Activities of Brando BENIFEI related to 2020/2130(INL)
Shadow reports (1)
REPORT with recommendations to the Commission on Responsible private funding of litigation
Amendments (73)
Amendment 6 #
Motion for a resolution
Recital A
Recital A
A. whereas third party litigation funding (TPLF) is a growing practice whereby commercial investors (‘litigation funders’) who are not a party to a dispute invest in legal proceedings and pay legal and other expenses, in exchange for a share of any eventual award; whereas TPLF does not only occur in collective redress cases but also incollective redress cases are only one type of litigation where TPLF is currently used, together with arbitration and, insolvency proceedings, investment recovery, anti- trust claims and others;
Amendment 8 #
Motion for a resolution
Recital A a (new)
Recital A a (new)
A a. whereas in some countries legal costs can be very high and prohibitive and TPLF can sometimes constitute the only chance for claimants to access justice in the first place;
Amendment 10 #
Motion for a resolution
Recital A b (new)
Recital A b (new)
Amendment 11 #
Motion for a resolution
Recital A c (new)
Recital A c (new)
A c. whereas the Commission Report COM/2018/040 on “benchmarking the 2013 non-binding recommendations on collective redress” highlights that TPLF is a key aspect of collective redress which has an important cross-border dimension;2b _________________ 2bhttps://eur-lex.europa.eu/legal- content/EN/TXT/PDF/?uri=CELEX:5201 8DC0040&from=EN, page 10.
Amendment 12 #
Motion for a resolution
Recital A d (new)
Recital A d (new)
A d. whereas women and marginalised groups may face additional funding barriers;
Amendment 13 #
Motion for a resolution
Recital A e (new)
Recital A e (new)
A e. whereas a significant economic imbalance exists between corporations and citizens seeking redress, and TPLF can help reduce it;
Amendment 14 #
Motion for a resolution
Recital A f (new)
Recital A f (new)
A f. whereas in this sense TPLF can not only constitute a powerful tool to promote access to justice, but also to ensure appropriate corporate accountability;
Amendment 15 #
Motion for a resolution
Recital A g (new)
Recital A g (new)
A g. whereas in some cases bringing a case to court could be a matter of public interest, and the absence of TPLF could lead to public interest cases not being brought to court;
Amendment 19 #
Motion for a resolution
Recital B
Recital B
B. whereas litigation funders involved in legal proceedings act in their own economic interest, rather than in the interest of claimants; whereas they canmay seek to control the litigation and demand an outcome that pays them the greatest return3 and in the shortest amount of time3; _________________ 3 The Australian Parliament concluded “the level of power and influence litigation funders have in class actions gives rise to situations where their financial interests trump those of the representative plaintiff and class members”, see Australian Law Reform Commission (2019): An Inquiry into Class Action Proceedings and Third- Party Litigation funders, p 19.
Amendment 24 #
Motion for a resolution
Recital C
Recital C
C. whereas, according to the scarcely available data, litigation funders often sometimes may demand a disproportionate share of the proceeds that exceed the typical returns of other types of investments; whereas the rates of returns for litigation funders can be up to 300% or in some cases even 3 000%4 , directly takinormally range from the compensation available for claimants5 20% to 50% across the EU3a; _________________ 4See Bentham3aEPRS Study (20214): Submission to the Ministry of Security and Justice. Dutch Draft Bill on Redress of Mass Damages in a Collective Action, par. 2.15 on page 5 as well as 1266/7/7/16 Walter Hugh Merricks CBE v MasterCard Incorporated and Others – Judgment (CPO Application) [2017] CAT 16 | 21 Jul 2017 in section 99 and 100 on page 37 and 38. 5 In Australia, the median return for claimants of collective redress proceedings involving TPLF is 51% while claimants of legal proceedings without the involvement of litigation funders get 85%. See Australian Law Reform Commission (2019): An Inquiry into Class Action Proceedings and Third-Party Litigation LResponsible private funding of litigation. Annex - State of play of the EU private litigation funding landscape and the current EU rules applicable to private litigation funders, p 83ing.
