Published 21 December 2023
This article acts as a definitive primer on the extant Indian law on third-party funding. It examines the legality of third-party funding in Indian law in the light of the permissive nature of various statutes and favourable case law. The author’s analysis reveals that despite the absence of an express legislation permitting third-party funding, the practice is clearly accepted and permissible in India. This is, to a large extent, owing to the common law doctrines of maintenance and champerty not being applicable in India. An important caveat, however, is that the funding agreement should not be contrary to public policy - a term that has been subject to rigorous judicial analysis. Funding by lawyers through conditional / contingency fee arrangements remains prohibited.
The article then examines some practical and regulatory considerations relevant to India, including foreign exchange, structuring challenges, recovery of the costs of funding, confidentiality and privilege, and conflict of interest and disclosure requirements. These considerations will inform a future law on third-party funding.
Armed with this analysis, the article then compares the Indian legal framework to that of several other jurisdictions across the globe.
The author expresses her thanks to Amoga Krishnan, Associate, Cyril Amarchand Mangaldas, for the assistance in preparing this article.