19 Amendments of Daniel BUDA related to 2020/2130(INL)
Amendment 5 #
Motion for a resolution
Recital A
Recital A
A. whereas third party litigation funding (TPLF) is a growing practice in countries such as Australia, the USA, Canada, the United Kingdom and, more recently, certain EU Member States, 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 or settlement received by the funded applicant; whereas TPLF does not only occur in collective redress cases but also in individual cases, especially arbitration and insolvency proceedings;
Amendment 16 #
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 and, generally speaking, not in the interest of claimants who represent the injured party; whereas they can seek to control the litigation and demand an outcome that pays them the greatest return3; _________________ 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.whereas it is essential to guarantee adequate damages for victims;
Amendment 25 #
Motion for a resolution
Recital C a (new)
Recital C a (new)
Ca. whereas it is essential to consider the fairness of the financial outcome for the funded plaintiff so as to avoid the risk that injured plaintiffs receive little or nothing in the way of damages;
Amendment 40 #
Motion for a resolution
Recital G
Recital G
G. whereas the current regulatory vacuum enables litigation funders to operate in secrecy, with the result that courts can, on occasion, make awards to claimants without realising that a large majority of the award will subsequently be redirected to litigation funders at the expense of claimants; whereas the 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; whereas, in the absence of harmonised regulation at EU level, there is a risk of fragmentation and regulatory imbalances in the area of litigation funding;
Amendment 53 #
Motion for a resolution
Paragraph 2
Paragraph 2
2. Firmly believes that in order to ensure that justice systems prioritise the interests of injured parties, redress for victims of injustice, and not the interests of investors who may seek commercial opportunity from disputes, a harmonised regulatory regime addressing key issues relevant to litigation funding, including transparency, fairness, and proportionality, is necessary;
Amendment 62 #
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 and confidentiality 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, governance and capital adequacy, and observing a fiduciary relationship vis-à-vis claimants and intended beneficiaries; stresses the need to ensure that this system does not create excessive administrative burdens for Member States;
Amendment 69 #
Motion for a resolution
Paragraph 6
Paragraph 6
6. Uunderlines that conflicts of interest may arise where there are 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. Notes that there is a trend of an increasingly close cooperation, with, for example, litigation funders agreeing to finance law firms across a series of future cases (portfolio funding)7. Recommends that safeguards are adopted to prevent such conflicts, set out claimants’ rights and to require that 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.ensuring for example that the funder is known at least to the other party as well as to the arbitrators/court; recommends also that safeguards are adopted to set out claimants’ rights and to require that details of relationships between litigation funders and the other involved parties are disclosed; stresses the need also to ensure the confidentiality of the information relating to the dispute, especially in arbitration proceedings, as the funder should not have access to the data in the file without the written consent of the parties;
Amendment 74 #
Motion for a resolution
Paragraph 7
Paragraph 7
7. Believes that litigation funders should not be permitted to abandon funded parties in litigation, except in restricexceptional, restricted, strictly regulated and well- defined circumstances, leaving claimants solely responsible for all costs of the litigation, which may have only been pursued due to the involvement of the funder, thereby making it harder to guarantee access to justice for the applicants;
Amendment 83 #
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 that does not give rise to significant costs and administrative burdens for Member States. 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;
Amendment 92 #
Motion for a resolution
Annex I – paragraph 10 – point 1
Annex I – paragraph 10 – point 1
Amendment 105 #
Motion for a resolution
Annex I – paragraph 10 – point 4
Annex I – paragraph 10 – point 4
Amendment 114 #
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 confidentiality, governance, transparency of funding agreements, 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 or withdraw any authorisation or to impose any condition, restriction or penalty upon any litigation funder, as well as to investigate any complaint against any litigation funder conducting activities within their jurisdiction.
Amendment 117 #
(11) Litigation funders should be required to commit to being bound to a duty to act fairly, transparently efficiently and in the best interests of claimants and intended beneficiaries of claims while respecting existing EU confidentiality rules. 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 123 #
Motion for a resolution
Annex I – paragraph 10 – point 13
Annex I – paragraph 10 – point 13
(13) This Directive should regulate the activities of litigation funders, but should be without prejudice to any other regulatory obligations or regimes that may apply, respecting the legal traditions of the Member States, their autonomy and their decisions regarding on the appropriateness of regulating litigation funding in their national legal systems.
Amendment 135 #
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 or other parties to the dispute, subject to appropriate limitations to protect any necessary confidentiality.
Amendment 148 #
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 at the expense of the claimant. In particular, litigation funders should not direct or 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 155 #
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 in which litigation funding is regulated, 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, 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 180 #
Motion for a resolution
Article 4 – point 1
Article 4 – point 1
1. Member States may determine in accordance with national law whether third party funding agreements can be offered in relation to legal or arbitration proceedings within their Member State, or for the benefit of claimants or intended beneficiaries resident within their Member State.
Amendment 183 #
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 of the activities of litigation funders within their Member State. That system shall include designatinglegation of powers to an independent supervisory department or authority tasked with granting or withdrawing authorisations for litigation funders and supervising the activities of litigation funders.