How to regulate Litigation Funding is a current trend lately. In this regard, Guido Demarco, Director of Stonward, has published an op-ed in the Spanish newspaper Expansión talking about the new Resolution approved by the European Parliament on Responsible Private Funding of Litigation.
The Resolution, dated 13 September 2022, recognizes that litigation funding is a growing practice in the EU and calls for a proposal for a Directive to establish common minimum standards on third-party commercial litigation funding addressing the transparency, fairness and proportionality of this tool.
The problem, according to Guido, is that the proposed regulation is prone to “over-regulation”. The article, titled “Regulating private funding of litigation: the higher the risk, the lower the return?”, can be read here.
At Stonward, we already addressed some of the European Parliament’s concerns and some of the issues raised in the resolution during the second International Congress on Litigation Funding (LF), organized by Stonward and the Peruvian Institute of Arbitration. For them, the reasons for this severe regulation are a mix of: a lack of real knowledge of how this legal tool works, a misconception and sometimes negative idea about the investment funds behind it, and some lack of transparency.