After 2 long years of pandemic, practitioners and academic experts resume gatherings to find solutions to issues of solving mass disputes fairly and effectively that have the potential to impact European justice. On this occasion, Alternative Dispute Resolution (ADR) took the spotlight.
In November 2022, Dr. Herbert Woopen, Director of Legal Policy of EJF, together with Dr. Lorenz Ködderitzsch, the former long-term Chair of EJF, contributed to the Panel “Feedback and Affecting Behaviour” in the context of ADR and provided views on how to develop the ideal holistic domestic infrastructure for dispute resolution. Whether a consumer is attempting to solve a dispute in court, out of court or with the intervention of a regulator as public authority, the structure of the task to be accomplished is always the same: (i) capture disputes and details as well as potential beneficiaries; (ii) define comparable cases in view of a solution; (iii) clarify applicable rules and legal norms; and (iv) negotiate or impose a solution.
To streamline this process, appropriate IT infrastructure should be set up. Such support for resolution tools could be essentially the same for all three pathways, as a high quantity of cases require digitization. It is against this background that Dr Woopen proposes a functional IT architecture: a single central electronic register that would be fed by consumers themselves, by consumer associations, by European Consumer Centres, by the public entities created by the Consumer Protection Cooperation Regulation for cross-border cases or by sectorial, other and residual ADR entities as sources.
For a deep dive into the present topic, see the full presentation here.
EJF, along with 12 other co-signatories have published our joint business statement supporting the European Parliament Report on Responsible Private Funding of Litigation by MEP Axel Voss.
Third Party Litigation Funding (TPLF) allows private financiers, like investment and hedge funds, to sign confidential deals with lawyers or qualified entities to fund lawsuits and arbitration in exchange for a cut of any settlement or judgment/award. TPLF is an estimated €40 to €80 billion market globally. There are more than 100 litigation funders operating in Europe, yet TPLF is largely unregulated in the EU, unlike other financial and legal commercial activities.
In our letter, EJF, together with organisations such as Airlines for Europe (A4E), BusinessEurope, DigitalEurope, European Banking Federation, InsuranceEurope, MedTech Europe and U.S. Chamber Institute for Legal Reform, explain our concerns with this practice. Although the EU Directive on Representative Actions provided for some rudimentary rules around transparency of funders, these rules will only apply to collective actions brought under this one Directive, and not to any other type of claim or law outside the Directive’s scope, including, in particular, those brought via the claims assignment models being operated in various EU Member States.
We are therefore supportive of the European Parliament’s legislative own-initiative report on responsible private funding of litigation, which calls on the European Commission to propose sensible safeguards for effective oversight of TPLF.
EJF is pleased to share its position paper regarding the legislative own initiative report of MEP Axel Voss on Responsible Private Funding of Litigation. EJF outlined points of crucial importance to achieve an effective and coherent legal architecture that safeguards against potential abuses of TPLF. This is because while collective redress mechanisms and TPLF are meant to have a positive impact for consumers in facilitating the access to justice, there is the risk – if no sufficient safeguards are put in place – that private funders’ interests (especially their interest in commercial profit) may be disconnected from – or even opposed to – consumers’ interests. Concrete examples can be seen in the US or in Australia. In Europe we are seeing an increase in cases.