Amendment 26 #
Motion for a resolution
Recital C a (new)
Recital C a (new)
C a. whereas in several Member States, such as Austria and the Netherlands, the fee to the litigation funder is paid on top of the damage award, therefore ensuring that claimants receive the full amount of compensation that they are entitled to;
Amendment 27 #
Motion for a resolution
Recital C b (new)
Recital C b (new)
C b. whereas rules should be introduced to ensure that the award is granted first to the claimants, before the fee is payed to the litigation funder;
Amendment 29 #
Motion for a resolution
Recital D
Recital D
D. whereas litigation funders seem to argue that only they can provide access to justice, there are in fact other waysextrajudicial remedies also exist to seek redress, such as mediation, ADR/ODR, the Ombudsman or throughinternal grievance systems managed by companies; whereas, those solutions could sometimes result in faster and more adequate compensation for claimants but are not all always necessarily effective enough in providing adequate redress; whereas claimants should always be given the possibility to directly seek judicial remedy;
Amendment 36 #
Motion for a resolution
Recital E
Recital E
E. whereas, although TPLF is widespread in Australia, it has not had a positive impact on the administration of justice in that jurisdiction TPLF is favourably regarded in the UK as a key factor in ensuring access to justice3b; whereas, empirical data6 show that litigation funders typically pick and choose between cases to fselect cases guaranteeindg the best returns, which are usually the most robust ones, and would not invest in cases they regard as too risky or not profitable enough; _________________ , therefore minimising the risk of excessive litigation; _________________ 3b See https://www.biicl.org/documents/1881_Stu dyontheStateofCollectiveRedress.pdf , p. 269: 'The general view of the UKs approach to third party funding was favourable and respondents rated the availability of such funding a key factor in their decision to participate in collective proceedings. The experience of third party funding of collective claims in practice was, overall, a positive one. None of the respondents had any experience of an organisation attempting to fund a claim against a competitor. None of the respondents had had an experience where a funder had overtly attempted to control the litigation although one lawyer described a situation where a funder had withdrawn funding part way through the claim leading to a premature settlement of the case'. 6 See Australian Law Reform Commission (2019): An Inquiry into Class Action Proceedings and Third-Party Litigation funders, p 34.
Amendment 38 #
Motion for a resolution
Recital F
Recital F
F. whereas the number of litigation funders is increasing with currently more thanstill limited, with only around 45 known to operate in the EU; whereas, the practice of TPLF however remains largely unregulated in the Union, despite presentingthe fact that it could present not only benefits, but also material risks to the administration of justice that need to be addressed;
Amendment 42 #
Motion for a resolution
Recital G
Recital G
G. whereas the current regulatory vacuum enables litigation funders to operate in secrecya non-transparent manner, with the result that courts can, on occasion, make awards to claimants without realising that a large majorityshare of the award will subsequently be redirected to litigation funders; whereas theis lack of transparency can also mean that even the potential beneficiaries have little or no knowledge about the distribution of awards or the funding agreements, in particular in Members States with an opt- out system;
Amendment 43 #
Motion for a resolution
Recital H
Recital H
H. whereas Directive (EU) 2020/1828 identifies certain safeguards relating to litigation funding, which are, however, limited to representative actions on behalf of consumers taken under that Directive, and therefore exclude many other types of action or categories of claimant, such as business and human rights, or categories of claimants, such as human rights organisations or workers; whereas, effective safeguards should apply to all types of claims;
Amendment 49 #
Motion for a resolution
Paragraph 1
Paragraph 1
1. Observes that third party litigation funding is a rapidly expanding commercial practice in the Union, which has a significant impact on justice systemsplays an increasing role in the justice systems of some Member States, as well as oin the way European citizens can access justice, even more so for cross-border cases. Notes that litigation funding is so far largely unregulated in the Union;
Amendment 51 #
Motion for a resolution
Paragraph 1 a (new)
Paragraph 1 a (new)
1 a. Underlines that this practice develops especially in countries where access to justice is limited because of extremely high legal costs and welcomes whereby that it can constitute the only way for citizens and consumers to obtain redress and ensure corporate accountability; notes, however, that regulating TPLF should go hand in hand with policies enhancing access to justice by lowering legal costs, by providing adequate public funding to consumer organisations and civil society organisations, or by promoting other practices such as legal aid or crowdfunding; calls on Member States to exchange best practices on this matter and to draw from the solutions provided in Article 20 of Directive (EU) 2020/1828 when it comes to ensuring effective access to justice;
Amendment 55 #
Motion for a resolution
Paragraph 2
Paragraph 2
