75 Amendments of Karen MELCHIOR related to 2020/2130(INL)
Amendment 35 #
Motion for a resolution
Recital E
Recital E
E. whereas, although TPLF is widespread in Australiaoutside of Europe, such as in Australia and the USA, it has not had a positive impact on the administration of justice in thatose third-country jurisdictions; whereas, empirical data6 show that litigation funders typically pick and choose between cases to find the best returns, and would not invest in cases they regard as too risky or not profitable enough; _________________ 6 See Australian Law Reform Commission (2019): An Inquiry into Class Action Proceedings and Third-Party Litigation funders, p 34.
Amendment 41 #
Motion for a resolution
Recital G
Recital G
G. whereas the current regulatory vacuum enables litigation funders to operate in secrecy, with the result that courts can, on occasion, make awards to claimants without realising that a large majority of the award will subsequently be redirected to litigation funders; whereas the lack of transparency can also mean that even the potential beneficiaries have little or no knowledge about the distribution of awards or the funding agreements, in particular in Members States with an opt- out mechanism within collective redress systems;
Amendment 45 #
Motion for a resolution
Recital H
Recital H
H. whereas Directive (EU) 2020/1828 identifieslays down certain safeguards relating to litigation funding, which are, however, limited to representative actions on behalf of consumers taken underwithin the remit of that Directive, and therefore exclude manydoes not regulate other types of action or categories of claimants; whereas, effective safeguards should apply to all types of claims;
Amendment 50 #
Motion for a resolution
Paragraph 1
Paragraph 1
1. Observes that third party litigation funding is a rapidly expanding commercial practice in the Union, which has a significant impact on justice systems as well asnd thereby on European citizens. Notes that litigation funding is so far largely unregulated in the Unionat Union level;
Amendment 68 #
Motion for a resolution
Paragraph 5
Paragraph 5
5. Recommends that litigation funders be obliged to respect a fiduciary duty of care requiring them to act in the best interests of a claimant. Believes that litigation funders should be prevented from exercising control over the legal proceedings they fund, which should be the sole responsibility of the claimant and their legal representatives. Points out that, whereby such control over thefunded legal proceedings they fund can consist of both of, formal control, such as athrough contractual power to make decisionarrangements, and informal control, such as therough threats to withdraw the funding;
Amendment 71 #
Motion for a resolution
Paragraph 6
Paragraph 6
6. Underlines that conflicts of interest may arise where there are relationships between litigation funders, qualified entities, law firms, aggregators, including claims-collection and award- distribution- platforms, and other actors who may bare involved in claimlegal proceedings, having an interest in the outcome of such court cases. Notes that there is a trend of an increasingly close cooperation, with, for example, litigation funders agreeing to finance law firms across a series of future cases (portfolio funding)7 . Recommends that safeguards are adopted to prevent such potential conflicts, set outto lay down claimants’ rights and to require that details of relationships between litigation funders and the other involved parties are disclosed; _________________ 7 EPRS Study (2021): Responsible litigation funding. State of play on the EU private litigation funding landscape and on the current EU rules applicable to private litigation funding, p. 28 -29.
