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The Litigation Funding Agreement is essential for parties seeking to finance significant legal proceedings in Saudi Arabia while ensuring compliance with local laws and Sharia principles. This document becomes relevant when a party requires external funding to pursue legitimate legal claims but lacks the financial resources to do so independently. The agreement carefully structures the funding arrangement to avoid prohibited elements under Islamic finance principles while providing clear mechanisms for funding deployment, case management, and returns distribution. It reflects recent developments in Saudi Arabian commercial law and court procedures, including the 2020 Commercial Courts Law reforms. The document typically includes detailed provisions for funding commitments, success fee calculations, control mechanisms, and comprehensive reporting requirements, all tailored to meet Saudi regulatory requirements and court expectations.

1. Parties: Identification of the Funder and the Funded Party, including full legal names and addresses

2. Background: Context of the litigation, relationship between parties, and purpose of the funding arrangement

3. Definitions and Interpretation: Key terms used throughout the agreement, including 'Claim', 'Proceeds', 'Success Fee', and interpretation rules

4. Funding Commitment: Details of the funding amount, drawdown conditions, and funding schedule

5. Purpose and Use of Funds: Specified use of funding and restrictions on application of funds

6. Sharia Compliance: Specific provisions ensuring the arrangement complies with Islamic finance principles

7. Conditions Precedent: Conditions that must be satisfied before funding obligation becomes effective

8. Representations and Warranties: Statements of fact and assurances from both parties

9. Obligations of the Funded Party: Ongoing duties including information provision, cooperation, and case management

10. Control and Conduct of Litigation: Decision-making rights and consultation requirements regarding the litigation

11. Success Fee and Returns: Structure of returns to the funder, calculation methods, and payment priorities

12. Proceeds and Distribution: Management and distribution of litigation proceeds

13. Confidentiality: Obligations regarding confidential information and permitted disclosures

14. Termination: Circumstances allowing termination and consequences

15. Dispute Resolution: Process for resolving disputes under the agreement, including jurisdiction and applicable law

16. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment