Transparency and Judicial Oversight in Third-Party Litigation Funding in Europe: Regulatory Approaches and Market Perspectives

Abstract

The regulation of third-party litigation funding (TPLF) is a pressing issue in EU civil justice, with transparency and disclosure being at the heart of legal and policy debates. Transparency enhances judicial oversight, prevents conflicts of interest, and promotes market efficiency, yet it also raises concerns about increased litigation costs and potential barriers to access to justice. While the European Parliament’s 2022 Draft Directive proposes strict governance and disclosure requirements, soft law initiatives, such as the European Law Institute (ELI) Principles, take a more flexible approach. National frameworks, in particular the Dutch system, demonstrate how courts can balance oversight with practical adaptability, often requiring adjustments to litigation funding agreements (LFAs) rather than outright rejection. The challenge lies in finding a regulatory equilibrium that safeguards fairness without deterring funders from the EU market. With the possible European Commission’s follow-up of the Mapping Study on TPLF set to influence future reforms, this paper explores the procedural implications of transparency, conflicts of interest, and judicial review.