Litigation funding in Denmark
Third party funding (TPF), also known as litigation financing, has gained ground in various legal systems around the world as an effective tool to democratize access to justice. Denmark, with its solid legal framework of continental tradition, is beginning to explore more closely the advantages of this model that allows solvent but illiquid plaintiffs to advance their claims without assuming the immediate costs of litigation. In this context, Loopa presents itself as a strategic ally that provides capital in exchange for a stake in the outcome of the case, bringing predictability and liquidity to processes that, in many cases, can be prolonged and costly.
A recent history of opening up to third party funding
Unlike other European jurisdictions, Denmark does not yet have a deep development of the litigation financing market. The concept remains relatively new, although it is beginning to gain recognition, especially in complex litigation and commercial arbitrations. For years, the traditional model of public legal assistance and legal protection insurance has played the role of the main source of economic support for litigants. However, with the growth of international commercial litigation and the need for more sophisticated financing solutions, some Danish law firms and disputing parties have begun to explore the use of third-party funding, especially in disputes involving significant amounts.
Legal framework
In Denmark, litigation funding is not expressly regulated by law, but it is perfectly compatible with the general principles of Danish law, which has a continental root. It is a private agreement between parties, making it a valid concept as long as it does not contravene public policy norms or ethical principles. The legal system allows for the assignment of litigation rights, providing a solid foundation for structuring third-party funding agreements, where the funder may receive part of the litigation outcome in exchange for assuming the economic risk. In this sense, third-party funding has parallels with the concept of a contingency fee, which is permitted under certain conditions, and also resembles accepted practices of contingency fees in common law jurisdictions.
Arbitration application: a fertile ground for external financing
Denmark has established itself as an attractive venue for the resolution of commercial disputes through arbitration, especially in the Nordic and European context. The Danish Institute of Arbitration (DIA), based in Copenhagen, is the country's main arbitration center and enjoys regional and international recognition. Its procedures, flexible and efficient, are compatible with the participation of third-party funders. International arbitration, due to its complexity and cost, represents one of the most natural spaces for the application of third-party funding. In this context, external financing allows companies —including SMEs— to address large-scale disputes without compromising their liquidity. The fact that arbitration proceedings in Denmark are generally confidential, along with the growing interest in improving financial transparency in these processes, opens the door to greater acceptance of the role of funds.
Application in judicial disputes: a useful tool to monetize long processes
Despite the efficiency of the Danish judicial system, certain complex litigations—especially those involving the State, cross-border commercial disputes, or multi-instance processes—can drag on for years. In these cases, third-party funding emerges as an effective solution to expedite access to resources, alleviating the economic burden of waiting for a final judgment. While direct litigation costs in Denmark are usually moderate, the value of funding lies in its ability to turn an uncertain expectation of future payment into immediate liquidity. In this sense, Loopa offers a differential value proposition: partially monetizing the litigation before the ruling, allowing plaintiffs to release resources and mitigate the financial impact of the wait, especially in cases against public entities or with difficult resolution.
Conclusion: a market with potential for growth
Litigation financing in Denmark is in a consolidation stage, with a stable legal environment, reliable institutions, and a growing interest in innovative solutions in legal risk management. The absence of restrictive regulation and the existence of legal mechanisms compatible with the principles of third-party funding make it a market with great potential. Loopa positions itself as a key player to support this process, offering capital, experience, and technology to plaintiffs and law firms looking to transform litigation into opportunities. In a context where access to justice should not depend on financial capacity, external financing becomes a strategic ally for those seeking to resolve disputes with economic criteria and long-term vision.
