Reimagining Access to Justice: Third-Party Litigation Funding (TPLF)
Context
India’s goal of “justice for all” remains a constitutional dream. TPLF could turn it into a reality by funding legal battles for those who cannot afford them.
Introduction
TPLF allows investors to fund lawsuits in exchange for a share of the winnings, addressing the issue of high litigation costs. From Supreme Court to district courts, this has emerged as a game-changer for access to justice.
Real-Life Struggles
Examples:
- A Pune shopkeeper vs. an e-commerce giant.
- Tribal villagers from Odisha vs. a polluting industrial company.
Such cases often collapse due to lack of funds, not merit.
TPLF Concept
- TPLF involves investors funding legal battles for a cut of potential winnings.
- It addresses India’s costly and lengthy litigation process, which has made justice a luxury.
Potential Equaliser
- The Supreme Court, in Bar Council of India v. A.K. Balaji, approved TPLF as long as lawyers do not fund the cases.
- Historical basis: 1876 Privy Council judgment (Ram Coomar Coondoo v. Chunder Canto Mookerjee) ruled old English laws on champerty don’t apply in India.
Potential Ripple Effects
- Broader reach: TPLF can help:
- Consumer groups fight adulteration,
- Startups challenge industry giants,
- Tribes and NGOs take on mining companies,
- Workers seek justice for unfair treatment.
- Specialised fields: TPLF could ensure cases involving medical malpractice or IPR, which depend on expert testimony, are heard.
- Public Interest Litigation: TPLF could revitalize PILs as a tool for social change.
Concerns & Need for Regulation
- Funders may cherry-pick only profitable cases, ignoring socially important ones.
- Questions arise about how much influence funders should have over case strategy.
- Several states (Maharashtra, Gujarat, MP, Odisha) have recognized third-party financiers.
- India lacks a national framework for TPLF. Regulation should ensure transparency, financial soundness of funders, and protect litigants’ rights.
Broader Implications
- Justice system: A more accessible system could lead to better consumer safeguards, environmental protections, and institutional accountability.
- Pendency: With ±80,000 cases pending in the Supreme Court and ±40 million across India, TPLF offers hope.
Considerations for Regulatory Framework
- Licensing: Should litigation funders be licensed?
- Oversight body: A dedicated body may be needed to regulate funders.
- Capital adequacy: Inspired by Hong Kong’s Code of Practice for Arbitration (2019), India could mandate disclosure of financing, liability, and funder control.
- Cost concerns: India should evaluate how to address cost risks in TPLF.
Way Forward
Court involvement in TPLF arrangements must be carefully structured. Balancing access to justice and judicial integrity will be key in forming a regulatory framework.
Conclusion
TPLF offers India both challenges and opportunities. By developing comprehensive regulations, India can create a thriving TPLF ecosystem that balances innovation and access to justice, setting a new global standard.
Spotlighting the Work of the Economics Nobel Winners: Daron Acemoglu, Simon Johnson, and James Robinson (AJR)
Context
- AJR’s work emphasizes the role of institutions in shaping development but has faced criticism for privileging Western liberal institutions.
Introduction: The Great Divergence
- Refers to the economic and political gap between the West and the East during the 17th-18th centuries.
- Western Europe’s industrialization allowed it to project political power and reap economic benefits globally.
- Institutions established during colonialism have long-lasting effects even after independence.
Institutions and Development
- Concept of Institutions: Defined as constraints on human behavior, forming rules (like law and order) that prevent misuse of force.
- Nobel winners AJR emphasized how institutions (legal and political) direct economic development.
- Role of Institutions: They exert influence through incentives (e.g., traffic fines encouraging safe driving).
Extractive vs. Inclusive Institutions
- Extractive Institutions: Generate prosperity but distribute wealth to a small elite, common in colonies like Sub-Saharan Africa, Latin America, and India.
- Inclusive Institutions: Motivate people by providing fair opportunities (e.g., the U.S., Canada).
Causal Impact on Economic Growth
- Key Contribution: AJR established how institutions influence economic growth through natural experiments.
- Settler Colonies: In places like the U.S. and Australia (with low mortality rates), settlers established better institutions, unlike tropical regions where diseases were rampant, leading to extractive institutions.
Research Methodology
- Natural Experiments: Social scientists can’t manipulate variables but can design observational studies comparing different settings (e.g., settler vs. non-settler colonies).
- These help identify the impact of institutions on long-term growth.
Investigations in India
- Influence of AJR: Inspired studies exploring long-term effects of historical events on development in India.
- Abhijit Banerjee and Lakshmi Iyer (2005): Found that colonial land tenure systems (landlord-based) resulted in lower agricultural investment and productivity.
- Lakshmi Iyer (2010): Direct colonial rule resulted in fewer schools, health centers, and roads compared to indirect rule.
- Political Power: Economic institutions are determined by political power, which can be de jure (legitimate office, e.g., Joe Biden) or de facto (personal power, e.g., Teodoro Obiang Nguema, Equatorial Guinea).
- Reforming Extractive Institutions: Reform is hard because groups with political power use it to maintain resource distribution in their favor.
A Perspective on AJR’s Work
- AJR’s research gained prominence when economics moved from universal policies (like Washington Consensus) to more diagnostic approaches.
- Criticism: AJR has been skeptical of China’s growth, predicting it will slow due to extractive institutions.
Conclusion
- Scholars like Yuen Yuen Ang argue AJR’s approach privileges Western institutions, overlooking the U.S.’s historical corruption, exclusionary practices, and exploitation of Native Americans.
- Onur Ulas Ince (2022): Criticizes AJR for not engaging deeply with the complexities of colonialism and capitalism.
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