Originally from Handbook on Third-Party Funding in International Arbitration

1.1.   TPF Regime in Brazil

1.1.1. Is TPF commonly used in your Jurisdiction? If yes, since when (is it a new trend or a well-established practice)? 

Since 2015 TPF has attracted the attention of arbitration practitioners, a few financial players and companies in Brazil, and a few cases have been already funded. The crisis affecting some of the key sectors of the Brazilian economy, such as oil & gas and infrastructure, has created a positive environment for Third-Party Funders (“Funders”).

Companies affected by the crisis in these and other sectors may struggle to bring claims without compromising their cash position, or may not be able to pursue claims at all, and thus be inclined to use TPF. In the future, financially sound companies may also adopt TPF as a financial alternative to funding their legal costs, as high interest rates in Brazil may make TPF an attractive option.  

During the preparation of this report we became aware of thirteen cases that were funded since 2015, three of which have come to an end, none of which is public. A considerable number of conferences and panels have been organized to discuss TPF, which is of growing interest to practitioners and clients. The use of TPF may become a new trend in the current economic environment, as the Brazilian financial markets are very sophisticated and have appetite for innovation and Brazil starts to recover from the recent downturn. 

TPF’s success will depend on how well local and international Funders develop and structure a transparent market and products. A key element of this process will be providing clear information about the pros and cons of using TPF and gain the users confidence to use TFP as an alternative to traditional funding  of disputes in the appropriate cases (regardless of the user’s financial position).