Litigation Finance in Canada: Provincial Frameworks and Court Approval

How third-party funding operates across Canadian provinces and the court-approval requirements in class proceedings.

Litigation finance is permitted across Canada, but the regulatory and procedural landscape varies meaningfully by province. Ontario is the most developed and permissive market, with a body of case law addressing the approval of funding arrangements in class proceedings. British Columbia, Alberta, and Quebec also permit third-party funding, each with its own procedural framework and its own history regarding champerty and maintenance doctrines. Funders must therefore tailor their approach to the specific province in which a matter is litigated.

A distinctive feature of Canadian practice is the active role courts play in reviewing funding arrangements. Particularly in class proceedings, Canadian courts, led by Ontario, have asserted the authority to review and approve litigation funding agreements to ensure they are fair, do not over-compensate the funder, and protect the interests of class members. Courts scrutinize the funder's return, the non-interference provisions, the disclosure obligations to class members, and the overall fairness of the arrangement.

The costs environment also shapes Canadian funding. Most Canadian jurisdictions follow a loser-pays costs principle similar to England's, exposing unsuccessful plaintiffs to adverse costs awards. This risk is a significant consideration in funding decisions and influences how arrangements are structured, including whether the funder indemnifies the claimant against adverse costs. The interplay between costs exposure and funding economics is a central part of Canadian underwriting.

Product coverage in Canada spans commercial litigation, class actions, securities and competition claims, and arbitration. Contingency fee rules vary by province and affect how plaintiff-side matters are structured. Ontario's framework, including provisions governing trust funds and contingency arrangements, is the most frequently navigated, but funders active across Canada must understand the distinctions among Ontario, British Columbia, Alberta, and Quebec to structure compliant arrangements.

Criterica Capital funds matters across Ontario, British Columbia, Alberta, and Quebec, structuring arrangements to satisfy the court-approval standards that apply in class proceedings and to address the costs environment in each province. Our underwriting draws on outcome data spanning Canadian court records. Firms and claimants pursuing Canadian matters can contact our international team to discuss funding.

Discuss your matter with our institutional team.