Amendment 73 #
Motion for a resolution
Paragraph 7
Paragraph 7
7. Believes that litigation funders should not be permitted to abandon funded parties in litigation, except in restricted and well-defined circumstances, leaving claimants solely responsible for all costs of the litigation, which may have only been pursued due to the involvement of the funder; stresses therefore that contractual arrangements on the basis of conditional funding should be considered as void;
Amendment 77 #
Motion for a resolution
Paragraph 9
Paragraph 9
9. Considers that legislation should impose limits ton the proportion of the award that litigation funders are entitled to by virtue of a funding agrereceive in case of successful litigation and on the basis of a contractual arrangement. Believes that only under exceptional circumstances arrangements between litigation funders and claimants should varydivert from the general rule that only a minaximum of 640% of the gross settlement or damages is paid to the claimantscan be claimed by the litigation funder;
Amendment 80 #
Motion for a resolution
Paragraph 10
Paragraph 10
10. Considers that there should be transparency regarding the involvement of litigation funding in legal proceedings, including obligations for claimants and their lawyers to disclose funding agreements to courts and defendants. Notes that, currently, courts or administrative authorities and defendants are often not aware that a claim is funded by a commercial actor. Points out that this can also hinder a court or administrative authority in properly considering costs issues and in ensuring that awards compensate claimants adequatelysuch lack of transparency can also have a negative impact on a court or administrative authority’s cost decision;
Amendment 86 #
Motion for a resolution
Paragraph 11
Paragraph 11
11. Is of the opinion that supervisory authorities, and courts and administrative authorities where appropriate in accordance with national procedural law, should have the powers to facilitate the enforcement of legislation adopted to achieve the goals set out above; recommends the establishment of a complaints system. Considers that supervisory authorities, and courts and administrative authorities, where appropriate in accordance with national procedural law, should have the powers to address abusive practices by authorised litigation funders;
Amendment 88 #
Motion for a resolution
Paragraph 12
Paragraph 12
12. Requests the Commission to submit a proposal for a dDirective to regulatelay down harmonised rules for third party litigation funding, following the recommendations set out in the Annex hereto;
Amendment 98 #
Motion for a resolution
Annex I – paragraph 10 – point 2 a (new)
Annex I – paragraph 10 – point 2 a (new)
(2 a) Third-party litigation funding could increase access to justice if the associated risks are mitigated; therefore, it is crucial to ensure a necessary balance between improving the claimants’ access to justice and appropriate safeguards to avoid abusive litigation;
Amendment 99 #
Motion for a resolution
Annex I – paragraph 10 – point 2 b (new)
Annex I – paragraph 10 – point 2 b (new)
(2 b) Responsible third-party litigation funding can lower costs, make those more predictable, simplify unnecessary procedures and deliver efficient services at costs that are proportionate to the amounts in dispute;
Amendment 136 #
Motion for a resolution
Annex I – paragraph 10 – point 22
Annex I – paragraph 10 – point 22
(22) The adequacy of supervision of litigation funders and third-party funding agreements cannot be ensured absentin the absence of obligations on litigation funders to be transparent regarding their activities. This includes transparency vis-à-vis courts or administrative authorities, defendants and claimants, and therefore obligations should apply to disclose third party funding agreements in full to courts or administrative authorities and defendants, subject to appropriate limitations to protect any necessary confidentiality.
Amendment 161 #
Motion for a resolution
Article 2 – paragraph 1
Article 2 – paragraph 1
This Directive applies to third party litigation funders and to the third-party funding agreements that they are entitled to offer to claimants in the Union.
Amendment 166 #
Motion for a resolution
Article 3 – paragraph 1 – point a
Article 3 – paragraph 1 – point a
(a) ‘litigation funder’ means any undertaking that enters into a third-party funding agreement in relation to proceedings, even though it is neither a party to those proceedings, a lawyeregal representingative of a party to such proceedings, or a provider of regulated insurance services to a party in such proceedings;
Amendment 170 #
Motion for a resolution
Article 3 – paragraph 1 – point c
Article 3 – paragraph 1 – point c
(c) ‘court or administrative authority’ means a competent court, administrative authority, arbitral body or other body tasked with adjudicating on proceedings, according to national law;
Amendment 175 #
Motion for a resolution
Article 3 – paragraph 1 – point f
Article 3 – paragraph 1 – point f
(f) ‘qualified entity’ means an organisation representing consumers’ interests and designated as qualified entity under Directive (EU) 2020/1828;
Amendment 178 #
Motion for a resolution
Article 3 – paragraph 1 – point h
Article 3 – paragraph 1 – point h
(h) ‘third-party funding agreement’ means an agreement in which a litigation funder agrees to fund of all or part of the costs of proceedings in exchange for receiving a share of the monetary amount awarded to the claimant or a success fee, so as to cover the reimbursement of its funding and, where applicable, remuneration for the service provided, based wholly or partially on the outcome of proceedings. This definition includes all agreements in which such a reward is agreed, whether offered as an ‘arm’s length’ service, or achieved through a purchase or assignment of the claim.
Amendment 179 #
Motion for a resolution
Article 4 – point 1
Article 4 – point 1
Amendment 182 #
Motion for a resolution
Article 4 – point 2
Article 4 – point 2
2. Where such activities are permitted, Member States shall create a system for the authorisation of the activities of litigation funders in relation to proceedings within their territory or for the benefit of claimants or intended beneficiaries resident within their Member State. That system shall include designating an independent supervisory authority tasked with granting or withdrawing authorisations for litigation funders and supervising the activities of litigation funders.
