Originally from Handbook on Third-Party Funding in International Arbitration, Second Edition

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PART I.  THE THIRD-PARTY FUNDING LANDSCAPE

 1.  The TPF market in Canada

1.1.  Please shortly describe the TPF market in your Jurisdiction.

TPF, in the sense of independent funding from standalone specialist dispute funders,  has existed in Canada for at least the past decade, although it had gone unnoticed by most of the legal community for much of that time.

One can group the Canadian TPF market into two segments: consumer litigation funding and commercial litigation/arbitration funding. Consumer funders, who deal primarily in the personal injury/tort sphere, are more established in Canada. In contrast, commercial funding is newer to the Canadian market, though funders have reported increasingly frequent expressions of interest from law firms in Canada, evidencing a growing awareness and acceptance.  

1.2.  Is it dominated by local or international Funders? Which Funders are active? Which cases typically get funded?

The Canadian TPF market is still in a development phase with respect to both litigation and international arbitration. Almost all funding of Canadian claimants in international arbitration to-date originates outside Canada, mainly from TPF firms and hedge funds located in the United Kingdom and the United States.  Notably, Bentham IMF (now Omni Bridgeway) opened an office in Toronto, Ontario in 2016. January 31, 2017 marked Omni Bridgeway’s first year operating in Canada at which point it had already received over 100 funding requests.  By 2020 it had funded 18 matters in Canada.

Many investor-state claims involving Canadian claimants are in the oil, gas, energy and mining sector. One prominent example involving TPF is Crystallex International Corporation v Bolivarian Republic of Venezuela, which we discuss in greater detail in the response to Question 2.1. 

TPF in domestic Canadian litigation has thus far been concentrated primarily on class actions and commercial matters. Some experts indicate that intellectual property litigation represents another potential area in which TPF might take root in Canada due to the considerable sums claimed in patent infringement matters, particularly in the pharmaceutical industry.

Like elsewhere, regardless of the type of case, the cases that typically get funded are those that fulfil the funders’ requirements for funding. This typically involves an assessment of: (i) the merits of the dispute; (ii) the likely realistic quantum of the claim; (iii) the cost of funding the claim (including legal costs, disbursements (such as experts and arbitration fees) and purchasing after-the-event (ATE) insurance for any adverse costs award); and (iv) the prospects of enforcement/recovery.