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What Companies Should Know Before Applying for Litigation Funding

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For many UAE-based companies, the decision to pursue a legal claim comes with one major concern — the cost of litigation.
Even with a strong case, the financial risk and unpredictability of legal expenses can discourage action. This is where third-party litigation funding steps in, providing a practical, non-recourse solution that allows companies to pursue justice without draining their resources.

However, before applying for funding, companies should understand what funders look for, what obligations exist under UAE regulations, and how to protect their confidentiality and independence throughout the process.

Here’s a clear checklist to guide you.

1. Understand the Nature of Litigation Funding

Litigation funding is a non-recourse investment: the funder covers the legal costs, and the company repays only if the case succeeds.
This is not a loan — it’s a partnership where the funder shares in the risk and the potential recovery.

Under ADGM Litigation Funding Rules (2019) and DIFC Practice Direction No. 2 of 2017, this model is fully recognized and enforceable in the UAE’s common law jurisdictions.

2. Confirm Jurisdiction and Enforceability

Before applying, companies should verify that their dispute falls under a jurisdiction that recognizes third-party funding — typically:

  • The Abu Dhabi Global Market (ADGM), or
  • The Dubai International Financial Centre (DIFC).

Both courts allow and regulate third-party funding agreements (LFAs) with clear disclosure and ethical guidelines.
For onshore UAE courts, funding is permissible in principle but remains less structured — funders and claimants should rely on solid contractual drafting aligned with Sharia-compliant good faith principles (maslaha and gharar avoidance).

3. Protect Confidentiality from the Start

Before sharing any details, ensure you have a Non-Disclosure Agreement (NDA) in place with the funder.
According to the CIArb Guidelines on Third-Party Funding (2021):

“Funders must treat all information provided during funding discussions as confidential, unless otherwise agreed.”

This protects sensitive documents, legal opinions, and commercial data from disclosure risks — especially in cases involving ongoing partnerships or competitors.

4. Maintain Funder Independence

A professional funder finances the claim but does not control litigation strategy.
Both ADGM and DIFC rules explicitly prohibit funders from directing counsel or influencing settlements.

  • DIFC PD 2/2017, Section 12(E): Lawyers must not be “swayed from their duties to the client by any conflicts between the client’s interests and the interests of any involved funder.”
  • ADGM Funding Rules 2019: Require funders to remain independent and ensure that funded parties receive independent legal advice before signing any agreement.

Maintaining this separation ensures the company’s legal strategy remains fully autonomous and compliant with ethical standards.

5. Evaluate the Funder’s Track Record

Before signing any agreement, companies should conduct due diligence on the funder:

  • Check if they have funded cases within ADGM/DIFC or similar jurisdictions.
  • Ask for examples of past recoveries and settlement handling.
  • Confirm that the funder has sufficient capital to finance the entire duration of the case.

Trustworthy funders operate with transparency and follow established codes, such as the Association of Litigation Funders (ALF) Code of Conduct or CIArb ethical standards.

6. Review the Funding Agreement Carefully

The Litigation Funding Agreement (LFA) should clearly state:

  • The amount to be funded.
  • The funder’s return structure (fixed multiple or percentage).
  • Termination rights (for both parties).
  • Dispute resolution clause.
  • Confidentiality and data protection terms.

Ensure that the agreement is in writing, as required by Article 225 of the ADGM Civil Evidence & Judicial Appointments Regulations 2015.

Always seek independent legal advice before signing — this is not just best practice, it’s a regulatory expectation in ADGM and DIFC frameworks.

7. Prepare Complete Documentation

Funders expect a concise, professional application. Prepare:

  • A detailed case summary (facts, claims, defendants).
  • Supporting contracts and correspondence.
  • Legal opinions or preliminary assessments.
  • Estimated claim value and cost projections.

The more organized and credible your submission, the faster the funder can assess your case.

8. Align Expectations on Timeframe & Reporting

Litigation funding involves regular updates between the claimant, funder, and counsel.
Before applying, agree on:

  • Reporting frequency (monthly/quarterly).
  • Budget adjustments.
  • Settlement consultation terms.

Transparency builds trust and ensures smooth cooperation during the case.

Conclusion

Third-party litigation funding allows UAE companies to transform legal claims from financial burdens into strategic opportunities.
By protecting confidentiality, maintaining independence, and partnering with reputable funders, claimants can pursue justice confidently — without compromising control or compliance.

At WinJustice, we ensure every case is evaluated with integrity, confidentiality, and full alignment with UAE legal frameworks.

Submit your case today for a confidential assessment.
No upfront costs. No repayment unless you win.

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