Amendment 187 #
Motion for a resolution
Article 5 – point 1 – introductory part
Article 5 – point 1 – introductory part
1. Member States shall ensure that supervisory authorities only grant or maintain authorisations, whether for domestic or cross-border litigation or other proceedings, to litigation funders who comply with the provisions of this Directive, and who meet, in addition to any suitability or other criteria as may be set out in national law, at least at least one or all of the following criteria:
Amendment 190 #
Motion for a resolution
Article 5 – point 1 – point c
Article 5 – point 1 – point c
(c) they demonstrate to the satisfaction of the supervisory authority that they have procedures and governance structures in place to ensure their ongoing compliance with this Directive, with the transparency requirements and fiduciary relationships this Directive provides for, and with any additional national requirements relating to the conclusion of third-party funding agreementsthey have established internal procedures to prevent a conflict of interest between itself and the defendant;
Amendment 195 #
Motion for a resolution
Article 5 – point 2
Article 5 – point 2
Amendment 196 #
Motion for a resolution
Article 6 – point 1 – point c
Article 6 – point 1 – point c
Amendment 198 #
Motion for a resolution
Article 6 – point 2
Article 6 – point 2
2. Member States shall ensure that supervisory authorities are empowered to verify whether litigation funders would be able to maintain access at all times to the minimum liquidity required to pay in full all foreseeable adverse costs in all proceedings they have funded. Members States shall ensure that their courts or administrative authorities can request litigation funders to provide security for costs in the forms admitted by national law, should a defendant so request based on reasoned specific concernsrequire that litigation funders, during the first stage of proceedings, make a financial deposit equivalent to the amount in dispute or the value in litigation with a public fiduciary.
Amendment 205 #
Motion for a resolution
Article 7 – point 1
Article 7 – point 1
Amendment 208 #
Motion for a resolution
Article 7 – point 2
Article 7 – point 2
2. Where a claimant intends to take a claim on behalf of others in proceedings, such as where the claimant is a qualified entity representing consumers, the litigation funder shall also be required to owe a fiduciary duty to such intended beneficiaries. Litigation funders shall be obliged to acting in a manner that is consistent with their fiduciary duty throughout the course of proceedings. In the event of a conflict between the interests of the litigation funder and those of claimants or intended beneficiaries, the litigation funder shall commit to placing the interests of the claimants or intended beneficiaries above its own interests.
Amendment 209 #
Motion for a resolution
Article 8 – point 1
Article 8 – point 1
1. In the Member States where third party funding agreements are permitted in accordance with Article 4, Member States shall provide that an independent public supervisory authority is responsible for overseeing the authorisation of litigation funders established within its jurisdiction, offering third party funding agreements to claimants and intended beneficiaries within its jurisdiction, or in relation to proceedings within its jurisdiction.
Amendment 212 #
Motion for a resolution
Article 8 – point 2
Article 8 – point 2
2. Member States shall ensure that a complaints procedure before supervisory authorities is available for any natural or legal person who wishes to raise concerns regarding the compliance of a litigation funder with its obligations under this Directive and the applicable national law.
Amendment 214 #
Motion for a resolution
Article 8 – point 3 – point c
Article 8 – point 3 – point c
Amendment 221 #
Motion for a resolution
Article 8 – point 4
Article 8 – point 4
4. Member States shall ensure that litigation funders are required to notify a supervisory authority without undue delay of any changes affecting compliance by a litigation funder with the capital adequacy requirements laid down in Article 6 paragraphs 1 and 2. In addition, Member States shall ensure that litigation funders certify, at regular intervals and at least once annually, that they remain in compliance with those paragraphs. Such a certification shall contain the opinion of a recognised national or international audit firm that the litigation funder is in compliance.
Amendment 223 #
Motion for a resolution
Article 8 – point 5
Article 8 – point 5
5. Member States shall ensure that supervisory authorities oversee fiduciary relationships between litigation funders and claimants and intended beneficiaries in general, and are able to make directions and orders to ensure that claimants’ interests and those of intended beneficiaries are protected.
