The Flags of Spain and the European Union. Without regulations on litigation funding, even failed legal pursuits could significantly cost European taxpayers. Image Source: Istock

This case has brought into sharp focus the urgent challenges the European Union faces in regulating a system where third-party financiers bankroll lawsuits in exchange for a share of the winnings, often at enormous cost to taxpayers and legal integrity.

Ethical Concerns Surrounding Therium

Central to the Sulu lawsuit is Therium, a UK-based litigation funding firm currently embroiled in several high-profile legal controversies and accusations of unethical conduct and malpractice. Therium’s reputation has suffered notably due to these allegations, especially those surrounding the Sulu lawsuit. Despite widespread skepticism regarding the lawsuit's chances of success, Spanish taxpayers could still face substantial legal and procedural expenses. Even if Spain ultimately prevails, taxpayers might incur significant costs due to lengthy international arbitration proceedings, legal fees, and ongoing litigation efforts across multiple jurisdictions. Typical international arbitration cases frequently cost between $5 million and $15 million, with complex disputes easily surpassing $30 million due to extensive legal representation, expert testimony, administrative fees, and tribunal expenses, magnifying the potential economic burden.

Therium’s investment of over $20 million into the Sulu claim illustrates how litigation funding—originally meant to support economically disadvantaged litigants—can be misused for speculative financial gains. Notably, Therium previously faced criticism for funding a contentious class-action lawsuit against Volkswagen after the emissions scandal, accused of prioritizing profits over genuine claimants' interests. Moreover, the firm has faced scrutiny for allegedly failing to disclose conflicts of interest and misleading its clients, casting further doubt on its ethical standards. Cohen's involvement in the Sulu case further exemplifies the problematic practices Therium has supported.

Paul Cohen’s Provocative Legal Strategies

Attorney Paul Cohen’s conduct has grown increasingly contentious as Therium’s considerable financial investment in the Sulu case continues to yield unsuccessful outcomes. Cohen represents the Sulu claimants, who are suing Spain alleging interference with their arbitration rights. Specifically, the claimants argue that Spain's judiciary wrongly removed and convicted arbitrator Gonzalo Stampa, who had issued a controversial $15 billion arbitration award favoring the Sulu heirs. Cohen recently failed in his attempt to lodge a criminal complaint against Spanish courts, further highlighting the desperation underlying his provocative legal tactics.

Cohen's strategies have included repeatedly filing lawsuits across multiple jurisdictions, despite consistent judicial rejection in major European courts including Madrid, Paris, Luxembourg, and The Hague. His persistence in the face of judicial rebukes underscores a troubling disregard for legal norms and boundaries.

He has publicly pursued confrontational legal strategies, notably suggesting that a French court ruling could allow the Sulu heirs to "lease Sabah to other nations," including China and the Philippines—territories clearly outside his or his clients' legitimate control. Such proposals have been widely criticized as diplomatically irresponsible and ethically questionable. These inflammatory actions have heightened diplomatic tensions and clearly illustrate significant ethical shortcomings within the litigation funding sector. Cohen's willingness to recklessly engage in geopolitical rhetoric exemplifies the urgent need for stronger oversight of litigation funding practices.

Cohen's willingness to recklessly engage in geopolitical rhetoric exemplifies the urgent need for stronger oversight of litigation funding practices.

Urgent Need for Regulatory Reform

The Sulu lawsuit, underwritten by Therium and rashly pursued by Paul Cohen, has become a textbook example of how unregulated litigation funding can escalate into a high-stakes gamble at the public's expense. Even in cases where victory is unlikely, the financial fallout — from legal fees to drawn-out arbitration — ultimately threatens taxpayers. While the European Union is taking steps to streamline regulations with initiatives like Ursula von der Leyen’s “Competitive Compass,” the unique risks posed by litigation funding require focused, enforceable oversight.

Reforms must go beyond procedural efficiency. They need to introduce limits on speculative compensation demands, enforce complete transparency in funding agreements, and establish strict controls to prevent conflicts of interest. Arbitration processes must also be restructured to discourage forum shopping and unnecessary legal maneuvering. If the Sulu case has taught us anything, it’s that without decisive action, opportunistic players like Therium and Cohen will continue to exploit legal loopholes, leaving European taxpayers to pick up the tab for schemes that enrich a few and undermine public trust in justice.

REFERENCES

Daily Express. (2024, November 12). Spectacular own goal: Malaysia’s legal victory may open door for Sulu heirs to lease Sabah, says report. Daily Express. https://www.dailyexpress.com.my/news/245867/spectacular-own-goal-malaysia-s-legal-victory-may-open-door-for-sulu-heirs-to-lease-sabah-says-report/

De Prez, M. (2022, May 25). Volkswagen Group agrees £193m settlement for Dieselgate claimants. Fleet News. https://www.fleetnews.co.uk/news/manufacturer-news/2022/05/25/volkswagen-group-agrees-193m-settlement-for-dieselgate-claimants

El Progreso. (2025, March 10). Dieciocho mil millones de razones por las que Europa necesita leyes más estrictas sobre la financiación de litigios. El Progreso. https://www.elprogreso.es/gl/articulo/comunicados/dieciocho-mil-millones-razones-que-europa-necesita-leyes-mas-estrictas-financiacion-litigios/202503101017571855923.amp.html

South China Morning Post (SCMP). (2024, February 20). French court rejects Sulu heirs’ appeal in US$14.9 billion land dispute with Malaysia. South China Morning Post. https://www.scmp.com/news/asia/southeast-asia/article/3285558/french-court-rejects-sulu-heirs-appeal-us149-billion-land-dispute-malaysia

Williams, D. (2023, October 25). Class action funding: Paccar and now Therium. DWF Group. https://dwfgroup.com/en/news-and-insights/insights/2023/10/class-action-funding-paccar-and-now-therium