Activities of Manon AUBRY related to 2020/2130(INL)
Shadow reports (1)
REPORT with recommendations to the Commission on Responsible private funding of litigation
Amendments (48)
Amendment 18 #
Motion for a resolution
Recital B
Recital B
B. whereas commercial litigation funders involved in legal proceedings mostly act in their own economic interest, rather than in the interest of claimants or the general interest; 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.
Amendment 20 #
Motion for a resolution
Recital B a (new)
Recital B a (new)
B a. whereas, while TPLF is quasi- inexistant in Europe, it is a booming phenomenon in investment arbitration that multiplies the number and the volume of claims of private investors against States;
Amendment 21 #
Motion for a resolution
Recital B b (new)
Recital B b (new)
B b. whereas the increased recourse by investors to investment arbitration has a detrimental regulatory chilling effect on States and, in particular, deters States from enacting new social and environmental protection norms;
Amendment 22 #
Motion for a resolution
Recital B c (new)
Recital B c (new)
B c. whereas by multiplying the number and the amount of investment arbitration claims against States, TPLF multiplies the already heavy financial burden that investment arbitration claims, whether successful or not, represent for States;
Amendment 30 #
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 factmay be other ways to seek redress, such as mediation, ADR/ODR, or the Ombudsman or through grievance systems managed by companies; whereas, those solutions could result in faster and more adequate compensation for claimants;
Amendment 31 #
Motion for a resolution
Recital D a (new)
Recital D a (new)
D a. whereas in the absence of sufficient public legal aid, civil society organisations have turned to TPLF to be able to litigate with the aim of protecting human rights, workers’ rights, consumer rights and the environment;
Amendment 32 #
Motion for a resolution
Recital D b (new)
Recital D b (new)
D b. whereas TPLF aiming at protecting human rights, workers’ rights, consumer rights and the environment should not be subject to the same regulations as TPLF for the sole prospect of economic gains;
Amendment 33 #
Motion for a resolution
Recital D c (new)
Recital D c (new)
D c. whereas public legal aid and public prosecution are and must remain the central mechanisms to guarantee the fundamental right to an effective remedy and to a fair trial; whereas Article 47 of the Charter of Fundamental Rights of the European Union explicitly states that 'legal aid shall be made available to those who lack sufficient resources in so far as such aid is necessary to ensure effective access to justice'.
Amendment 47 #
Motion for a resolution
Recital H a (new)
Recital H a (new)
H a. whereas TPLF should be subject to existing applicable rules on financial services; whereas any additional regulation of TPLF should not undermine the existing protection granted to beneficiaries of this financial service;
Amendment 59 #
Motion for a resolution
Paragraph 3 a (new)
Paragraph 3 a (new)
3 a. Firmly believes that third party funding of investment arbitration procedures should be prohibited considering that the lack of transparency in investment arbitration procedures would make new transparency, governance, capital adequacy or other obligations for funders impossible to enforce. Underlines that third party litigation funding of investment arbitration multiplies the regulatory chilling effect and financial burdens for States of such proceedings and that its prohibition would protect the ability of States to legislate in the general interest.
Amendment 66 #
Motion for a resolution
Paragraph 4 a (new)
Paragraph 4 a (new)
4 a. Recommends that any regulation of TPLF preserves the possibility for civil society organisations to access funding to litigate for the protection of human rights, workers’ rights, consumer rights and the environment, including by creating exceptions to general rules on TPLF;
Amendment 81 #
Motion for a resolution
Paragraph 10
Paragraph 10
10. Considers that there should be transparencysupervision by public authorities regarding the involvement of litigation funding in legal proceedings, including obligations for claimants and their lawyers to disclose funding agreements to courts and defendants. 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 85 #
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;
Amendment 90 #
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 funders can easily be attracted by cross-border cases, 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 96 #
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 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 disadvantaged. The risks can be particularly acute where those expecting to benefit from litigation are consumers, 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 102 #
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 or 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.
Amendment 104 #
Motion for a resolution
Annex I – paragraph 10 – point 4
Annex I – paragraph 10 – point 4
(4) This Directive aims to regulate third-party litigation funding, a commercial practice whereby third-party entities not directly involved in a dispute invest for profit in legal proceedings, typically in exchange for a percentage of any settlement or award. Third-party litigation funding does not include provision of funds to sponsor litigation on a charitable or donated basis, or similar activities carried out on a pro bono publico basis. This Directive aims to preserve funding and access to justice for victims of violations of human rights, workers’ rights, consumers’ rights and the protection of the environment. This Directive also aims to lay down safeguards to prevent conflicts of interest, abusive litigation as well as the disproportionate allocation of monetary awards to litigation funders.
Amendment 107 #
Motion for a resolution
Annex I – paragraph 10 – point 4 a (new)
Annex I – paragraph 10 – point 4 a (new)
(4 a) This Directive aims to prohibit third-party funding for investment arbitration, considering the impossibility to enforce governance, transparency, capital adequacy, and observance of a fiduciary duty obligations in this opaque domain of dispute settlement. This prohibition also aims to preserve States form a multiplication of the number and the volume of investors’ claims that hinders States’ ability to regulate in the general interest.
Amendment 116 #
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 or withdraw any authorisation or to impose any condition, restriction or penalty upon any litigation funder, as well as to investigate any complaint againston any litigation funder conducting activities within their jurisdiction.
Amendment 118 #
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 interestinfringes ofn the litigation funder, rather than those of therights of claimants.
Amendment 124 #
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, including regulations on financial services.
