- In India’s legal system, the growing use of Third-Party Litigation Funding (TPLF) is emerging as a potential solution to the financial barriers to justice.
- TPLF allows investors to fund legal battles in exchange for a share of the winnings, helping those who cannot afford litigation costs like small business owners or tribal communities, to seek justice against powerful entities.
- TPLF provides financial support to individuals or groups involved in legal cases, with investors receiving a portion of the settlement if the case is successful.
- The Supreme Court has cautiously Bar Council of India v. A.K. Balaji allowed TPLF as long as lawyers are not directly funding the cases, viewing it as a potential equaliser in the legal system.
| Champerty refers to a relationship that arises when third parties unrelated to a litigation provide material support to litigants in exchange for consideration contingent on the outcome of the litigation. Often that relationship between the third party and the litigant is known as champerty. |
- This decision is rooted in historical judgments that support third-party funding, distinguishing it from old English laws on champerty.
- TPLF could support various legal areas, including consumer rights, environmental issues, workers’ rights, public interest litigation, cases involving medical malpractice, intellectual property rights, and social justice issues.
- India lacks a national framework for TPLF, though some states have recognised third-party financing in civil cases.
- Learning from international examples like Hong Kong’s Code of Practice for TPLF in Arbitration, India must address risks like funder control, capital adequacy, and court oversight.
Dig Deeper: Read about various innovations adopted by the judiciary to reduce pendency in recent times.