2. Firmly believesIs convinced that in order to ensure that justice systems prioritise redress for victims of injustice, and not the interests of investors who may seek commercial opportunity from disputes, a regulatory regime addressing key issues relevant to litigation funding, including transparency, fairness, and proportionality, is necessary;
Amendment 57 #
Motion for a resolution
Paragraph 3
Paragraph 3
3. Strongly bBelieves that only the regulation of litigation fundersestablishing EU common minimum standards for TPLF will allow rleguislators to exercise effective oversight and adequately ensure that the interests of claimants are protected. Points out that voluntary regulatory mechanisms and codes of conduct can play a positive role, but so far have not been subscribed to by the large majority of funders, leaving claimants significantly exposed;
Amendment 65 #
Motion for a resolution
Paragraph 4
Paragraph 4
4. Recommends the establishment of a system of authorisation for litigation funders, permitting the introduction of corporate governance requirements and supervisory powers to protect claimants, and to ensure that funding is only provided by entities that are committed to complying with minimum standards in terms of transparency, independence, governance and capital adequacy, and observing a fiduciary relationship vis-à-vis claimants and intended beneficiaries;
Amendment 70 #
Motion for a resolution
Paragraph 6
Paragraph 6
6. Underlines that conflicts of interest may arise where there are undue relationships between litigation funders, qualified entities, law firms, aggregators, including claims-collection and award- distribution- platforms, and other actors who may be involved in claims. N; notes that there is a trend of an increasingly close cooperation, with, for example, trend of litigation funders agreeing to finance law firms across a series of future cases (portfolio funding)7 . R; recommends that safeguards are adopted to prevent such conflicts, set out claimants’ rights and to require thatdisclosure of details of relationships between litigation funders and the other involved parties are disclosed; _________________ 7 EPRS Study (2021): Responsible litigation funding. State of play on the EU private litigation funding landscape and on the current EU rules applicable to private litigation funding, p. 28 -29.;
Amendment 75 #
Motion for a resolution
Paragraph 7
Paragraph 7
7. Believes that litigation funders should not be permitted to abandon funded parties in litigation throughout the whole litigation process, except in restricted and well-defined circumstances, leaving claimants solely responsible for all costs of the litigation, which may have only been pursued duethanks to the involvement of the funder;
Amendment 82 #
Motion for a resolution
Paragraph 10
Paragraph 10
10. Considers that there should be transparency regarding the involvement of litigation funding in legal proceedings, including obligations for claimants and their lawyers to disclose funding agreements to courts and defendantsupon their request. Notes that, currently, courts or administrative authorities and defendants are often not aware that a claim is funded by a commercial actor. Points out that this can also hinder a court or administrative authority in properly considering costs issues and in ensuring that awards compensate claimants adequately;
Amendment 84 #
Motion for a resolution
Paragraph 11
Paragraph 11
11. Is of the opinion that supervisory authorities, and courts and administrative authorities were appropriate in accordance with national procedural law, should have the powers to facilitate the enforcement of legislation adopted to achieve the goals set out above; recommends the establishment of a complaints system. Considers that supervisory authorities, and courts and administrative authorities where appropriate in accordance with national procedural law, should have the powers to address abusive practices by authorised litigation funders, while not hindering access to justice for claimants and intended beneficiaries;
Amendment 87 #
Motion for a resolution
Paragraph 12
Paragraph 12
12. Requests the Commission to submit a proposal for a dDirective to regulateestablish common Union minimum standards on third party litigation funding, following the recommendations set out in the Annex hereto;
Amendment 93 #
Motion for a resolution
Annex I – paragraph 10 – point 1
Annex I – paragraph 10 – point 1
(1) Third-party litigation funding is a commercial practice which is quickly developing into a litigation services market without any proper legislative framework being in place at Union level. Despite the fact that litigation funders are regularly established and operating in various Member States, domestically or across borders, they have so far been subject to different national rules and practices. Diverging rules and practices in Member States are likely to constitute an obstacle to the functioning of the internal market. A lack of clarity on the terms on which commercial third party litigation funders (‘litigation funders’) may operate, in particular taking into account that litigation funcross- borders can easily be attracted by cross- border casesses may only be possible to fund through a third party, is not compatible with the proper functioning of the internal market. Divergences in the legal framework applicable in each Member State entail a risk of forum shopping by litigation funders, which could be influenced by the favourability of certain national rules concerning their establishment, the law applicable to funding agreements and national procedural rules.
