Over the last few years litigation finance has grown at a rate faster than ever. From its origins in Australia and the UK, to all over Europe and Asia to here in North America, the growth does not seem to be slowing down at all. Most recently it looks like South America may become the next area for litigation finance development.
One sign that litigation finance may soon be coming to the region is the expansion of arbitration in the area. Just like in Singapore and Hong Kong, expanding arbitration is often a good sign of legal development that may lead to litigation finance. In both Singapore and Hong Kong, the countries started by first only allowing litigation finance in arbitration proceedings.
This is all stemming from the International Chamber of Commerce’s International Court of Arbitration announcing last year that it will open its fourth international office in Sao Paulo, Brazil. According to statistics from the International Chamber of Commerce (ICC), the new location makes logical sense as Brazil ranks third among countries with most of the parties involved in ICC Arbitration.
South America right now adheres to a code-based, civil law justice system unlike the United States and many other countries worldwide. However, the civil law justice system may be a benefit for litigation finance, as many civil systems do not have prohibitions on champerty and maintenance that are a part of the English common law, which tends to slow the growth of litigation finance.
On the other hand, it may be more difficult for litigation finance to growing rapidly in South American because the rule of law is still developing in some areas and a less settled legal system makes it very hard to assess the likelihood of success for a particular case. But that wouldn’t necessarily prohibit litigation finance from starting in arbitration hearings while the legal system develops in the area before alternative funding is an option for litigation.
As it is impossible to predict the future only time will tell what will happen in South America but it is definitely a place to keep an eye on.
Topics: litigation finance, alternative litigation finance, third party funding, South America
Works Cited: Is South America the Next Litigation Funding Hot Spot?, Bentham IMF (July 11, 2018).