Litigation Risk Transfer Mechanisms in Construction Dispute Resolution Process: Cross-Case Analysis

Abstract

Disputes in construction projects are a common phenomenon around the world. The practice of approaching courts to resolve disputes, a risk-seeking behavior of parties in a dispute, is influenced by several factors. The availability of litigation risk transfer instruments like litigation insurance (LI) and third-party litigation funding (TPLF) can potentially change the litigious behavior of disputants. LI and TPLF markets have evolved differently in various jurisdictions around the world. The variation in the maturity levels provides a research opportunity to distill and document the learnings pertaining to the growth LI and TPLF in matured regimes and apply them in nascent markets. In this research, the authors consider the German (matured market for LI and TPLF) and Indian (nascent market) jurisdictions to identify potential focus areas influencing the growth of litigation risk transfer instruments. With reference to TPLF, this study concludes that while the legal framework is no doubt important in creating a favorable climate for adoption, its growth is influenced by agreement-level factors.