Amendment 97 #
Motion for a resolution
Annex I – paragraph 10 – point 2
Annex I – paragraph 10 – point 2
(2) Union law seeks to ensure a balance between access to justice and providing appropriate safeguards to those engaged in proceedings, to prevent their wish to access justice from being unjustly exploited. When litigation funders provide financing for legal proceedings in exchange for a share of any compensation awarded, a material risk of injustice can arise. That risk includes litigation funders being able to take advantage of claimants, or those whom they represent, including where relevant consumers whose interests are represented by qualified entities, to serve their own purposes and to maximise their own return, thus leaving claimants or intended beneficiaries materially disadvantagewith a reduced share of the potential award. The risks can be particularly acute where those expecting to benefit from litigation are consumers or victims of human rights violations, who might welcome the involvement of a litigation funder ready to pay for proceedings, without appreciating that their interests could be subverted in favour of the litigation funder’s own interests.
Amendment 101 #
Motion for a resolution
Annex I – paragraph 10 – point 3
Annex I – paragraph 10 – point 3
(3) As the internal market facilitates increasing cross-border trade, as disputes are increasingly cross-border, and as the activities of litigation funders are global in nature, the risk of material divergences in Member State approaches to safeguards and the protections necessary with regard to third party funding is acute. Voluntary approaches have not been successful orto some extent but not always subscribed to by the majority of the industry, and, in any event, non-legislative measures would not be appropriate in light of such material risks, including to consumers and vulnerable categories of citizens, including from third countries.
Amendment 106 #
Motion for a resolution
Annex I – paragraph 10 – point 4 a (new)
Annex I – paragraph 10 – point 4 a (new)
(4 a) Establishing a common Union framework of minimum standards for responsible third-party litigation funding can not only constitute a powerful tool to promote access to justice, but also to ensure appropriate corporate accountability. Indeed a significant economic imbalance exists between corporations and citizens seeking redress, and third-party litigation funding can help reduce it, if properly regulated and in complementarity with other measures removing barriers to access to justice;
Amendment 110 #
Motion for a resolution
Annex I – paragraph 10 – point 6 a (new)
Annex I – paragraph 10 – point 6 a (new)
(6 a) In those Member States where legal costs represent a significant barrier to access justice, however, it would be appropriate to introduce legislation to allow third-party litigation funding, establishing clear conditions and safeguards according to the provisions of this Directive. At the same time, Member States should take measures aiming to ensure that the costs of the proceedings related to representative actions do not prevent qualified entities from effectively exercising their right to seek redress, in accordance with Directive 2020/1828 and in particular its Article 20.
Amendment 115 #
Motion for a resolution
Annex I – paragraph 10 – point 9
Annex I – paragraph 10 – point 9
(9) Supervisory authorities within the Union granting authorisations to conduct third-party litigation funding activities should be empowered to require that litigation funders comply with minimum criteria laid down by this Directive. Such criteria should include provisions relating to governance, transparency, capital adequacy, and observance of a fiduciary duty to claimants and intended beneficiaries. Supervisory authorities should be empowered to make any necessary orders, including the power to receive from litigation funders applications for authorisation and to decide upon them, to gather any necessary information, grant, deny, suspend or withdraw any authorisation or to impose any condition, restriction or penalty upon any litigation funder, as well as to investigate without undue delay any complaint against any litigation funder conducting activities within their jurisdiction.
