EJF organises TPLF event with AmChamEU - "Access to justice but not for profit"

Legal experts, policymakers, and representatives from industry and consumer side as well as academia gathered on the 1st of December for an insightful discussion on TPLF organized by EJF in collaboration with the American Chamber of Commerce to the European Union. The event, moderated by Ekkart Kaske (Executive Director of EJF), delved into the crucial aspects of effective and fair delivery of justice, proportionality, sensible regulation, oversight, and transparency in the context of TPLF.

The keynote speakers, including Kenny Henderson (Partner at CMS), addressed the evidence of growth in mass claims and the consequences of the lack of regulation in private litigation financing. His presentation emphasized the impact of the Representative Actions Directive (RAD) on mass claims across Europe. He pointed out that while the RAD provides flexibility to domestic jurisdictions, it is likely to complement existing collective redress procedures. He also noted that the RAD could increase the frequency of mass claims, citing examples from the Netherlands, Portugal, and the UK.

Thomas Holzheu, (Chief Economist Americas, Swiss Re Institute), provided a transatlantic perspective, discussing learnings from the US in terms of litigation culture and macroeconomic factors. His presentation underscored concerns about conflicts of interest among law firms and funders, predatory lending practices, skewed legal verdicts, and the need for transparency in TPLF, given its negative economic consequences by driving costs up for consumers and companies.

Turning the spotlight on the Dutch legal system, Professor Jeroen Kortmann (Professor of International Litigation at University of Amsterdam), presented real-life examples highlighting the gap between theory and practice in the Netherlands. He emphasized that collective actions should ideally be initiated by not-for-profit entities, but in reality, ad- hoc entities created by entrepreneurs (funders and law firms) often taking the lead. Jeroen raised questions about funding initiatives, the choice of funding for specific cases, and the central role of the ‘class’ in funding arrangements.

The discussion panel, led by Ekkart and featuring Jacek Garstka (Legislative Officer, Civil Justice, Directorate-General for Justice and Consumers, European Commission), Dr Martin Hohlweck (Judge of the Cologne Higher Regional Court, Expert at German Association of Judges), aforementioned Jeroen Kortmann, and Miryam Vivar (Policy, enforcement and legal actions coordinator, Public Affairs and Media Department, Organisation of Consumers and Users, OCU, Spain), tackled the necessary scope of research on TPLF and how to safeguard good practices. Some conclusions drawn from the engaging exchange included the importance for the newly established European Commission in November 2024 to receive a thorough research study covering relevant jurisdictions and stakeholder input. The panel also advocated for more regulation regarding Qualified Entities (distance funder and funded) and public funding, citing the lack of transparency around initiatives taken by ad-hoc entities. One of the top priorities identified for well-regulated TPLF is transparency and the need for oversight. Recognizing the limitations of courts as gatekeepers, e.g. due to lack of knowhow, the certification and supervision through supervisory bodies becomes even more important as additional layer. Lastly, the panel recommended licensing as the best solution to oversee the entire scope of the funder's activities.

As the legal landscape evolves, the insights shared at this event should shape the ongoing discourse on TPLF. With the European Commission at the forefront, stakeholders are hopeful that a comprehensive and transparent research study on TPLF will discover the areas with substantial risks of non-regulation. In this way EJF has timely contributed with expert knowhow from numerous perspectives to the start of the study, with the goal of a fair and efficient regulatory framework in the years to come.