Litigation financing in Chile: A boost for access to Justice
Litigation financing, also known as third party funding (TPF), has emerged as a key tool in the legal field, especially in countries like Chile. This financing model allows plaintiffs to obtain the necessary capital to pursue their litigation without having to assume the total economic risk of the dispute. With the support of specialized funds, such as Loopa, this type of financing has enabled many cases that would have otherwise been dismissed or abandoned due to lack of resources to move forward. Litigation financing opens the door to a more accessible and equitable justice, allowing individuals and companies to seek resolution in high-stakes cases, even against entities with much greater resources.
History of Third Party Funding in Chile
The concept of third party funding began to gain relevance in Chile in the last decade, when the need for financing options for more complex legal cases became more evident. In this context, Qanlex, now Loopa, was one of the first funds to introduce this model in the country, standing out for its innovative approach and its ability to offer solutions to clients who would not have otherwise been able to afford the high costs of prolonged litigation. Qanlex started its operations in Chile, offering financing to companies and individuals involved in legal disputes, whether in court or in arbitration. The key to its success lay in the flexibility of the financing model and in designing agreements that adapted to the particular needs of each case. Since its arrival, Loopa has worked to ensure that access to justice does not depend solely on the financial capacity of the plaintiffs, but on the strength of their claims and the likelihood of success in litigation.
The legal framework for TPF in Chile
In Chile, the legal framework supporting litigation funding is based on the principles of continental law, which regulate the relationships between the parties under the principle of autonomy of will. This means that the parties involved in litigation funding, whether an investment fund or the plaintiff themselves, are free to agree on the terms of the agreement privately, as long as they do not contravene public policy norms. In this context, the third party funding model is based on private agreements, where the funder provides the necessary capital for the litigation in exchange for a share in the profits obtained if the case is successful. This type of agreement is comparable to the practice of "cuota litis," traditionally used by lawyers to finance the expenses of litigation in exchange for a percentage of the amount recovered. The assignment of litigation rights is one of the keys to the system, as the funder acquires the right to a percentage of the economic compensation derived from the case, making it an investment with high potential profitability, albeit with inherent risks.
The application of the FIDIC contract in arbitration
Arbitration has traditionally been a preferred method of dispute resolution in Chile, especially in the commercial and international sphere. Arbitration centers such as the Santiago Chamber of Commerce (CCS) and the Arbitration Court of the Santiago Stock Exchange (BCS) have established themselves as key points for conflict resolution, being internationally recognized for their efficiency and professionalism. Third party funding in arbitration offers a unique opportunity for parties involved in complex and high-value disputes. The possibility of financing arbitration allows companies and individuals to focus on their claims without having to worry about high procedural costs. Loopa, for example, has significant experience in international arbitrations, working with specialized lawyers to ensure that cases are resolved in the most favorable manner possible, guaranteeing a share in the economic results obtained.
Litigation financing: a solution to the lengthy duration of cases
In Chile, judicial disputes, especially those involving commercial claims or against the State, can drag on for several years. The costs associated with these cases can be prohibitive, especially in legal processes that are prolonged due to the complexity of the procedures and congestion in the courts. Loopa, like other litigation funding funds, offers a key solution in this scenario. The funding allows plaintiffs to obtain liquidity to cover the costs of the litigation throughout the process, while the fund assumes the economic risk associated with the prolongation of the case. This model is particularly useful in litigation against the State, where procedures tend to be lengthy and costs can accumulate rapidly. Thanks to litigation funding, plaintiffs can pursue their case without the pressure of immediate costs, maximizing their chances of success.
Conclusion: the future of litigation funding in Chile
Litigation financing has proven to be an invaluable tool for democratizing access to justice in Chile. By providing a flexible and risk-free financing solution for the parties involved, Loopa is changing the way people and businesses approach their legal disputes. The Chilean legal framework, based on principles of continental law, has allowed for the development and expansion of this financing model, while its application in arbitration and judicial litigation has proven to be an efficient and effective response to the growing demand for access to justice. The future of litigation financing in Chile looks promising, with a legal landscape that continues to evolve and adapt to the needs of litigants. Loopa's ability to finance complex cases and offer monetization solutions for lengthy litigation positions this model as a key component to ensure that plaintiffs can seek justice without being limited by their financial resources.