Amendment 119 #
Motion for a resolution
Annex I – paragraph 10 – point 11
Annex I – paragraph 10 – point 11
(11) Litigation funders should be required to commit to being bound to a duty to act fairly, transparently and in the best interests of claimants and intended beneficiaries of claims. A lack of a requirement to place the interests of claimants and intended beneficiaries ahead of a litigation funder’s own interests creates the risk of proceedings being directed in a manner that ultimately serves the interests of the litigation funder, rather than those of the claimant.
Amendment 122 #
Motion for a resolution
Annex I – paragraph 10 – point 12
Annex I – paragraph 10 – point 12
(12) To prevent circumvention of the requirements of this Directive, agreements entered into with third party funders who do not havinge the necessary authorisation should have no legal effect. The burden to acquire the necessary authorisations should be on litigation funders themselves, and therefore claimants and intended beneficiaries should be indemnified in respect of any harm caused by a litigation funder not having the necessary authorisation.
Amendment 127 #
Motion for a resolution
Annex I – paragraph 10 – point 16
Annex I – paragraph 10 – point 16
(16) To facilitate the provision of cross border litigation funding services in those Member States where it is permitted under national law, Member States should be able to cooperate, share information and best practices, and should be required to take full account of each other’s authorisation decisions.
Amendment 128 #
Motion for a resolution
Annex I – paragraph 10 – point 16 a (new)
Annex I – paragraph 10 – point 16 a (new)
(16 a) Member States should ensure that comprehensive and clear information and guidance on how to take and to fund a claim are fully and freely accessible to all citizens who might seek redress, including to the most vulnerable groups.
Amendment 133 #
Motion for a resolution
Annex I – paragraph 10 – point 19
Annex I – paragraph 10 – point 19
(19) Courts or administrative authorities should be empowered, where a third-party funding agreement is relevant to the case before them, either upon request by a party to the proceedings to review the agreement, on their own initiative, or following an action brought before them against the administrative decision of a supervisory authority which has become final, to deal with such a case in a way which allows them to assess whether this Directive is complied with.
Amendment 138 #
Motion for a resolution
Annex I – paragraph 10 – point 22
Annex I – paragraph 10 – point 22
(22) The adequacy of supervision of litigation funders and third-party funding agreements cannot be ensured absent obligations on litigation funders to be transparent regarding their activities. This includes transparency vis-à-vis courts or administrative authorities, defendants and claimants, and therefore obligations should apply to disclose third party funding agreements in full to courts or administrative authorities and defendants, subject to appropriate limitations to protect any necessary confidentiality.
Amendment 139 #
Motion for a resolution
Annex I – paragraph 10 – point 23
Annex I – paragraph 10 – point 23
(23) In proceedings to which a third- party funding agreement applies, the relevant court or administrative authority should assess upon request by a party to the proceedings, or on the own initiative of the court or administrative authority being appointed for judging the case in which a third-party funding agreement is relevant, whether that agreement complies with this Directive and whether claimants and those they represent, including consumers, are protected.
Amendment 140 #
Motion for a resolution
Annex I – paragraph 10 – point 23
Annex I – paragraph 10 – point 23
(23) In proceedings to which a third- party funding agreement applies, the relevant court or administrative authority should assess without undue delay and upon request by a party to the proceedings raising justified concerns whether that agreement complies with this Directive and whether claimants and those they represent, including consumers, are protected.
Amendment 142 #
Motion for a resolution
Annex I – paragraph 10 – point 24
Annex I – paragraph 10 – point 24
(24) Litigation funders should establish internal good governance processes to avoid conflicts of interests between the litigation funder and claimants. Compliance with transparency requirements should ensure that claimants are fully aware of any relationship a litigation funder may have with defendants, lawyers, other litigation funders, or any other third party involved in the case, which may create an actual or perceived conflict.
