FRANCE Law and Practice Contributed by: Thierry Marembert, Cécile Labarbe and Céline Serpagli, Kiejman & Marembert
be construed as loans. Since the banking sec- tor is heavily regulated in France and only duly authorised financial institutions may grant loans on a regular basis, such an interpretation would restrict the growth of third-party litigation fund- ing. Therefore, it would be unlikely for French courts to construe third-party litigation funding agree- ments as loans, since the “repayment” of the “loaned” sums is only incurred in the event of a favourable outcome, whereas the repayment of an actual loan is always incurred. To a lesser extent, legal literature has also con- sidered whether third-party funding could be construed as a form of betting (also a heavily regulated business in France) but has concluded the opposite, since it is not essentially specula- tive in nature. The French Supreme Court has not yet ruled on the matter. Concerns Over Legal Obligation, Privilege and Arbitration Both the National Council of Bar Associations and the Paris Bar Association have welcomed the development of third-party funding, which they see as a positive development for access to justice. They have also emphasised that lawyers owe ethical obligations solely to their client (ie, the funded party) and not to the funder, which means that: • they should not take any instruction from the funder regarding the proceedings; and • they may not disclose any privileged informa- tion to the funder. Legal privilege under French law cannot be waived by the client. In other words, if clients
wish to disclose any privileged information relat- ed to the proceedings to the funder, they must do it themselves and may not ask their lawyer to do so. A number of concerns have also been raised regarding third-party funding in international arbitrations. The ICC and the Paris Bar Asso- ciation, among others, have highlighted the risks associated with non-disclosure of third-party funding agreements, especially regarding the potential annulment of the award and/or obsta- cles to its enforcement, and have recommended that the funded party’s attorney encourages their client to disclose the existence of such an agree- ment. 2.2 Third-Party Funding: Lawsuits Since third-party litigation funding is unregu- lated, there are no restrictions on the types of lawsuits that can be funded. 2.3 Third-Party Funding for Plaintiff and Defendant As third-party litigation funding is unregulated, it seems to be available to both the plaintiff and the defendant. 2.4 Minimum and Maximum Amounts of Third-Party Funding There is no legal limitation on the minimum and maximum amounts that can be provided by a third party. 2.5 Types of Costs Considered Under Third-Party Funding As court fees are relatively low, a third-party funder might consider covering legal fees in addition to the cost of legal opinions or experts, if necessary.
442 CHAMBERS.COM
Powered by FlippingBook