Litigation finance is a reality in Brazil, though currently it is not part of the legal mainstream.

However, while the actual numbers remain unclear and the overall amount remains small when compared to other jurisdictions with a longer history of finance, anecdotally, there appears to be a steady increase in the number of arbitrations involving third party finance. For example, in November 2017, Brazilian law firm Atelier Jurídico surveyed Brazilian arbitral institutions on their practices with regard to third party finance. Interestingly, the survey reports at least four cases involving third party finance, whereas there were none in the prior year.

Litigation finance is not a regulated activity in Brazil. The Arbitration and Mediation Centre of the Brazil-Canada Chamber of Commerce (CAM-CCBC) Administrative Resolution No. 18, issued in July 2016, is the only rule expressly dealing with the subject, and no statutory regulation exists. Despite the lack of regulation, third-party finance activities in Brazil are increasing, especially in arbitrations, as mentioned above. The same is not yet true as far as litigation is concerned.

Looking ahead, litigation finance will no doubt continue to grow, particularly in arbitration, as practitioners and claimants become more familiar with its substantial advantages in offsetting risk and levelling the playing field in contentious disputes. Of course, regional economic and political uncertainty may also play a role in the growth of finance.

For example, Brazil’s economic slump and the lingering impacts of the Lava Jato revelations likely portend a number of disputes that will eventually find their way into arbitration.

Zachary D Krug

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