World
With lawfare on the rise, courts are becoming a venue for politics
The opinions expressed in this article are those of the author and do not represent in any way the editorial position of Euronews.
Usually with no leg to stand on, the objective of these claims is to disrupt and clog the system and cause chaos, Pieter Cleppe writes.
Long gone are the days when politics was confined to parliaments. Apart from the growingly politicised and polarised media, the courtroom is increasingly becoming a political venue, with third-party litigation funding being particularly concerning.
Both in Europe and the US, there has been increased scrutiny of third-party litigation funding.
This is a phenomenon where claimants in court cases no longer fund their own cases. Instead, they are bankrolled by investment firms, who basically see it as an attractive, if insecure, investment.
Bloomberg Law recently disclosed how Russian billionaires close to President Vladimir Putin have been secretly pouring money into US courts through third-party litigation funding in a bid to contest the sanctions they have been subject to.
The gist is that by investing millions without even showing their face in court, some malevolent actors have found lawfare a useful tool to laugh in the face of law and justice and syphon their money across the border while doing it.
Chinese claims are now targeting intellectual property in the US
In another example, a company based in China has been clandestinely funding intellectual property lawsuits against Samsung, using a Florida tech company as a front, to claim that the South Korean giant used its intellectual property in its popular audio products.
The essence of the problem here is that the funders “often manipulate civil litigation for their own purposes”, according to a letter to the heads of a US congressional committee in October by major pharma companies Bayer and Johnson & Johnson.
In the letter, they complain that the litigation finance industry “goes to great lengths to operate in complete secrecy,” demanding more transparency.
The fear here, backed by the US Chamber of Commerce, is that litigation financing could allow Washington’s adversaries to obtain confidential information about sensitive technologies.
In any case, US House Speaker Mike Johnson and Senator John Kennedy, have already taken legal action, having submitted a legislative proposal that would regulate foreign entities’ ability to fund litigation.
Business groups like the US Chamber of Commerce support this, as they believe the shortage of available information about who is financing cases opens the door for foreign adversaries to undermine US national security.
An EU directive is in the works
Also in Europe, legal action is on the way. Last summer, the European Parliament recommended to the European Commission to propose a Directive on the regulation of third-party funding in the EU, aptly named “Responsible funding of litigation”, with the goal of regulating third-party funders’ financing proceedings in the EU.
If adopted, it would create a minimum standard for third-party funders in the EU and establish a supervisory authority granting permits to funders and monitoring their activities.
It would also hold funders jointly liable with the funded disputing party to pay the cost of the proceedings that may be awarded, impose an obligation on funders to adequate financial resources to fulfil their liabilities under the funding arrangement, impose a fiduciary duty of care the funder owes toward the funded disputing party, establish specific disclosure and transparency obligations to inform competent judicial or administrative organs of the existence of a funding arrangement and limit the financial stake of funders to 40% of the amount of compensation awarded, save for exceptional circumstances.
The directive was spurred on by a number of questionable claims that have seen a spike in recent years. Usually with no leg to stand on, the objective of these claims is to disrupt and clog the system and cause chaos, with profits nothing more than a side quest.
Yet, sometimes, a case like this can end up hurting an entire country’s GDP, too.
The Sultanate of Sulu case continues to raise eyebrows
A prominent example in Europe of litigation funding is a case brought by a Spanish private arbitrator, Gonzalo Stampa, who demanded Malaysia to pay a $14.9 billion (€13.7bn) arbitral award to a group of individuals claiming to be heirs of the last sultan of Sulu, a territory now belonging to Malaysia. Kuala Lumpur rejected the claim, arguing the case represented a challenge to its sovereignty.
The legal claims of the sultan’s heirs had been financed by a global litigation and arbitration finance firm, the London-based Therium.