Amendment 143 #
Motion for a resolution
Annex I – paragraph 10 – point 25
Annex I – paragraph 10 – point 25
(25) Litigation funders that have a direct interest in the financial outcome of proceedings may be incentivised toshould in no case claim unfair, disproportionate or unreasonable rewards at the expense of claimants. Courts or administrative authorities should be empowered to assess the context of third- party funding agreements relevant to the case before them, including the legal position and the knowledge of the claimants, in order to determine effectively whether in all the circumstances the third- party funding agreement is fair and complies with the laws of the Member State concerned.
Amendment 145 #
Motion for a resolution
Annex I – paragraph 10 – point 26
Annex I – paragraph 10 – point 26
(26) Where third-party funding agreements permit litigation funders to receive a share of any reward or certain fees in priority to any awards allocated to claimants, the available award could be so reduced as to leave little or nothing for claimants. Therefore, the award should always be granted to the claimants first, before that of the funder. Litigation funders should not be permitted to require the prioritisation of their own reward.
Amendment 147 #
Motion for a resolution
Annex I – paragraph 10 – point 27
Annex I – paragraph 10 – point 27
(27) As in some Member States the share of any reward received by litigation funders reduces any relief obtained by claimants, courts or administrative authorities should exercise oversight over the value and proportion of this share to prevent any disproportionate allocation of monetary awards to litigation funders. Save in exceptional circumstances, when a share of any reward claimed by a litigation funder would dilute the share of any total award (including all damages amounts, costs, fees and other expenses) available to claimants and intended beneficiaries to 60% or below, it should be presumed unfair and invalid.
Amendment 150 #
Motion for a resolution
Annex I – paragraph 10 – point 28
Annex I – paragraph 10 – point 28
(28) Additional conditions should be put in place to ensure that litigation funders do not influence the decisions of claimants in the course of proceedings in a manner that would benefit the litigation funder itself. In particular, litigation funders should not direct orunduly influence decisions on how cases are pursued, which interests are prioritised, or whether or not claimants should accept any particular outcome, award or settlement.
Amendment 151 #
Motion for a resolution
Annex I – paragraph 10 – point 29
Annex I – paragraph 10 – point 29
(29) Litigation funders should not be allowed to withdraw the funding they have agreed to provide, except in limited circumstances as set out in this Directive, so that funding is not withdrawn throughout the whole litigation, to the disadvantage of claimants or intended beneficiaries in mid-case due to the litigation funder’s business interests or incentives changing.
Amendment 153 #
Motion for a resolution
Annex I – paragraph 10 – point 30
Annex I – paragraph 10 – point 30
(30) Where litigation funders have instigated, supported or funded proceedings which are not successful, they should be jointly liable with claimants for any adverse costs they caused defendants to incur and that may be awarded by courts or administrative authorities. Courts or administrative authorities should be granted adequate powers to ensure the effectiveness of such an obligation, and third party funding agreements should not exclude responsibility for such adverse costs.
Amendment 156 #
Motion for a resolution
Annex I – paragraph 10 – point 33
Annex I – paragraph 10 – point 33
(33) The objectives of this Directive, namely to ensure the harmonisation of Member States’ rules applicable to litigation funders and their activities, and thus to ensure that common minimum standards for the protection of the rights of funded claimants and intended beneficiaries in proceedings financed wholly or in part by third-party funding agreements apply in all Member States, cannot be sufficiently achieved by the Member States as litigation funders operate in multiple Member States and are subject to different national rules and practices, but can rather be better achieved at Union level, by reason of the scale of the emerging market of third-party litigation funding, the need to avoid diverging rules and practices that are likely to constitute an obstacle to the proper functioning of the internal market and the need to avoid ‘forum shopping’ by litigation funders seeking to optimise national rules, be better achieved at Union level. The Union may thus adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.
Amendment 157 #
Motion for a resolution
Article 1 – paragraph 1
Article 1 – paragraph 1
This Directive is aimed at harmonising the rules of Member Statintroducing minimum standards on the rules applicable to third- party litigation funders (‘litigation funders’) and their authorised activities, and also at protecting funded claimants and intended beneficiaries, including where relevant those whose interests are represented by qualified entities, in proceedings financed wholentirely or in part by third-party litigation funding. It lays down safeguards to prevent conflicts of interest, abusive litigation as well as the disproportionate allocation of monetary awards to litigation funders, while ensuring that this practice can continue to allow claimants and intended beneficiaries to access justice and ensure corporate accountability.
