Litigation financing in Portugal: a solution for access to justice
Litigation financing, also known as third party funding (TPF), has gained relevance in Portugal as a key tool to facilitate access to justice, especially in large-scale disputes or high-value economic cases. This model allows parties involved in litigation to obtain the necessary capital to finance their cases, without having to assume all the economic risk. With the support of specialized funds like Loopa, parties can focus on legal issues, without the lack of resources being an impediment to seeking justice. Litigation financing is therefore presented as an effective solution to ensure that all individuals and companies can assert their rights, regardless of their financial situation.
History of third party funding in Portugal
Unlike jurisdictions such as the United Kingdom or the Netherlands, where third party funding has a consolidated history, in Portugal the practice is more recent. For many years, the model was viewed with caution by the legal community, partly due to tradition and partly due to the lack of specific regulation. However, in the last decade, the environment has begun to change. The growth of international arbitration, the professionalization of the legal sector, and the increase in complex commercial litigation have fueled interest in external financing solutions. Today, both law firms and Portuguese companies and investors with assets trapped in disputes see third party funding as a legitimate tool to share risks and accelerate processes. Loopa, with experience operating in continental Europe, is prepared to structure secure agreements compatible with the Portuguese regulatory framework, leading the consolidation of this model in the country.
Legal framework: civil law and contractual freedom
Portugal is governed by a civil law system, which means that agreements between parties are based on principles of autonomy and contractual freedom. This framework is ideal for the implementation of third party funding, as it allows litigants and funders to reach private agreements on financing terms, without state intervention, as long as such agreements do not contravene public order laws. Third party funding in Portugal operates through private agreements in which the funder provides the necessary capital to finance the litigation, in exchange for a share in the profits obtained if the case is successful. This model is comparable to the practice of "cuota litis," in which lawyers take on the risk of financing the litigation in exchange for a portion of the profits obtained. However, unlike "cuota litis," in TPF the funder is not necessarily a lawyer and is limited to financing the case, assuming the economic risk of the litigation. This allows more individuals and companies to access justice without having to bear all the financial risk.
Arbitration application: Lisbon as a growing venue
Portugal has strengthened its positioning as a venue for arbitration in the Lusophone and European spheres. Institutions such as the Commercial Arbitration Center (CAC) and the Arbitration Center of the Portuguese Chamber of Commerce and Industry (CCIP) have modernized their regulations, promoting efficiency, neutrality, and transparency in the procedures. The country is a signatory to the New York Convention, and its domestic legislation aligns with the UNCITRAL Model Law, ensuring the recognition of international arbitral awards and a predictable legal framework for complex disputes. Third-party funding is fully compatible with arbitration in Portugal. International best practices are already being adopted by Portuguese arbitration institutions, including the disclosure of the existence of funders when relevant to avoid conflicts of interest. Loopa can intervene in this context by financing arbitrations based in Lisbon or other cities in the country, covering legal fees, arbitration costs, expert fees, and other key procedural expenses.
Application in judicial disputes: relief from lengthy and costly processes
Although the Portuguese judicial system has improved in efficiency, civil, commercial, and administrative litigation - especially in higher instances - can drag on for years. This represents a barrier for many individuals and companies who, even though they have a legitimate case, cannot afford the costs or wait for the final outcome to access the funds claimed. Loopa's model offers a direct alternative: monetizing litigation. This means transforming a future expectation into present liquidity, allowing the client to cover expenses, reinvest, or release operational capital. Furthermore, financial support strengthens the procedural position, enabling resistance to pressures from the opposing party, access to specialized expertise, or solid appeals. The key advantage: Loopa assumes the risk. If the case is unsuccessful, the client has no repayment obligation.
Conclusion: an emerging model with strong potential
Portugal brings together all the elements for third party funding to consolidate: a compatible legal framework, modern arbitral institutions, a legal community open to innovation, and a judicial system that still requires relief in certain complex processes. Loopa arrives in Portugal with a clear proposal: to provide smart capital, secure contractual structures, and strategic support that allows claimants to move forward without economic obstacles. Whether in arbitration or judicial litigation, access to justice can —and should— also be a matter of financing. Because in Portugal, as in all of Europe, litigating with merit should not depend on whether or not capital is available.