Amendment 131 #
Motion for a resolution
Annex I – paragraph 10 – point 18
Annex I – paragraph 10 – point 18
(18) Courts or administrative authorities should be empowered to ensure the provision of sufficient disclosure ofaccess relevant information on all third-party litigation funding activity relevant to the legal proceedings under their responsibility.
Amendment 132 #
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, 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 137 #
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 with claimants and public authorities 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 141 #
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 proceedingbe empowered to assess whether that agreement complies with this Directive and whether claimants and those they represent, including consumers, are protected.
Amendment 158 #
Motion for a resolution
Article 1 – paragraph 1
Article 1 – paragraph 1
This Directive is aimed at harmonising the rules of Member States applicable to third- party litigation funders (‘litigation funders’) and their authorised activities, and also atin order to provide a supportive framework, similar to the ones in place for financial services, that also protectings funded claimants and intended beneficiaries, including where relevant those whose interests are represented by qualified entities, in proceedings financed wholly 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.
Amendment 160 #
Motion for a resolution
Article 1 – paragraph 1
Article 1 – paragraph 1
This Directive is aimed at harmonising the rules of Member States 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 wholly or in part by third-party litigation funding. It prohibits third-party funding of investment arbitration proceedings. It lays down safeguards to prevent conflicts of interest, abusive litigation as well as the disproportionate allocation of monetary awards to litigation funders.
Amendment 167 #
Motion for a resolution
Article 3 – paragraph 1 – point a a (new)
Article 3 – paragraph 1 – point a a (new)
(a a) 'public interest litigation funder' means litigation funders dedicated to the funding of litigations of public interest, or to the funding of public interest litigation on a case-by-case basis.
Amendment 173 #
Motion for a resolution
Article 3 – paragraph 1 – point e a (new)
Article 3 – paragraph 1 – point e a (new)
(e a) 'public interest litigation' means proceedings aiming to protect or enforce human rights, workers' rights, consumer rights or the environment;
Amendment 174 #
Motion for a resolution
Article 3 – paragraph 1 – point e b (new)
Article 3 – paragraph 1 – point e b (new)
(e b) 'investment arbitration proceedings' means proceedings initiated by investors against States on the basis of an investment protection agreement;
Amendment 181 #
Motion for a resolution
Article 4 – point 1 a (new)
Article 4 – point 1 a (new)
1 a. Members States shall not authorise third-party funding for investment arbitration proceedings.
Amendment 185 #
Motion for a resolution
Article 4 – point 2 a (new)
Article 4 – point 2 a (new)
2 a. Member States shall facilitate the authorisation of third-party funding for public interest litigation. They shall provide support for litigation funders and claimants engaging in proceedings with the aim to protect human rights, workers' rights, consumer rights and the environment.
Amendment 192 #
Motion for a resolution
Article 5 – point 1 a (new)
Article 5 – point 1 a (new)
1 a. Member States shall ensure that supervisory authorities provide support for public interest litigation funders to comply with the conditions for authorisation.
Amendment 193 #
Motion for a resolution
Article 5 – point 1 b (new)
Article 5 – point 1 b (new)
1 b. Members States should ensure that supervisory authorities do not withdraw authorisations of public interest litigation funders that do not fulfil the conditions of authorisations without granting a sufficient period of time for them to take necessary actions in order to be in compliance with this Directive.
Amendment 194 #
Motion for a resolution
Article 5 – point 1 c (new)
Article 5 – point 1 c (new)
1 c. Members States shall ensure that supervisory authorities do not withdraw authorisations of public interest litigation funders if it affects the rights of current of potential claimants to engage in public interest litigation.
Amendment 199 #
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 defendant so request based on reasoned specific concerns.
Amendment 210 #
Motion for a resolution
Article 8 – point 2
Article 8 – point 2
Amendment 216 #
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 withdrawn if it no longer complies with one or more of those criteria. Before withdrawing the authorisation of a public interest litigation funder, it shall also refrain from withdrawing the authorisation if this would affect current or potential claimants' capacity to engage in public interest litigation.
Amendment 217 #
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 withdrawn if it no longer complies with one or more of those criteria. Before withdrawing the authorisation of a public interest litigation funder, it shall grant it sufficient time to take the necessary steps in order to comply with the requirements of this Directive.
Amendment 220 #
Motion for a resolution
Article 8 – point 3 – point f
Article 8 – point 3 – point f
Amendment 224 #
Investigations and complaints
Amendment 225 #
Motion for a resolution
Article 9 – point 1
Article 9 – point 1
Amendment 228 #
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 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 232 #
Motion for a resolution
Article 9 – point 3 – point i
Article 9 – point 3 – point i
Amendment 282 #
Motion for a resolution
Article 13 – point 6 a (new)
Article 13 – point 6 a (new)
6 a. Members States shall make sure that the annulment of a third-party funding agreement does not affect claimants' capacity to initiate or continue litigations of public interests. In ongoing cases of litigations of public interest, Member States shall in particular provide legal aid as a replacement for third-party funds in order to allow claimants to sustain their claim.
Amendment 289 #
Motion for a resolution
Article 15 – point 2
Article 15 – point 2
Amendment 291 #
Motion for a resolution
Article 15 – point 3
Article 15 – point 3
Amendment 298 #
Motion for a resolution
Article 16 – paragraph 1 – point a
Article 16 – paragraph 1 – point a
(a) to make orders or give directions that are binding on a litigation funder, such as requiring the litigation funder to provide the funding as agreed in the relevant third- party funding agreement or requiring the litigation funder to make changes in respect of the relevant funding and, if necessary, rejecting the legal standing of the funded claimant, in particular, when the action is brought by a qualified entity, in accordance with Article 10, paragraph 4, of Directive (EU) 2020/1828 of the European Parliament and of the Council;