Code of Conduct

Adopted by the Board of Directors on 29 June 2022

  • Scope of application and definitions
    This Code of Conduct governs the conduct of Funders when providing Litigation Funding for the resolution of a Claim to a Funded Party based on a Funding Agreement (all as defined below).
    • A Funding Agreement is a contract for the provision of Litigation Funding entered into between a Funder and a Funded Party.
    • Funders are the members of the European Litigation Funders Association (ELFA). The articles of incorporation of ELFA set forth the membership requirements.
    • A Funded Party is a natural or legal person who, based on a Funding Agreement, has the right to receive Litigation Funding from a Funder for the assertion of or the defense against a Claim.
    • Litigation Funding is the provision by a Funder to a Funded Party of financial support for the costs of, and where applicable the risks related to, the resolution of a legal dispute, based on a Funding Agreement, in exchange for a remuneration or reimbursement that is dependent upon the outcome of the dispute.
    • Claim relates to the claim (or the claims) which are asserted in a dispute whose resolution is sought primarily through litigation or arbitration procedures before a court or tribunal seated in a European Union member state and in member states of the European Free Trade Association.
  1. Funders’ commitment to provide information
    • Funders shall timely provide clear and comprehensive information to the Funded Parties. This includes (without limitation):
      • The Funders’ promotional information;
      • The process of obtaining Litigation Funding; and
      • The contents of the Funding Agreement.
    1. Funders shall inform the Funded Parties, as soon as possible after the commencement of the negotiations of a Funding Agreement, of the legal entity deemed to enter into the Funding Agreement.
    2. In the event that a Funded Party is without a legal advisor, a Funder shall recommend that the Funded Party seek legal advice and/or representation before entering into a Funding Agreement (and, if requested by the Funded Party, propose a list of suitable independent candidates).
  1. Funders’ commitment regarding form and contents of a Funding Agreement
    • A Funding Agreement shall be executed in writing in English or in a language that is understood by the Funded Party, its counsel or its advisor.
    • A Funding Agreement shall at least include clear and unequivocal provisions regarding:
      • The commercial terms and conditions of the Litigation Funding;
      • The costs and, where applicable, the risks included in the Funders’ funding commitment;
      • A decision-making process regarding the conclusion of settlement agreements pursuant to which the parties shall seek each other’s consent before agreeing to a settlement (such consent not to be unreasonably withheld);
      • A resolution mechanism in case the parties disagree whether a settlement offer is appropriate;
      • The calculation and payment of the Funder’s remuneration; and
      • The possibilities and conditions for the parties to terminate the Funding Agreement.
    1. Unless specifically agreed otherwise, the objective of the Funding Agreement is that the Funder’s entitlement vis-à-vis the Funded Party is limited to the amount received by the Funded Party through the assertion of the Claim (non-recourse character).
    2. Unless specifically agreed otherwise or if the Funded Party is in breach of the Funding Agreement, if a Funding Agreement is terminated by the Funder, all amounts provided by the Funder until the termination will remain invested for the benefit of the Claim.
  1. Funders’ commitment to maintain confidentiality
    Funders shall take all necessary steps to preserve the confidentiality and legal privilege of information which they receive during the negotiation or the execution of a Funding Agreement, to the extent that the applicable law permits and subject to the terms of any agreed confidentiality or non-disclosure agreement.
  1. Funders’ commitment to prevent conflicts of interests
    Funders shall maintain effective systems to detect and manage potential conflicts of interests.
  1. Funders’ commitment to maintain capital adequacy
    Funders shall not enter into investment commitments without having adequate capital available to meet such commitments, and to adequately protect the Funded Parties’ interests also in adverse scenarios. More specifically, Funders:
    • Shall at all times maintain the ability to pay debts when they become due;
    • Shall at all times have immediate access to sufficient capital to fulfill their obligations under a Funding Agreement;
    • Shall meet audit requirements and provide evidence of their financial ability under (a) and (b) pursuant to the articles of incorporation of ELFA.
  1. Funders’ confirmation of the legality principle
    With regard to the funding relationship and the Funder’s contractual duties, Funders shall at all times conduct their activities in accordance with the applicable legislation of the European Union members states and/or member states of the European Free Trade Association. This obligation, among others, applies to:
    • Funders assisting Funded Parties by providing information or strategic advice as well as Funders assisting in the pursuit of a Claim in other ways.
    • Funders and their relationship with lawyers and other professionals. The Funders shall not take any steps causing lawyers and other professionals to breach their professional duties.
  1. Complaints procedure
    Funders shall set up a complaints procedure by which the Funded Parties can bring potential deviations from this Code of Conduct to the attention of ELFA.

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