Third-party litigation funding (TPLF), where a non-party funder finances the costs of litigation or arbitration in exchange for a share of the proceeds, is an evolving area of Indian law. The doctrines of champerty and maintenance that historically prohibited such funding have been largely superseded in India.
The Supreme Court in Bar Council of India v AK Balaji (2018) observed that there is no restriction on third parties (non-lawyers) funding the litigation and seeking a share of the proceeds, provided the lawyer receiving the instructions does not share fees. The doctrine of champerty has not been adopted as part of Indian public policy. Indian courts have permitted funding arrangements in several reported decisions, and institutional arbitration rules (SIAC Practice Note on Third-Party Funding, 2017) provide disclosure guidelines. However, India does not yet have a standalone statutory framework governing TPLF.
AMLEGALS advises parties, funders and law firms on structuring and documenting litigation funding arrangements, disclosure obligations, conflicts-of-interest analysis, cost and adverse-cost implications and the interface between funding agreements and arbitration proceedings.
Advising parties and funders on the legality and enforceability of TPLF arrangements under Indian law.
Drafting and negotiating litigation funding agreements, including return mechanisms, termination, control and information rights.
Advising on disclosure obligations to courts, tribunals and opposing parties under applicable rules and institutional guidelines.
Advising on TPLF in international and domestic arbitration, including security-for-costs implications.
Assessing and managing conflicts of interest arising from the involvement of a third-party funder.
Advising on the funder's share of the recovery and enforcement of the funded party's award or judgment.
The Supreme Court in Bar Council of India v AK Balaji (2018) observed that there is no restriction on third parties (non-lawyers) funding litigation and sharing in the proceeds, provided the advocate does not share professional fees. The doctrines of champerty and maintenance have not been adopted as part of Indian public policy. While there is no standalone TPLF statute, funding arrangements are permissible and several Indian courts have recognised their validity.
There is no statutory disclosure requirement in India for TPLF. However, the SIAC Practice Note on Third-Party Funding (2017) requires disclosure of the existence of a funding arrangement and the identity of the funder to the tribunal and other parties. Some Indian courts have also directed disclosure in specific cases, particularly where security for costs is at issue.
Yes. The existence of a third-party funder may be relevant to applications for security for costs. A tribunal or court may consider whether the funder should be made liable for adverse costs or provide security. The SIAC Practice Note addresses this interface.
The most common models involve the funder bearing all costs of the proceedings (legal fees, arbitration costs, expert fees) in exchange for a percentage of the recovery (typically 20% to 40%) or a multiple of the funded amount. The funding agreement specifies the funder's control rights (if any), information rights, termination events and the waterfall of recovery distribution.
No. The Bar Council of India Rules prohibit advocates from sharing fees with non-advocates. The Supreme Court in BCI v AK Balaji distinguished between the funder's share of the proceeds (permissible) and fee-sharing between the advocate and the funder (impermissible). The funding agreement must be structured so that the funder's return comes from the client's share of the recovery, not from the advocate's fees.
No. No engagement is treated as accepted until conflicts, scope and terms are confirmed in writing.
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