Litigation financing in El Salvador: strategic access to justice
Third party funding, also known as third party funding, is a model that has transformed the way complex litigation is approached in many jurisdictions. It allows a third party to cover the legal costs of a case in exchange for a portion of the favorable outcome, which is an ideal solution for those with a legitimate claim but lack the financial resources to pursue it. In El Salvador, this model is beginning to generate interest as a response to the need for greater efficiency and equity in access to justice. Loopa, as a fund specialized in the region, is prepared to lead this change.
History of third party funding in El Salvador
In El Salvador, third party funding is not yet institutionalized or widely present. However, its logic has started to gain traction in certain legal and business sectors, especially among lawyers seeking innovative ways to advance meritorious litigation without relying solely on the client to cover all process costs. In recent years, with the internationalization of legal services, the growth of commercial arbitration, and the gradual modernization of the judicial system, the figure of the external funder has begun to be discussed as a legitimate option, especially in complex, long-term, or cross-border cases. Loopa, as a fund with a presence in Latin America, positions itself as a pioneer in this field, offering smart capital and legal expertise to help drive strong cases in El Salvador.
Legal framework: contractual autonomy and assignment of rights
El Salvador has a legal system of continental tradition, based on principles of civil law. In this context, contracts between individuals are valid as long as they do not infringe on public policy provisions or prohibitive norms. Under this premise, third-party litigation funding agreements are perfectly lawful and can be structured as private agreements between the funder and the claimant. The Salvadoran legal system recognizes the assignment of litigious credits, a key figure for structuring the funder's recovery guarantee. This assignment can be total or partial, and is used for the funder to receive a portion of the economic result in case of success. In addition, the practice of negotiating contingent fees (quota litis) is allowed in certain areas of law, reinforcing the compatibility of the system with shared risk schemes. This provides Loopa with a clear and functional legal basis to operate in El Salvador, always respecting the independence of the lawyer and the rights of the client.
Arbitration application: a gateway to sophisticated financing
El Salvador has taken firm steps in consolidating arbitration as an alternative mechanism for conflict resolution. It has a modern Mediation, Conciliation, and Arbitration Law, inspired by the UNCITRAL Model Law, and has ratified the New York Convention, which facilitates the recognition and enforcement of international awards. Institutions such as the Mediation and Arbitration Center of the Chamber of Commerce and Industry of El Salvador (CMA/CCIES) offer professional arbitration services and are gaining regional prominence. While third-party funding is not yet common in domestic arbitrations, its application in international arbitrations involving Salvadoran parties is perfectly viable. Loopa is prepared to intervene in these types of proceedings, providing funding to cover the high costs associated with expert opinions, institutional fees, and top-tier legal representation. Funding in arbitration not only allows for progress without budgetary restrictions, but also validates the strength of the case before the counterparty and the tribunal.
Application in judicial disputes: monetizing lengthy processes
Judicial disputes in El Salvador, especially in civil, commercial, or administrative matters, can drag on for years. This delay generates a significant financial burden for the plaintiffs, who must sustain the process without access to the economic value of their claim. In particular, disputes against the State —for patrimonial liability, expropriations, or administrative contracts— tend to be long and complex. In this context, Loopa's financing model offers a concrete solution: monetizing the dispute by advancing part of the claim's value. This allows the plaintiff to have liquidity without waiting for the final judgment. Additionally, the financing can cover key expenses that increase the likelihood of success: technical consultants, specialized experts, appeal strategies, or defense against dilatory tactics. In a system where time is a scarce and valuable resource, Loopa helps transform a future expectation into a real opportunity in the present.
Conclusion: a new stage for justice in El Salvador
El Salvador presents a legal environment compatible with the development of third party funding. Its legal framework allows for flexible contractual agreements, recognizes the assignment of credits, and enables shared risk models. As its judicial and arbitral system modernizes, litigation financing emerges as a legitimate, useful, and transformative tool. Loopa arrives in El Salvador with a clear proposal: to finance strong cases, reduce waiting times, share risks, and support lawyers and clients on their path to justice. In a country where access to courts is often limited by economic factors, our model ensures that meritorious cases do not remain on paper. Because moving towards a more accessible justice is also possible in El Salvador.
