Originally from Handbook on Third-Party Funding in International Arbitration

1.1.   TPF Regime in Scotland

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

TPF is commonly used in respect of personal injury actions and employment law claims. In those types of actions, claim handling companies are prepared to offer a ‘no win, no fee’ service in exchange for a percentage success fee. Claim companies have operated on this basis in Scotland since the late 1980s. Claim companies are commonly owned by or connected with law firms, but solicitors are not currently permitted to take a percentage of the amount recovered as a fee, and so do not offer this service directly. Legislation to allow this has however been introduced.

Solicitors are often willing to provide ‘funding’ through a conditional fee arrangement where an uplifted ‘success’ fee is applied where a recovery is made, and a reduced or zero fee is applied if no recovery is made. However these fees are not expressed as percentages of the amount recovered.

In the commercial sphere, Third-Party Funding is much less well developed. There is some ATE insurer activity in commercial litigation and arbitration, but there is very little in the way of Third-Party Funding of legal expenses by investors.

There is little if anything in the way of TPF for International Arbitration in Scotland. However it is only fair to say that International Arbitration in Scotland is underdeveloped, and there is no body offering institutional arbitration based in Scotland.

We are aware of new entrants to the Scottish TPF market. They are principally focused on funding litigation initiated by insolvency practitioners. However, it is understood that they are prepared to consider the funding of international arbitration. The market may therefore develop.