Third-Party Litigation Funding (TPLF) in India

Source: The post Third-Party Litigation Funding (TPLF) in India has been created, based on the article “Reimagining access to justice” published in “The Hindu” on 17th October 2024

UPSC Syllabus Topic: GS Paper 2– dispute redressal mechanisms

Context: The article discusses Third-Party Litigation Funding (TPLF) in India. It highlights how TPLF can help individuals afford legal battles against powerful entities. The article also emphasizes the need for a regulatory framework to manage TPLF and ensure fair access to justice for all.

For detailed information on third party funding read this article here

What is Third-Party Litigation Funding (TPLF)?

Third-Party Litigation Funding (TPLF) allows external investors to finance legal cases. In return, these investors get a share of the winnings. It helps people who can’t afford legal expenses, making justice more accessible.

Why is TPLF Important in India?

1. Justice in India is becoming increasingly expensive, and many can’t afford them.
2. With over 80,000 cases pending in the Supreme Court and around 40 million across the country,
3. TPLF could provide access to justice and empower disadvantaged groups to pursue legal action.
4. The Supreme Court views TPLF as a “potential equaliser” in the courtroom.

How has TPLF been accepted in India?

1. The Supreme Court, in Bar Council of India v. A.K. Balaji, supported TPLF. It said TPLF is acceptable as long as lawyers don’t fund the cases.
2. This builds on the Ram Coomar Coondoo v. Chunder Canto Mookerjee case, which said English laws against such funding don’t apply in India.

What Challenges Does TPLF Face?

1. Profit-Driven Funding: Critics worry that funders may choose only profitable cases, ignoring important but less profitable ones. There is also concern over how much control funders should have in deciding case strategies.
2. Regulatory Gaps: India lacks a comprehensive national framework for TPLF, leading to uncertainty in operations. Only some states, like Maharashtra and Madhya Pradesh, have started to recognize TPLF.
3. Transparency Issues: Without regulations, there are concerns about how funding deals are structured, risking clients’ decision-making rights.
4. Court Involvement: Determining the appropriate level of court oversight is complex and needs clear guidelines to maintain judicial integrity.

What are global examples of TPLF regulation?

Hong Kong’s 2019 Code of Practice for Third Party Funding in Arbitration requires funders to disclose financial details, liability, and control. India may adopt similar rules to protect against risks and ensure fair litigation.

Question for practice:

Discuss the importance of Third-Party Litigation Funding (TPLF) in making justice more accessible in India.