Justice unchained | BEUC’s view on third party litigation funding for collective redress

When consumers are harmed by mass wrongdoing, consumer organisations can bring collective redress claims to court, especially since the adoption of the EU Directive on representative actions (RAD) in 2020. Yet such actions are very often too costly. Since public funding options remain limited, third-party litigation funding (TPLF) has emerged as an alternative. Ongoing discussions asking for stricter European TPLF rules could significantly limit funding availability, leaving many consumers without compensation.

BEUC’s view on TPLF for collective redress in a nutshell:

• To secure justice for consumers, robust funding mechanisms are essential
• Third party litigation funding has emerged as a solution to bridge a funding gap
• TPLF provides substantial benefits to claimant organisations
• Assessment of TPLF needs to be evidenced by specific cases
• The potential risks related to TPLF for collective redress are already addressed by the RAD
• Additional regulation of TPLF at EU level should be considered only if it is necessary
• Concerned stakeholders (funders, claimants organisations and others) should agree on best practices, such as making the funder’s sources of capital transparent or guaranteeing full decision-making autonomy of the consumer organisation and its legal counsel.