ELFA Welcomes European Commission’s Position on Third Party Litigation Funding as an Opportunity and an Invitation to Further Promote and Improve Industry Best Practices
ELFA welcomes the European Commission’s decision not to propose EU rules on third-party litigation funding for now.
BRUSSELS, 19 March 2025: The European Litigation Funders Association (ELFA) welcomes the European Commission’s confirmation that EU-wide regulation of third-party litigation funding is currently not necessary. ELFA continues to believe that industry best practices represent the most effective alternative to regulation.
When concluding the discussions of the High-Level Forum on Justice for Growth in November 2025, Commissioner Michael McGrath referred to the feedback from participants indicating that there was “currently no need to regulate third-party funding at EU level”. He therefore announced that the European Commission had decided to “instead prioritise monitoring of the application of the Representative Action Directive in the field of consumer collective redress”.
As a result, the Commission will not propose EU-level legislation to regulate third-party litigationfunding for the time being.
Charles Demoulin, Chairman of ELFA, emphasised that the association remains firmly committed toholding the industry to the highest ethical and professional standards:
“Our members already adhere to a comprehensive Code of Conduct that addresses transparency, conflicts of interest, capital adequacy, and the protection of funded parties' interests. Our objective is to promote ethical standards and maintain a high level of trust among all those who rely on third-party funding to defend their legitimate interests.”
“Following the announcement by the European Commission, ELFA remains committed to a constructive engagement with EU institutions. We will continue to provide the Commission with information about our industry and facilitate its monitoring of third-party funding’s contribution to collective redress. At the same time, ELFA will pursue its efforts to promote industry best practices in the interest of all stakeholders.”
Way Forward: ELFA’s Core Principles and Objectives
While the European Commission has indicated that it will, for the time being, monitor the role of third-party litigation funding in the application of the Representative Action Directive, ELFA will continue to promote high standards and best practices within the litigation funding industry. These efforts extend beyond collective redress to all types of disputes for which third-party funding may be provided.
ELFA remains open to reviewing and refining its recommendations and best practices. In this context, the association also takes note of recent initiatives, such as the Principles Governing the Third Party Funding of Litigation developed by the European Law Institute, which may provide useful inspiration for future updates to its Code of Conduct.
ELFA’s engagement in any initiative or discussion concerning the role of third-party funding within the European Union will continue to be guided by the following core principles:
1) Third-party funding does not operate in a legal vacuum. The content of funding agreements and, more broadly, the activities of litigation funders are already subject to applicable European and national laws, including consumer legislation. These legal frameworks provide important safeguards, address concerns raised by some stakeholders, and offer protection to users of litigation funding.
2) Self-regulation complements existing legal frameworks. ELFA believes that industry-led standards can effectively protect all stakeholders while preserving the accessibility and commercial viability of litigation funding. Codes of conduct developed by associations such as ELFA contribute to transparency and responsible market practices and should be recognised as reflecting industry best practices. ELFA will review and update its own Code of Conduct by the end of 2026.
3) Users of litigation funding should be advised by independent professionals. Users of litigation funding should be represented by lawyers or other qualified professionals who can help them maximise the benefits of third-party funding. Litigation funders should refrain from engaging with potential clients who are not assisted by such professionals and must respect the independence of the client’s counsel at all times.
4) Collective actions require appropriate safeguards for all parties involved. In the specific context of consumer collective actions, courts and qualified entities can play an important role in safeguarding the consumers’ interests. Litigation funders accept and endorse the objectives established in Article 10 of the Representative Actions Directive. They remain open to requirements aimed at protecting consumers’ interests, provided such measures are balanced, proportionate and take into account the specific constraints faced by funders, including financial commitment, risk, and timing. ELFA considers that the existing framework of applicable laws and industry self-regulation already provides an appropriate basis for ensuring transparency and responsible market practices. Only where clearly necessary should limited and proportionate safeguards complement this framework, for instance, to address identified risks or isolated instances of misconduct by individual market participants. Any such measures should be evidence-based and developed in consultation with relevant stakeholders, including representatives of the litigation funding industry, while avoiding unintended restrictions on access to justice or on the ability of consumer organisations to pursue meritorious claims. This should be a common objective for all parties involved, as funders may otherwise decide not to fund a collective action which would not serve the interests of the main beneficiaries of collective redress: consumers and their organisations. Courts can also play an important role in maintaining that balance. Judicial oversight may contribute to ensuring sufficient predictability regarding the parties’ performance of funding agreements during legal proceedings and the payment of the funder’s remuneration in the event of a successful outcome.
About the European Litigation Funders Association (ELFA)
The European Litigation Funders Association (ELFA) represents the litigation funding industry in continental Europe and promotes high professional and ethical standards within the sector. ELFA's mission is to establish the litigation funding industry as a trusted partner for consumers, associations, businesses, and lawyers. ELFA encourages collaboration among European funders and welcomes professional litigation funding firms of all sizes that meet the association's membership criteria and commit to its ethical framework. As the representative voice of the continental European legal finance industry, ELFA remains committed to promoting best practices and ensuring that disputes are resolved on their merits rather than on the basis of financial resources.