Amendment 176 #
Motion for a resolution
Article 3 – paragraph 1 – point g
Article 3 – paragraph 1 – point g
(g) ‘supervisory authority’ means a public authority designated by a Member State to be responsible for granting, suspending or withdrawing the authorisation for litigation funders, and for supervising the activities of litigation funders;
Amendment 184 #
Motion for a resolution
Article 4 – point 2
Article 4 – point 2
2. Where such activities are permitted, Member States shall create a system for the authorisation and monitoring of the activities of litigation funders within their Member State. That system shall include designating an independent supervisory authority tasked with granting, suspending or withdrawing authorisations for litigation funders and supervising the activities of litigation funders.
Amendment 200 #
Motion for a resolution
Article 6 – point 2
Article 6 – point 2
2. Member States shall ensure that supervisory authorities are empowered to verify whether litigation funders would be able to maintain access at all times to the minimum liquidity required to pay in full all foreseeable adverse costs in all proceedings they have funded. Members States shall ensure that their courts or administrative authorities can request litigation funders to provide security for costs in the forms admitted by national law, should a defendpotential claimant so request based on reasoned specific concerns.
Amendment 206 #
Motion for a resolution
Article 7 – paragraph 1 (new)
Article 7 – paragraph 1 (new)
Third-party litigation funders shall observe a fiduciary duty of care, requiring them to act in the best interests of a claimant.
Amendment 211 #
Motion for a resolution
Article 8 – point 2
Article 8 – point 2
2. Member States shall ensure that a complaints procedure before supervisory authorities is available for any natural or legal person who wishes to raise concerns regarding the compliance of a litigation funder with its obligations under this Directive and the applicable national law. Concerns raised by defendants in a case involving the litigation funder shall not be receivable.
Amendment 215 #
Motion for a resolution
Article 8 – point 3 – point c
Article 8 – point 3 – point c
(c) decide on the suitability and fitness of a litigation funder including by reference to their experience, reputation, anyinternal processes for the avoidance and resolution of conflicts of interest or knowledge;
Amendment 218 #
Motion for a resolution
Article 8 – point 3 – point e
Article 8 – point 3 – point e
(e) assess at least every year whether an authorised litigation funder continues to comply with the criteria for authorisation referred to in Article 5(1) and ensure that such authorisation is suspended or withdrawn if it no longer complies with one or more of those criteria. Such a suspension or withdrawal shall not affect the rights of the claimants and beneficiaries of the proceedings in which the funder may be involved.
Amendment 229 #
Motion for a resolution
Article 9 – point 2
Article 9 – point 2
2. Under the complaints system referred to in paragraph 1, Member States shall ensure that supervisory authorities are empowered to assess without undue delay whether a litigation funder is in compliance with any obligations or conditions associated with its authorisation, with the provisions of this Directive and with any other applicable requirements under national law.
Amendment 243 #
Motion for a resolution
Article 10 – point 6
Article 10 – point 6
6. Where a litigation funder has sought authorisation from a supervisory authority, and subsequently seeks authorisation from another, such supervisory authorities shall coordinate and share information to the extent appropriate, with a view to taking consistent decisions, with due regard to diverging national rules.
Amendment 248 #
Motion for a resolution
Article 11 – paragraph 1 – introductory part
Article 11 – paragraph 1 – introductory part
Member States shall ensure that third party funding agreements are required to be written in one or more of the official languages of the Member Statecountry in which the claimant(s) and intended beneficiaries are resident, and presented in clear and easily understood terms, in particular with regard to the following elements:
Amendment 252 #
a a. a reference to the responsibility of the litigation funder as regards adverse costs, in accordance with Article 17 of this Directive.
