Litigation financing in Nicaragua: strategic boost in a demanding legal environment
Litigation financing by third parties (third party funding) is a legal and financial solution that allows a party with a legitimate claim to receive capital to cover the costs of a judicial or arbitral process, in exchange for a portion of the favorable outcome. In Nicaragua, where litigation is often prolonged and complex, this model represents a concrete opportunity for companies and individuals seeking justice but facing liquidity constraints. Loopa, as a specialized fund, arrives in Nicaragua with a clear proposal: to finance cases with merit, share risks, and help ensure that access to justice does not depend solely on available capital.
History of third party funding in Nicaragua
In Nicaragua, the third party funding model is still in its early stages. There is no formal industry developed around this concept, and its use has been limited by the lack of specialized actors and widespread ignorance about this alternative. However, in recent years, there has been a growing interest from law firms, companies with strategic litigation, and legal professionals in incorporating financing solutions to drive complex processes without immobilizing their own capital. The need for alternatives has been driven by a judicial system facing structural delays, scarcity of institutional resources, and, in some cases, challenges of predictability. In this context, external financing emerges as a useful response for those with a strong case but lacking the resources to sustain it to the end. Loopa positions itself as one of the first funds to offer structured financing in Nicaragua, combining international experience with an approach tailored to the local legal context.
Legal framework: civil law and contractual freedom
Nicaragua adopts a civil law system, with a strong influence from the Spanish model. In this framework, contractual freedom allows parties to enter into valid agreements, as long as they do not violate mandatory rules or public order. This provides a sufficient legal basis for structuring litigation financing contracts, in which a third party assumes the costs of the litigation in exchange for a portion of the favorable outcome. The assignment of litigious credits is allowed by the Nicaraguan Civil Code, and can be used to establish the legal relationship between the funder and the claimant. This mechanism is particularly useful in civil, commercial, or enforcement litigation contexts. On the other hand, although there are restrictions on lawyers charging based solely on the outcome of the case (quota litis), these limitations do not apply to third-party funders like Loopa, which allows for the implementation of shared risk schemes, always respecting the lawyer's independence and the client's rights.
Arbitration application: expanding opportunities
Nicaragua has a Mediation and Arbitration Law (Law No. 540) that promotes alternative mechanisms for conflict resolution, aligned with international standards. Additionally, the country is a signatory to the New York Convention, ensuring the recognition and enforcement of foreign arbitral awards. Arbitration has expanded in sectors such as construction, energy, agribusiness, and public contracts, with institutions like the Center for Mediation and Arbitration of the Chamber of Commerce of Nicaragua (CEMARC) playing an active role in the administration of these procedures. Although third party funding is not yet widely implemented in local arbitrations, its compatibility with arbitration rules and the global trend towards procedural transparency make it increasingly viable. Loopa can intervene in this space by financing legal fees, arbitration costs, expert expenses, and other procedural costs so that parties can pursue their claims without economic constraints.
Application in judicial disputes: monetize the wait, alleviate the burden
The Nicaraguan judicial system, like in many jurisdictions in the region, faces significant challenges regarding the duration of processes, procedural congestion, and lack of resources. Civil, commercial, or administrative disputes can take years, directly impacting the financial position of those waiting to recover assets or enforce their rights. Loopa offers a concrete alternative: monetizing litigation. This means that the plaintiff can receive an advance on the estimated value of their claim, turning a future expectation into immediate liquidity. This financing can be used to cover legal expenses, release working capital, pay debts, or meet operational commitments while the trial progresses. Furthermore, by assuming the risk of the case, Loopa allows the client to litigate without financial stress and with support that enhances their strategic position against the counterparty, especially when the latter has more economic power or the ability to delay the process.
Conclusion: a powerful tool to transform access to justice
Nicaragua gathers the necessary conditions for third-party litigation funding to become a transformation tool: a compatible legal framework, real needs for access to resources, and a legal ecosystem that is beginning to open up to new ways of managing conflicts. Loopa arrives in Nicaragua with a specific proposal: to provide capital, share risks, and allow cases with merit to progress, regardless of the financial capacity of the plaintiff. Whether in civil litigation, commercial arbitrations, or enforcement processes, we are prepared to be strategic allies of lawyers, companies, and individuals who seek justice... but also need it now. Because in Nicaragua, as in all of Latin America, access to justice also requires financial support.
