Litigation funding—Canada—Q&A guide
Litigation funding—Canada—Q&A guide

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Litigation funding—Canada—Q&A guide
  • 1. Is third-party litigation funding permitted? Is it commonly used?
  • 2. Are there limits on the fees and interest funders can charge?
  • 3. Are there any specific legislative or regulatory provisions applicable to third-party litigation funding?
  • 4. Do specific professional or ethical rules apply to lawyers advising clients in relation to third-party litigation funding?
  • 5. Do any public bodies have any particular interest in or oversight over third-party litigation funding?
  • 6. May third-party funders insist on their choice of counsel?
  • 7. May funders attend or participate in hearings and settlement proceedings?
  • 8. Do funders have veto rights in respect of settlements?
  • 9. In what circumstances may a funder terminate funding?
  • More...

This Practice Note contains a jurisdiction-specific Q&A guide to litigation funding in Canada published as part of the Lexology Getting the Deal Through series by Law Business Research (published: September 2020).

Authors: Woodsford—Ekin Cinar; Franca Ciambella

1. Is third-party litigation funding permitted? Is it commonly used?

Third-party litigation funding is permitted in Canada, and Canadian courts are increasingly favourable of litigation funding. Over the past decade, the law has confirmed the suitability of third-party litigation funding in the context of class proceedings, insolvency cases and single-case commercial litigation, subject to certain requirements.

In Canada, case law on third-party funding in domestic arbitration is lacking. There have not been any reported decisions, either from courts or public arbitral awards, that discuss this matter. Also, Canadian domestic arbitral legislation does not mention third-party funding.

2. Are there limits on the fees and interest funders can charge?

Whereas there is no explicit provisions or regulations, the ongoing case law provides some clarity as to the limit on funder’s fees and interest within the scope of a litigation funding agreement (LFA).

In a class proceeding context, the Ontario Superior Court (ONSC) provided in Houle v St Jude Medical Inc that whether a particular LFA is fair and reasonable to the parties will depend on the circumstances of the litigation, and the commercial terms within the LFA must not overcompensate the third-party litigation funder.

Elaborating on what

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