Even if there was no link to Spain, the claimants still brought the case there to the judicial authorities eager to find any judicial forum to get their way. As a result, Stampa, who specializes in international mediation, was appointed by the Civil and Penal Chamber of Spain’s Supreme Court (TSJM) as the arbitrator of the case.
Following legal challenges by the Malaysian government on the grounds that the required procedure had not been followed, Spain’s Supreme Court ruled in June 2021 to remove Stampa from the case, thereby granting the Malaysian government’s request for dismissal.
While Stampa was ordered to end the arbitration several times, the arbitrator ignored those orders and even changed the arbitration venue from Madrid to Paris on disputable legal grounds.
There, he issued his final ruling, granting the massive award, making it the second highest ever rendered, and amounting to 1% of Malaysia’s GDP. It’s peculiar that such important cases tend to involve multiple arbitrators, rather than just one, with the entire proceedings including payment to Stampa apparently funded by Therium.
Later, an appeal in France overturned the decision, and remarkably, Stampa was found guilty of contempt of court for failing to comply with an earlier court ruling ordering him to drop the complex legal battle.
It’s time to stop and think what to do next
Imposing to disclose who’s funding a court case may deter outside investors and mean “less access to legal finance”, but that hasn’t stopped legal action being initiated both in Europe and the US related to the practice of third-party litigation funding.
Looking at the whole range of extra bureaucracy the European Parliament has in mind, perhaps it is important to take a pause.
Allowing judges to decide on a case-by-case basis to what extent claimants need to be transparent, particularly in a contentious case where national security could be at risk, might just be a better way forward.
Pieter Cleppe is the editor-in-chief of BrusselsReport.eu and a former attorney-at-law.
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GULF SHIPPING OPERATIONS GRIND TO HALT NEAR IRAN, US QUIETLY PREPARES FOR POSSIBLE STRIKE: ‘HEIGHTENED RISK’
A tanker sits at the Port of Fujairah, as the U.S.-Israel conflict with Iran limits marine traffic in the Strait of Hormuz. (REUTERS / Amr Alfiky / File Photo)
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A cargo ship sails in the Persian Gulf toward the Strait of Hormuz on April 22, 2026. (AP Photo)
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“The Islamic Republic emphasizes that the authorities to determine transit routes, timing, and issuance of maritime licenses are an absolute sovereign right exclusively in the hands of Tehran.”
The tanker blackout, crude transfer activity and movement toward a U.S.-Iran deal accelerated following the launch of Iran’s Persian Gulf Strait Authority on May 20.
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An Islamic Revolutionary Guard Corps speedboat sails in the Persian Gulf near the Bushehr nuclear power plant during a marine parade marking Persian Gulf National Day in Bushehr, Iran, on April 29, 2024. (Morteza Nikoubazl/NurPhoto)
Alex Vatanka, director of the Iran Program at the Middle East Institute, told Fox News Digital that enforcement “relies on the IRGC Navy’s asymmetric playbook.”
“This includes fast boats, drones, radar tracking, coastal missiles and selective intimidation rather than constant physical interdiction,” Vatanka said.
“Tehran wants Gulf states and major importers to gradually accept Iranian oversight of Hormuz as a new geopolitical reality,” he added.
While nuclear issues are dominating the current negotiations amid reports of a 60-day ceasefire, the PGSA has quickly emerged as an economic leverage tool threatening global oil and shipping markets.
“Now Hormuz is Iran’s main non-nuclear leverage tool,” Vatanka said as the PGSA he claimed gives Tehran a “mechanism to pressure rivals, favor allies and normalize IRGC oversight of one of the world’s most critical energy routes.”
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“Ships submit cargo and crew data for approval, while reports point to quiet ‘facilitation payments,’ preferential treatment for friendly states and uncertainty for everyone else,” Vatanka warned.
“Iran keeps the penalties deliberately vague. Noncompliant ships risk delays, harassment, drone surveillance, IRGC interception or denial of safe passage — enough pressure to encourage compliance without outright closing the strait.”
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