New Trends in Financing Civil Litigation in Europe

New Trends in Financing Civil Litigation in Europe

A Legal, Empirical, and Economic Analysis

New Horizons in Law and Economics series

Edited by Mark Tuil and Louis Visscher

This unique and timely book analyses the problem of financing civil litigation. The expert contributors discuss the legal possibilities and difficulties associated with several instruments – including cost shifting, fee arrangements, legal expense insurance and group litigation.

Chapter 6: Financing Civil Litigation: The Case for the Assignment and Securitization of Liability Claims

Andrea Pinna

Subjects: economics and finance, law and economics, law - academic, european law, law and economics

Extract

Andrea Pinna INTRODUCTION The Fundamental Value of the Right for Compensation and its Implementation 1. 1.1 The right for an injured party of a tortious or contractual wrongdoing to receive compensation was granted the status of a fundamental value in Europe. The European Court of Human Rights has indeed decided that a credit for damages deriving from a wrongdoing, that is a liability credit or liability claim, is a good for the purpose of application of Protocol 1 of the European Convention of Human Rights.1 However, in practice, the implementation of this fundamental right is far from being satisfactory. Several types of losses do not receive compensation because of the practical difficulties and the costs necessary to achieve it. The traditional way for an injured party to seek compensation is to bring a claim directly and individually in court. In the last decades, legal systems have developed alternative mechanisms to grant compensation without exposing the injured party to the burdens of a lawsuit: compensation schemes have been implemented with regard to particular types of losses; the insurer is sometimes obliged to offer the injured party a compensation without having been sued or even having been requested to do so.2 In other legal systems, the lawsuit has become an industry for lawyers who are entitled to exclusively finance the lawsuit and to be remunerated only in case of success on the proceeds of such action, even though this is not a common accepted rule for European legal systems (see Chapter 3...

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