Amendment 253 #
Motion for a resolution
Article 11 – paragraph 1 – point a b (new)
Article 11 – paragraph 1 – point a b (new)
a b. a clause specifying that the award will be granted first to the claimants, before the fee is payed to the funder;
Amendment 258 #
Motion for a resolution
Article 11 – paragraph 1 – point b – point i
Article 11 – paragraph 1 – point b – point i
Amendment 262 #
Motion for a resolution
Article 11 – paragraph 1 – point b – point iii
Article 11 – paragraph 1 – point b – point iii
iii. the strictly defined circumstances in which the third party funding agreement can be terminated and the risks to claimants and/or beneficiaries in that scenario, and
Amendment 281 #
Motion for a resolution
Article 13 – point 6
Article 13 – point 6
6. Claimants and intended beneficiaries shall be indemnified in respect of any losses caused by a litigation funder that entered into a third-party funding agreement which is found to be invalid. The rights of the claimants and of the intended beneficiaries of the proceedings shall not be affected.
Amendment 285 #
Motion for a resolution
Article 15 – point 1
Article 15 – point 1
1. Member States shall ensure that claimants or their representatives are required to provide a complete and unredacted copy of any third-party funding agreements relating to the proceedings concerned to the relevant court or administrative authority at the earliest stage of those proceedings. Member States shall ensure that defendants are made aware of the existence of a third-party funding agreement, and of the identity of the litigation funder.
Amendment 290 #
Motion for a resolution
Article 15 – point 2
Article 15 – point 2
2. Member States shall ensure that courts or administrative authorities are empowered to review the third-party funding agreement in accordance with Article 16, upon request by a party to the proceedings, where that party has justified doubts in respect of the compliance of such third party funding agreement with this Directive and any other applicable national law in accordance with Article 16, or on its own initiative.
Amendment 293 #
Motion for a resolution
Article 15 – point 3
Article 15 – point 3
Amendment 296 #
Motion for a resolution
Article 16 – paragraph 1 – introductory part
Article 16 – paragraph 1 – introductory part
Member States shall designate the competent court or administrative authority to perform the different judicial and administrative tasks under this Directive. Such designation shall in particular specify whichthat the court or administrative authority is to conduct controlsn front of which a privately funded case is brought shall also conduct controls without undue delay and upon request by a party to the proceedings or upon their own initiative on the impact of funding agreements on the cases before them, by exercising powers:
Amendment 301 #
Motion for a resolution
Article 16 – paragraph 1 – point b
Article 16 – paragraph 1 – point b
(b) to assess the compliance of each third-party funding agreement with the provisions laid down in this Directive, particularly with the fiduciary duty owed to claimants and intended beneficiaries under Article 7, and, where that agreement is found not to be compliant, order the litigation funder to make the necessary changes, or declare thea clause to be null and void in accordance with Article 13;
Amendment 304 #
Motion for a resolution
Article 16 – paragraph 1 – point c
Article 16 – paragraph 1 – point c
(c) to evaluate the suitability of each third-party funding agreement with respect to the transparency requirements under Article 12, taking in particular into account the level of clarity and transparency of the third-party funding agreement, and the degree to which any risks and benefits were presented to and knowingly undertaken by claimants or those intended beneficiaries represented by claimants;
Amendment 313 #
Motion for a resolution
Article 16 – paragraph 1 – point f
Article 16 – paragraph 1 – point f
(f) to consult or seek expertise from persons with appropriate knowledge and independence to assist in the performance of the court’s or administrative authority’s assessment powers, including from any suitably qualified expert or from supervisory authorities.
Amendment 322 #
Motion for a resolution
Article 19 – point 1
Article 19 – point 1
1. No later than [...] years after the date of application of this Directive], the Commission shall carry out an evaluation of this Directive and present a report on the main findings to the European Parliament, the Council and the European Economic and Social Committee. The evaluation shall be conducted in accordance with the Commission’s better regulation guidelines. In the report, the Commission shall in particular assess the effectiveness of the Directive, with particular regard to the level of fees or interests diverted from claimants’ awards (including to intended beneficiaries) to litigation funders and, the impact litigation funders have on the level of dispute resolution activity and the extent to which third-party litigation funding has allowed greater access to justice.