Third-Party Funding and Securing the Defendant’s Claim for Reimbursement of Litigation Costs in German Civil Procedure Using English Law as an Example

Abstract This article explores the growing significance of third-party litigation funding in German civil procedure, with a particular focus on securing the defendant’s claim for reimbursement of litigation costs. While Germany has implemented protective measures against abusive litigation and conflicts of interest, there is limited protection ensuring defendants can recover costs if a third-party-funded plaintiff is unsuccessful. Drawing comparisons with English law, the article highlights the absence of cost security provisions for defendants in German law and advocates for reforms that would enable defendants to demand security for litigation costs from claimants and third-party funders. Such measures would align with the principles of procedural fairness, balancing the risks and incentives involved in third-party-funded cases. The proposed reforms aim to establish a fairer cost-allocation system that secures defendants’ rights while maintaining access to justice for claimants supported by third-party funders.