Leadership and Governance
ELFA has recently strengthened its governance through the appointment of a new leadership team reflecting the experience and diversity of the European litigation funding industry. The association is led by:
- Charles Demoulin (Chairman), Chief Investment Officer at Deminor
- Isabelle Berger, Chief Investment Officer at Nivalion
- Paul de Beauchef de Servigny, Fund Manager at Ivo Capital Partners
- Kees de Visser, Chair of Investment Committee EMEA at Omni Bridgeway
- Jesús Rodrigo Lavilla, CEO of PLA Litigation Funding
The leadership team will continue to guide ELFA’s work in promoting high professional standards, responsible funding practices and constructive engagement with European institutions and stakeholders. For more information about ELFA, please visit: https://elfassociation.eu/
Policy Background
The Resolution of the European Parliament and the Mapping Study
In September 2022, the European Parliament adopted a Resolution calling on the Commission to propose a directive establishing common minimum standards for commercial third-party litigation funding. The Parliament also annexed a draft directive to its Resolution. In response, the Commission commissioned an extensive study entitled “Mapping Third-Party Litigation Funding in the EU”. The study aimed to analyse the legal framework and practices governing third-party litigation funding in EU Member States and selected third countries, and to inform the Commission’s future policy decisions. The Final Report on the study – a 700-page document – was published in March 2025. Several ELFA members contributed to the Mapping Study and participated in interviews.
Key findings of the Mapping Study
The survey conducted as part of the Mapping Study revealed that stakeholders mostly viewed third-party funding as having only positive effects (34%) or as having both positive and negative effects(24%).
Among the positive effects identified were: improved access to the courts (56%), the professionalisation and expertise provided by funders (34%) and a filtering effect on claims (28%).
Businesses and their organisations - typically defendants in funded disputes, although many (smaller) businesses themselves rely on litigation funding – were the only stakeholder group that predominantly viewed third-party funding negatively (17% of responses). The report nevertheless noted that their concerns were often based on general considerations or experiences in jurisdictions outside the EU, most notably the United States, adding that “(s)everal business organisations and businesses provided in similar answers a disclaimer that the extent of negative effects [in the EU] were not (yet) known”.
In its November 2024 position paper on third-party litigation funding for collective redress, the European Consumer Organisation (BEUC) had already emphasised the “substantial benefits” provided by litigation funding to claimant organisations and stressed that “frequent criticism about TPLF (…) are today not well-substantiated and insufficiently evidenced by specific cases”, adding that “no evidence of abusive practices has been documented in any EU Member State”.
The Mapping Study further found no “empirical data demonstrating that the introduction of TPLF automatically increases the number of unmeritorious claims”. This finding contradicts the assumptions underlying the resolution of the European Parliament. Indeed, ELFA and its members have consistently rejected such criticism, noting that such practices would be contrary to the economic logic of litigation funding. Funders assume significant financial risk and therefore invest only in claims with strong legal merits. In practice, a very small percentage of all funding requests ultimately receive financing.
The Mapping Study concluded by listing three possible approaches: (1) no regulation, (2) light-touch regulation and (3) strong regulation.
High-Level Forum on Justice for Growth
The publication of the Mapping Study results was followed by the first plenary meeting of the High Level Forum on Justice for Growth on 27 March 2025, which addressed, among other topics, third-party litigation funding.
A discussion paper prepared by the European Commission’s services noted that the European Parliament’s resolution was largely based on negative experiences with litigation funding in non-European jurisdictions, particularly Australia and the United States, and that comparable evidence had not emerged in the EU.
During the discussions, Member States with experience of litigation funding in their domestic legal systems did not report significant concerns. Participants in the Forum also expressed reservations about the need for EU-level regulation and highlighted the risk that legislative intervention could restrict the ability of consumer organisations to access financing for legitimate claims.
The Forum therefore concluded that “at this stage, there is no need for action at the EU level” and invited the Commission “to continue analysing the situation and gathering evidence, while keeping open the possibility of reassessment in the future".
The European Commission has now confirmed that it will follow this approach and will, for the time being, focus on monitoring the implementation of the Representative Actions Directive which already contains provisions on litigation funding.
The Commission’s decision reflects the evidence gathered in recent studies and discussions with Member States, which have not identified systemic risks requiring EU-wide legislation.
ELFA welcomes the European Commission’s position and observes with satisfaction that the Mapping Study and the discussions at the High-Level Forum have demonstrated that an increasing number of stakeholders recognise the important role litigation funding plays in ensuring access to justice across Europe.
Stakeholder Dialogue
In addition to maintaining a dialogue with the European Commission and other institutions, ELFA supports open discussions with other stakeholders, including consumer organisations, bar associations and representatives of the judiciary. Such dialogue can help build a common understanding of expectations and may contribute to the development of widely recognised and accepted references, recommendations, and guidelines.
About The European Litigation Funders Association
ELFA was founded by three leading litigation funders with a European footprint and today includes an increasing number of Europe’s most highly respected litigation funders. ELFA was established to serve as the European voice of the commercial litigation funding industry. The association has the objective of representing the industry’s interests before governmental bodies, international organisations, and professional associations. ELFA also aims to act as a clearing house and reference for relevant information, research and data regarding the uses and applications of commercial legal finance within the European continent. ELFA aims to be inclusive for all professional litigation funders of larger or smaller size and to allow specific contributing market participants and academics as associate members.