Amendment 226 #
Motion for a resolution
Article 9 – point 1
Article 9 – point 1
1. Member States shall ensure that a complaints system is in place thatwhich allows for the reception and investigation of complaints as referred to in Article 8, paragraph 2.
Amendment 230 #
Motion for a resolution
Article 9 – point 2
Article 9 – point 2
2. Under the complaints system referred to in paragraph 1, Member States shall ensure that supervisory authorities are empowered to assess whether a litigation funder is in compliance with any obligations or conditions associated with its authorisation, with the provisions of this Directive and with any other applicable requirements under national law.
Amendment 231 #
Motion for a resolution
Article 9 – point 3 – introductory part
Article 9 – point 3 – introductory part
3. Member States shall ensure that, in exercising their oversight with litigation funders’ compliance with such obligations, supervisory authorities arshall be empowered to:
Amendment 233 #
Motion for a resolution
Article 9 – point 3 – point iv
Article 9 – point 3 – point iv
(iv) initiate investigations following a recommendation from a court or administrative authority that has concerns regarding a litigation funder’s compliance with such obligations arising from any proceedings before such a court or administrative authority, prior to any court action or during the proceedings.
Amendment 234 #
Motion for a resolution
Article 10 – point 2
Article 10 – point 2
2. The Commission shall oversee and coordinate the activities of the supervisory authorities in performing the functions set out in this Directive, and shall convene and chair a network of supervisory authorities. The modalities for cooperation within the network shall be laid down and revised by the Commission by means of delegated acts , in close cooperation with theestablish a network of supervisory authorities.
Amendment 236 #
Motion for a resolution
Article 10 – point 3
Article 10 – point 3
3. The supervisory authorities may consult the Commission on any matter involving the implementation of this Directive. The Commission may issue guidelines, recommendations, best practice notices and advisory opinions to supervisory authorities on the implementation of this Directive, and in relation to any apparent inconsistency in this regard, or in relation to the supervision of any litigation funders. The Commission may also set up a centre of competence to provide qualified expertise to court or administrative authorities seeking advice on how to assess litigation funders’ activities within the UnionCommission may issue guidelines on the implementation of this Directive.
Amendment 238 #
Motion for a resolution
Article 10 – point 4
Article 10 – point 4
4. Each supervisory authority shall communicate every quarter to the Commission a list of the litigation funders it has authorised and make that list publicly available. Supervisory authorities shall inform the Commission each and every time there is a change to that lista list of authorised litigation funders.
Amendment 240 #
Motion for a resolution
Article 10 – point 5
Article 10 – point 5
Amendment 242 #
Motion for a resolution
Article 10 – point 6
Article 10 – point 6
Amendment 244 #
Motion for a resolution
Article 10 – point 7
Article 10 – point 7
Amendment 247 #
Motion for a resolution
Article 11 – paragraph 1 – introductory part
Article 11 – paragraph 1 – introductory part
Member States shall ensure that third party funding agreements are required to be provided in writtening in one or morat least one of the official languages of the Member State in which the claimant(s) and intended beneficiaries are residentUnion, and presented in a clear and easily understood termscomprehensible manner, in particular with regard to the following elements:
Amendment 250 #
Motion for a resolution
Article 11 – paragraph 1 – point a
Article 11 – paragraph 1 – point a
a. the share of any award or fees that will be paid to the litigation funder or any other third party, or any other financial costs borne by the claimants and /or intended beneficiaries directly or indirectly both in absolute terms, and also modelled on a range of realistic outcomes given the facts then known about the claim;
Amendment 255 #
Motion for a resolution
Article 11 – paragraph 1 – point b – introductory part
Article 11 – paragraph 1 – point b – introductory part
b. the risks that the claimants and/or intended beneficiaries are assuming, including:a declaration of absence of conflict of interest by the litigation funder.
