Litigation financing in Mexico: a tool to democratize access to justice
Litigation financing, or third party funding (TPF), has begun to gain importance in Mexico as an effective option to facilitate access to justice, especially in complex cases that require high legal costs. This model allows plaintiffs to obtain the necessary capital to cover the expenses of a lawsuit without having to assume the full economic risk. Through specialized funds like Loopa, litigants can move forward with their cases without being limited by their financial capacity, ensuring that economic barriers do not hinder the pursuit of justice. Litigation financing is enabling more individuals and businesses in Mexico to access legal solutions in commercial, labor, environmental, or state disputes. This approach, which has been widely used in other countries, is transforming the way Mexicans approach their litigation, ensuring that everyone, regardless of their resources, has the opportunity to defend their rights in court.
History of third party funding in Mexico: Loopa, a pioneering model
Third party funding in Mexico is a relatively new practice, but it has started to gain ground in recent years due to the need for financial solutions to face the high costs of litigation, especially in complex and long-term cases. Loopa, formerly known as Qanlex, has been one of the pioneers in introducing litigation financing in the country, marking the beginning of a new stage in access to justice. Since its arrival, Loopa has managed to offer a financial alternative to litigants who otherwise would not have been able to afford the expenses of prolonged litigation. The fund has facilitated the financing of a wide range of cases, from commercial disputes to litigation against the State, allowing plaintiffs to continue with their legal processes without having to bear all the economic risk. Loopa has established itself as a reference in the third party funding market in Mexico, demonstrating that this model can be an effective solution to ensure that access to justice does not depend on the financial capacity of litigants.
The legal framework for TPF in Mexico: a private approach within civil law
Mexico follows a civil law system, which means that agreements between parties are governed by principles of autonomy of will and contractual freedom. In this context, litigation financing fits perfectly within the Mexican legal framework, as financing agreements can be privately established between the plaintiff and the funder, provided they do not violate public policy norms. The third-party funding model in Mexico is based on private agreements, where the funder provides the necessary capital to carry out litigation in exchange for a share in the profits obtained if the case is successful. This model is comparable to the practice of contingency fees, where lawyers take on the risk of financing the litigation in exchange for a percentage of the outcome. However, the key difference is that the funder of a litigation does not have to be a lawyer, but an independent third party that offers capital to cover the costs associated with the litigation, assuming the risk in exchange for potential profitability.
The application of the FIDIC contract in arbitration: arbitration centers in Mexico
In Mexico, arbitration is an increasingly used form of resolving commercial, labor, and contractual disputes. The Commercial Arbitration Law and the National and International Arbitration Law regulate arbitration in the country, providing a solid legal framework for dispute resolution outside of traditional courts. Among the main arbitration centers in Mexico are the International Chamber of Commerce (ICC) and the Mexico City Arbitration Center (CAM), which have established themselves as key points for the resolution of arbitration disputes. Litigation funding plays a fundamental role in the field of arbitration, especially in international commercial disputes, where costs can be high. Loopa has expanded its funding model to arbitration in Mexico, providing parties with the necessary resources to finance these processes without having to assume the full economic risk. This allows companies and individuals to focus on their claims without the financial burden, maximizing the chances of success in these proceedings.
The TPF in judicial disputes: a solution to the duration and costs of cases
Judicial disputes in Mexico, especially those involving commercial disputes or claims against the State, often drag on for years, significantly increasing associated costs. Congestion in the courts and the complexity of cases cause many litigants to be discouraged from proceeding due to a lack of resources to face these long-term costs. The prolongation of judicial processes and the uncertainty about their outcome can be a significant barrier to accessing justice. This is where litigation funding becomes a crucial solution. Loopa allows litigants to obtain the necessary capital to finance the costs of their cases, whether in courts or arbitrations, without having to worry about immediate costs. This is especially relevant in cases against the State, which tend to be longer and more expensive. By offering funding, Loopa helps alleviate the financial burden on plaintiffs, allowing them to continue their pursuit of justice without the duration of the case becoming an obstacle.
Conclusion: the future of litigation funding in Mexico
The future of litigation financing in Mexico is promising. As more individuals and companies realize the advantages of this model, the demand for third party funding like Loopa continues to grow. The Mexican legal framework, based on civil law principles and contractual autonomy, provides a conducive environment for litigation financing to expand and consolidate as a fundamental tool for access to justice. Loopa, as a pioneering fund in the country, has demonstrated that litigation financing is not only a viable solution but also an effective way to ensure that more individuals and companies can access justice, regardless of their economic situation. With the support of funds like Loopa, litigants in Mexico can finance their cases with confidence, ensuring that the pursuit of justice is not hindered by financial limitations. Litigation financing is intended to remain a key tool in the Mexican judicial system, promoting a more equitable and accessible justice for all.
