Brazil: Third-Party Funding: Current Scenario and Challenges in Brazil
Litigation funding — internationally known as Third-Party Funding (TPF) — has been gaining increasing prominence in the Brazilian legal context. This topic, which has already drawn the attention of courts, arbitral institutions, and investors, was recently discussed at the 13th Brazilian Congress on Commercial Law, held on May 15–16, 2025, at the headquarters of the São Paulo Lawyers Association (AASP).
On that occasion, the partner of law firm Rossetti Advogados, Maristela SA Rossetti, chaired the panel “Corporate arbitration costs and funding”, which brought together leading jurists to discuss the growing use of this practice, recent judicial interpretations, and the impact on the dynamics of corporate litigation. The firm’s active participation reinforces its commitment to the technical and current discussion of emerging topics.
TPF involves the participation of a third party — usually an investment fund or specialized company — that covers the costs of judicial or arbitration proceedings, such as attorneys’ fees, expert examinations, and court costs, in exchange for a portion of the amount recovered at the conclusion of the dispute, if any. If the funded party is unsuccessful, the loss is borne by the funder, which requires a careful assessment of the case’s feasibility.
This practice is well-established in more mature markets, such as the United States and the United Kingdom. In Brazil, its use still raises questions but has been growing, especially in complex corporate arbitrations where the amounts involved attract investor interest.
In addition to serving as a tool to increase access to justice and arbitration, TPF can be used strategically, including by minority shareholders in corporate litigation. In this context, important debates arise regarding transparency, good faith, fiduciary duties, and information asymmetries, especially in disputes characterized by prolonged relationships between the parties.
In the field of arbitration, the progress on this issue led CAM-CCBC (Arbitration and Mediation Chamber of the Brazil-Canada Chamber of Commerce) to adopt Administrative Resolution No. 18/2016, which establishes the obligation to disclose the existence of funding and the identity of the funder whenever there is a potential conflict of interest with the arbitrators. The measure aims to ensure the impartiality and independence of the arbitral tribunal, which are fundamental pillars for the credibility of proceedings. 2
In the judiciary, although there is no specific regulation, recent decisions show that the topic is beginning to gain traction. An important example comes from the Court of Appeals of Minas Gerais, where the 18th Civil Chamber ruled that the assignment of judicial credits to a funder could be characterized as fraud upon the execution of judgment when such an act would hinder satisfaction of the debt due to the original creditor (TJMG. Civil Appeal 5097018-55.2022.8.13.0024 (No. 1.0000.23.268860-6/001), Reporting Appellate Judge Marcelo de Oliveira Milagres, 18th Civil Chamber, trial date August 13, 2024, published in the electronic Court Gazette (DJe) on August 14, 2024). Although it is considered an isolated case, the appellate court decision reignited the debate on the limits of the assignment of litigation credits and asset liability in execution procedures, especially in cases involving companies experiencing financial difficulties.
Notwithstanding concerns — such as the potential undue influence of the funder over the conduct of the proceedings, loss of strategic control by the client, or ethical conflicts — there is an emerging consensus that TPF represents a trend toward professionalization and innovation in the legal market. When structured with caution and transparency, funding can enable legitimate disputes to be effectively brought before the judiciary, mitigating risks and optimizing resources.
However, the issue is far from settled. As the market matures, it becomes essential to continue discussing regulatory guidelines, codes of conduct, and transparency mechanisms that preserve the integrity and fairness of the proceedings. Third-party funding remains an evolving field, and its legal and ethical boundaries continue to be shaped by experience, case law, and dialogue among legal professionals.
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For more information on the above or other matters, please contact Maristela SA Rossetti (mar@rraa.com.br) or Gilberto Rossetti (gmr@rraa.com.br).
This article is based on publicly available information and given for informational purposes only. It is not intended as legal advice foreign subsidiary as a comprehensive analysis of the matters referred to herein.