Amendment 257 #
Motion for a resolution
Article 11 – paragraph 1 – point b – point i
Article 11 – paragraph 1 – point b – point i
Amendment 260 #
Motion for a resolution
Article 11 – paragraph 1 – point b – point ii
Article 11 – paragraph 1 – point b – point ii
Amendment 261 #
Motion for a resolution
Article 11 – paragraph 1 – point b – point iii
Article 11 – paragraph 1 – point b – point iii
Amendment 264 #
Motion for a resolution
Article 11 – paragraph 1 – point b – point iv
Article 11 – paragraph 1 – point b – point iv
Amendment 266 #
Motion for a resolution
Article 11 – paragraph 1 – point b a (new)
Article 11 – paragraph 1 – point b a (new)
b a. a disclaimer with regard to non- conditionality of funding with regard to procedural steps;
Amendment 267 #
Motion for a resolution
Article 11 – paragraph 1 – point b b (new)
Article 11 – paragraph 1 – point b b (new)
b b. a clause stating that any share of the award for the funder can only be considered after the award of the claimant has been satisfied and is, in any case, limited to a maximum of 40% of the gross settlement or damages claimed;
Amendment 271 #
Motion for a resolution
Article 12 – point 2 – point b
Article 12 – point 2 – point b
Amendment 274 #
Motion for a resolution
Article 13 – point 1
Article 13 – point 1
1. Member States shall ensure that third-party funding agreements concluded with natural or legal persons who are not authorised to act as a litigation funder have no legal effect.
Amendment 280 #
Motion for a resolution
Article 13 – point 5 a (new)
Article 13 – point 5 a (new)
5 a. Member States shall ensure that third-party funding agreements must be unconditional to the withdrawal of funding under certain procedural circumstances.
Amendment 283 #
Motion for a resolution
Article 14 – point 1
Article 14 – point 1
1. Member States shall prohibit the unilateral termination of a third-party funding agreement by a litigation funder without the claimant’s informed consent, except where a court or administrative authority has granted the litigation funder permission to terminate the agreement, having considered whether the interests of the claimant and intended beneficiaries would be adequately protected despite the termination.
Amendment 284 #
Motion for a resolution
Article 14 – point 2
Article 14 – point 2
Amendment 288 #
Motion for a resolution
Article 15 – point 2
Article 15 – point 2
Amendment 294 #
Motion for a resolution
Article 15 – point 3
Article 15 – point 3
Amendment 295 #
Motion for a resolution
Article 16 – paragraph 1 – introductory part
Article 16 – paragraph 1 – introductory part
Member States shall designate the competent court or administrative authority to perform the different judicial and administrative tasks under this Directive. Such designation shall in particular specify which court or administrative authority is to conduct controls on the impact of funding agreements on the cases before them, by exercising powers:
Amendment 297 #
Motion for a resolution
Article 16 – paragraph 1 – point a
Article 16 – paragraph 1 – point a
Amendment 300 #
Motion for a resolution
Article 16 – paragraph 1 – point b
Article 16 – paragraph 1 – point b
Amendment 302 #
Motion for a resolution
Article 16 – paragraph 1 – point c
Article 16 – paragraph 1 – point c
Amendment 305 #
Motion for a resolution
Article 16 – paragraph 1 – point d
Article 16 – paragraph 1 – point d
Amendment 307 #
Motion for a resolution
Article 16 – paragraph 1 – point d – point i
Article 16 – paragraph 1 – point d – point i
Amendment 308 #
Motion for a resolution
Article 16 – paragraph 1 – point d – point ii
Article 16 – paragraph 1 – point d – point ii
Amendment 309 #
Motion for a resolution
Article 16 – paragraph 1 – point d – point iii
Article 16 – paragraph 1 – point d – point iii
Amendment 310 #
Motion for a resolution
Article 16 – paragraph 1 – point d – point iv
Article 16 – paragraph 1 – point d – point iv
Amendment 311 #
Motion for a resolution
Article 16 – paragraph 1 – point e
Article 16 – paragraph 1 – point e
Amendment 312 #
Motion for a resolution
Article 16 – paragraph 1 – point f
Article 16 – paragraph 1 – point f
Amendment 323 #
Motion for a resolution
Article 19 – point 2
Article 19 – point 2
Amendment 324 #
Motion for a resolution
Article 19 – point 2 – point a
Article 19 – point 2 – point a
Amendment 325 #
Motion for a resolution
Article 19 – point 2 – point b
Article 19 – point 2 – point b
Amendment 326 #
Motion for a resolution
Article 19 – point 2 – point c
Article 19 – point 2 – point c
Amendment 327 #