The Globalization of Litigation Finance: Expanding Legal Funding in Civil Law Jurisdictions

Litigation finance has traditionally flourished in common law jurisdictions, where well-established case precedents and the predictability offered by appellate systems have facilitated its adoption. However, as the industry matures, funders are increasingly turning their attention to civil law jurisdictions.

While these markets present challenges in case assessment, they also offer significant opportunities. The rise of complex commercial disputes, the expansion of arbitration, and the development of specialized courts are reshaping dispute resolution and opening new entry points for third-party funding. For businesses, this means greater access to financial solutions that enable them to pursue legitimate claims without burdening their balance sheets, ensuring that meritorious cases are not abandoned due to financial constraints.

The growing presence of specialized funders in civil law systems signals more than just geographic expansion—it marks a shift in litigation finance itself. Rather than merely replicating common law models, funders are refining strategies to align with jurisdiction-specific procedural and economic realities. As litigation finance continues to evolve, its integration into civil law jurisdictions underscores a broader shift toward adaptability, innovation, and strategic risk management, fostering a more globally attuned approach that meets the needs of businesses and legal practitioners operating across diverse legal traditions.

Procedural Differences and Their Impact on Case Assessment

One of the most fundamental distinctions between common law and civil law jurisdictions is the role of judicial oversight in litigation. In common law systems, adversarial proceedings are party-driven, relying on extensive pre-trial discovery, cross-examinations, and case law precedent. In contrast, civil law jurisdictions emphasize a more centralized approach, where judges actively direct fact-finding and legal interpretation within a codified framework, with case law serving as a reference rather than a binding authority.

For litigation funders, these procedural distinctions necessitate a tailored approach to case assessment. The limited scope of discovery in civil law jurisdictions places greater emphasis on early-stage legal analysis, documentary records, and expert opinions rather than exhaustive pre-trial disclosures. While this can reduce the unpredictability associated with discovery-heavy processes, it also requires a more refined understanding of how judges evaluate and weigh evidence in decision-making.

This underscores the importance of jurisdiction-specific expertise in the underwriting process, as funders must anticipate how procedural norms influence the admissibility and probative value of documentary evidence. Those who effectively adapt to these distinctions can leverage the structured nature of civil law litigation, allowing for a more precise risk assessment and a strategic approach to funding in these markets.

Emerging Opportunities in Key Sectors

The expansion of litigation finance into civil law jurisdictions is being driven by a growing demand for funding across various industries. Commercial litigation remains a dominant driver, particularly in disputes related to contract enforcement, banking, energy, infrastructure, and construction. Given the complexity and financial stakes involved in these sectors, litigation finance plays a crucial role in enabling claimants to pursue meritorious claims that might otherwise be abandoned due to prohibitive costs.

In the energy sector, particularly in Latin America, disputes arising from natural resource extraction, power purchase agreements, and evolving regulatory landscapes have fueled a rising demand for funding solutions. As contractual disputes between private entities become more prevalent due to shifting regulations and market volatility, litigation finance provides a strategic advantage, ensuring that claimants can sustain legal proceedings against well-capitalized opponents.

Likewise, large-scale infrastructure and construction projects, often involving multiple jurisdictions and complex contractual obligations, present ideal conditions for third-party funding. Disputes in these sectors frequently stem from delays, cost overruns, contractual breaches, or force majeure events, leading to protracted legal battles. Given the high costs and specialized expertise required to litigate such disputes, third-party funding serves as a critical enabler, allowing claimants to pursue their claims without straining their financial resources.

Additionally, the evolution of collective redress mechanisms, especially in the European Union, is unlocking new opportunities for litigation finance. As legislation continues to shape mass claims in areas such as consumer rights, financial misrepresentation, and environmental disputes, funders are playing a crucial role in financing large-scale litigation that requires substantial upfront investment. The increasing demand for structured financing solutions in these collective actions underscores the expanding role of litigation finance as a tool for delivering legal and economic justice at scale.

Arbitration as a Gateway to Litigation Finance in Civil Law Jurisdictions

International arbitration has emerged as a pivotal entry point for litigation finance in civil law jurisdictions. Arbitration provides a neutral and structured framework that reduces jurisdictional risks, making it an attractive avenue for funders and claimants alike.

Civil law jurisdictions, particularly in Continental Europe and Latin America, favor arbitration for resolving complex commercial disputes. Unlike traditional litigation, arbitration allows parties to select specialized arbitrators with deep industry expertise, improving predictability and increasing the viability of funding high-value claims. The enforceability of arbitral awards under international conventions, such as the New York Convention, further strengthens funders’ confidence in successful recoveries across multiple jurisdictions.

Moreover, leading arbitral institutions are increasingly addressing the role of third-party funding. Institutions such as the ICC (International Chamber of Commerce), LCIA (London Court of International Arbitration), ICSID (International Centre for Settlement of Investment Disputes), and CAM-CCBC (Center for Arbitration and Mediation of the Brazil-Canada Chamber of Commerce) have introduced disclosure requirements and ethical guidelines regarding third-party funding. These measures enhance transparency and promote broader acceptance of litigation finance as a legitimate tool in international dispute resolution.

The Future of Litigation Finance in Civil Law Jurisdictions

The expansion of litigation finance beyond common law jurisdictions represents more than just a geographic shift—it signals a transformation in how legal funding is perceived and utilized across different legal traditions. While challenges remain, including jurisdictional nuances and procedural variations, the growing demand for funding solutions in commercial litigation, arbitration, and collective actions highlights the increasing relevance of third-party finance in civil law jurisdictions.

As litigation funders refine their approach, build partnerships with corporate legal teams and external counsel, and develop jurisdiction-specific underwriting strategies, the role of litigation finance in civil law systems is set to expand. Arbitration continues to serve as a natural bridge into these markets, while emerging sectors such as energy, infrastructure, and financial services are creating new opportunities for innovative funding models.

Funders who invest in understanding the distinct legal landscapes of civil law jurisdictions will be best positioned to capitalize on this expanding frontier. The continued evolution of litigation finance will not only shape dispute resolution mechanisms but also redefine how legal risk is managed globally, solidifying its place as an essential component of modern legal and financial strategies.

By Marina Gouveia, Investment Manager at Qanlex