Third Party Litigation Financing: Asset or Liability​​

Anshuman Das Gupta
Manipal University Jaipur, India.

Volume IV, Issue I, 2021

The people focus on problems faced by litigants due to cost of litigation and the possible solutions available. It is important to study the gap between affordability of a litigation and the possible benefit from the outcome of a case or suit as in some cases it is the difference between access to justice. A third party is a party that is not involved in the matter or an outsider. When a third party independently provides funds to parties for a dispute in exchange of any fraction of monetary rewards that’s recovered from the proceedings is called Litigation Financing. This paper intends to draw a direct connection between litigants dropping their cases or withdrawing their cases or not pursuing their cases in the 1st place because of high litigation cost and there am inability towards litigation financing as a solution to the predicament of high litigation costs. Third-party litigation funding is legally recognized in India. The concept of third-party funding is allowed under the Civil Code of Procedure, 1908 in some states. Financiers are fascinated towards new business openings, Litigation Funds anticipate on the high-stake legal proceedings, they support the expenses of a litigation and in return they reap the yield of the proceedings.

Article 39A of the Constitution of India provides that the State shall secure the operation of the legal system should promote justice on a basis of equal opportunity, and shall in particular, provide free legal aid service, by suitable legislation or schemes or in any other way, to ensure that opportunities for securing justice are not denied to any citizen for the reason of economic or any other disability. It is an interesting concept and practiced globally. Though, it is not prohibited in India but there is a necessity of a dedicated regulation through laws, rules and directives that can govern TPF.