The European Commission has made a surprising announcement and confirmed that it intends to pause the introduction of third-party litigation funding regulations across the EU.
A Change of Policy
Commissioner Michael McGrath commented through the Justice for Growth high-level forum to say that decision-makers had agreed it was unnecessary to regulate EU-wide third-party litigation funding after a broad period of stakeholder engagement and feedback. This is after a long period of assumption that https://www.novo-modo.co.uk/litigation-funding required some form of regulation and enforcement across the EU.
What the EU Plans to Do Instead
Instead of bringing new laws into play, the Commission has announced that it will focus on continued monitoring of EU legislation, such as the Representative Actions Directive, which facilitates collective redress for consumer action, rather than bringing in new laws that create regulatory burden.
The Response
The news has been widely welcomed by various litigation funders and their groups, including the International Legal Finance Association, which had argued against any such move towards regulation, saying that it could limit fair and equal access to justice and court action, especially where claimants were otherwise unable to fund themselves. Critics of possible regulation, including various consumer organisations, felt that tighter rules also deter funders from supporting more risky claims, further limiting access to justice for smaller claimants.
The debate, however, is far from over, and the focus will now move to existing rules and understanding how they operate in practice. There is still also scope for individual member states to move ahead on further rules and regulations.