EU-Wide Regulation of Funding on Pause: Current Position and Divergence Across Member States
The European Commission has confirmed that it is not currently advancing EU-wide legislation to regulate third-party litigation funding (TPLF).¹ This follows a period of analysis and consultation at the EU level and reflects a decision to refrain from immediate legislative intervention rather than a definitive policy conclusion. As a result, the regulation (or prohibition) of litigation funding within the European Union remains primarily a matter of national law.
Basis for the Commission’s position
The Commission’s decision follows work undertaken by the High-Level Forum on Justice for Growth and a Commission-commissioned study mapping the use of TPLF across EU Member States and selected non-EU jurisdictions.² ³
Participants in the High-Level Forum expressed the view that, at present, there is no demonstrated need for EU-level regulation of litigation funding. In particular, the Forum noted that Member States in which litigation funding is already permitted had not identified issues warranting immediate harmonised intervention. The Commission has indicated that priority should instead be given to observing the operation of existing EU instruments, including the Representative Actions Directive, before considering whether further action may be required.⁴
Implications at the EU level
In the absence of EU-wide rules, the legal treatment of litigation funding continues to vary significantly between Member States. Across the EU, litigation funding may be:
expressly permitted and subject to specific regulation,
permitted but largely unregulated, or
restricted or prohibited under domestic law.
For practitioners involved in cross-border disputes, this divergence has practical consequences, including differences in enforceability of funding agreements, disclosure obligations, and the treatment of funding in costs and procedural contexts. The Commission’s decision does not remove the possibility of future EU-level action. The High-Level Forum recommended continued monitoring and evidence-gathering, and the Commission has left open the option of reassessing the position at a later stage should experience justify doing so.
This development is particularly relevant for Member States, such as Ireland, where litigation funding remains prohibited under domestic law and future decisions rest with national legislators.
Developments outside the EU: the UK as a point of reference
Although no longer part of the EU legal framework, developments in the United Kingdom remain relevant for comparative purposes. In 2025, the UK Civil Justice Council published a comprehensive review of litigation funding, recommending statutory clarification and the introduction of a proportionate regulatory framework.⁵
The review also addressed the impact of the UK Supreme Court’s decision in PACCAR Inc v Competition Appeal Tribunal, which classified certain funding arrangements as damages-based agreements, with implications for enforceability under existing rules.⁶ Subsequent statements from the UK Government have indicated an intention to legislate in this area, at least in part, to overturn that ruling.
Current position and a funder’s outlook
At present, litigation funding within the EU remains governed by a patchwork of national regimes, with no immediate prospect of harmonised regulation at the European level. While the Commission has not ruled out revisiting the issue in the future, responsibility for determining the permissibility and regulation of litigation funding currently rests with individual Member States.
From a funder’s perspective, the absence of EU-wide harmonisation presents both challenges and opportunities. While the Commission’s decision to defer regulation avoids the immediate imposition of prescriptive EU-level requirements, it leaves a complex landscape of enforceability risk across jurisdictions.
For legal teams, this reinforces the importance of early-stage collaboration with funders who possess deep jurisdictional expertise. In the current environment, the success of a funded claim depends not only on the underlying legal merits but also on the robustness of the funding structure under applicable national law. As practitioners navigate the post-PACCAR landscape in the UK and ongoing divergence across the EU, precision in contracting and proactive management of regulatory risk remain critical.
European Commission statements following publication of the High-Level Forum on Justice for Growth Final Report (2025).
European Commission, High-Level Forum on Justice for Growth – Final Report (November 2025).
European Commission, Mapping Third-Party Litigation Funding in the European Union (2025).
Directive (EU) 2020/1828 on representative actions for the protection of the collective interests of consumers.
UK Civil Justice Council, Review of Litigation Funding – Final Report (June 2025).
R (on the application of PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28.