English law as the putative lex causae can have a say (the court oddly refers to A3 and 10 Rome I, despite A1(2)e excluding choice of court and arbitration agreement from its scope of application). The court also [4.9] rejects a lis pendens stay on the basis of Dutch residual rules, and, summarily, an A33 Brussels Ia stay, with reference to the English claim form having been issued after the Dutch courts had been seized. At the time of posting the Dutch finding on the merits had not yet been published. Back then to the English judgment: [53] Davison AR like his Dutch colleague seems to have overlooked A1 Rome I’s exclusion of choice of court and applies English law as the putative law to the (alleged) choice of court agreement. [54] he holds Masters of vessels must, in the ordinary course, sign many documents of a commercial nature such as bills of lading, statements of fact, certificates of compliance etc. Mr Soukup would be no exception. The working languages of VTS Rotterdam and VTS Antwerp are English and Dutch. I find it hard to accept (especially without hearing from him and having his evidence tested in cross-examination) that Mr Soukup did not, in fact, understand what he was signing. But if that was the case, he should have made a proper enquiry, not a casual one. And having failed to do so, he and his principal are bound by the content of the document he signed. [55] deals with the alleged lack of certainty in the clause The document is clear (as Andrew Baker J has already found [this is in 2024] EWHC 1329 (Admlty): the interim ASI, GAVC]). It provides for English law and jurisdiction in London. On any reasonable interpretation that means the courts in London, including this court. A final anti-suit injunction is made, as is an award for the salvage services. Clearly the judgment will clash with the eventual Dutch judgment and how that in turn will be resolved, will be one to watch. Geert. https://bsky.app/profile/gavclaw.bsky.social/post/3ljz5hc2xss2j https://x.com/GAVClaw/status/1899016175897510296
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