In our system, the biggest obstacle in the development of third party litigation funding is the unpredictable (often particularly long) duration of proceedings, which makes it difficult to predict a likely return on investment.
However, this phenomenon is also beginning to gain a foothold in our system, albeit with investments that currently are somewhat sporadic and not yet well established, with a few exceptions.
In particular, new, purely national funds have begun to appear on the Italian market, focusing their activities on arbitration and domestic litigation.
Italian litigation has, as in some other jurisdictions, considerable advantages: litigation costs are relatively low, a factor that in the context of third-party litigation funding is a definite advantage in terms of return on investment.
Antitrust and litigation funding: privileged sector
In this context, one of the most important areas for litigation funding is the infringement of antitrust law and the related action for damages, for two reasons.
The first lies in recent case law and regulatory interventions that have changed the landscape of antitrust litigation.
As is well known, the introduction of the Competition Law (Law No. 287 of 10 October 1990) has not significantly affected the volume of cases.
In fact, the real development of litigation funding is due to the judgments of the European Court of Justice of 20.9.2001, Case No. C453/99, and of 13 July 2006, Case No. C-295/04, which were followed by Directive 2014/104/EU, implemented In Italy through Legislative Decree. 3/2017, with regard to actions for damages resulting from anti-competitive activity.
In the development of litigation and third party litigation funding, the role now played by the Italian Antitrust Authority, which is competent in this area, appears particularly relevant.
Indeed, it was envisaged that the decision issued by the Authority would be binding on the national courts, although naturally subject to appeal before the administrative courts.
Prior to this regulatory change, the decision of the Antitrust Authority could only be considered an administrative act, which could be freely assessed by the ordinary court called upon to rule in a claim for damages and to therefore ascertain any unlawful conduct, thereby extending the duration of the proceedings.
Evidently, the binding force of decisions of the Antitrust Authority, issued in the context of a less complex and less costly procedure, makes antitrust litigation particularly favourable for the development of the phenomenon of third party litigation funding.
The second reason concerns the reform of class action lawsuits, provided for in Art. 140 bis of the Italian Consumer Code and extensively amended by Law 31/2019 which, by inserting Title VIII bis of Book IV into the Code of Civil Procedure, with Articles 840 bis et seq., extended standing to sue in class action proceedings also to non-consumers, albeit within the scope of business
activities, in order to protect individual homogeneous rights infringed by the actions or conduct of companies or bodies managing public services or utilities.
Antitrust: the legislation
The legislation must obviously be interpreted in conjunction with the antitrust rules and, in particular, with the rules on the burden of proof, which is lighter in antitrust cartel cases since there is a system of simple presumptions as to the damage and the causal link between said damage and the damaging conduct, although proof to the contrary is admissible.
Although there is no significant activity before the Antitrust Authority for the time being, the introduction of class actions into our legal system has allowed an embryonic development of third party litigation funding in class actions for damages suffered due to cartel cases.
Indeed, the initiation of class actions, directed by specialised litigation funds, suing for damages caused by antitrust violations can be observed in the domestic market following the Antitrust Authority’s decisions.
A well-known and particularly recent case is that of the Antitrust Authority’s decision No. 27849 of 2019, which sanctioned several companies for having “put in place an agreement that is by object restrictive of competition contrary to Article 101 TFEU, consisting of a single and complex cartel continued over time aimed at strongly distorting the competitive dynamics in the market for the production and
marketing of corrugated cardboard sheets.
A large number of companies are involved in the Authority’s decision, which also includes some leniency applicants, and the penalties issued against them are very high.
There is, therefore, a clear symbiosis between the role played by the Antitrust Authority and that of private enforcement, highly incentivised by the new procedural measures provided for by the recent legislative changes.
The result is, in fact, an increase in the deterrent value of the action for damages, which reinforces the measure, ultimately binding on the trial court, issued by the administrative authority.
All these aspects confirm the Antitrust sector as an ideal area for the development of third party litigation funding.