Champerty holds firm in Ireland as Supreme Court rejects third-party funding

Denham: complex policy issues

The Irish Supreme Court has ruled that third-party litigation funding is champertous, citing statute dating back to 1634, and so banned Harbour Litigation Funding from backing a major commercial case.

Chief Justice Susan Denham, giving the lead judgment, said changing the law was a matter for legislation, not the court, given the “complex” policy issues involved.

“The proposed investment agreement is a funding agreement which is champertous, and hence it is unlawful,” she ruled simply.

That the case was described as one of “immense public importance” was not relevant. It concerns allegations that there was impropriety in a tender process resulting in the award of a mobile phone licence in 1996 which caused the claimants loss.

Denham CJ said she was, however, concerned that the defendants and third party “who vigorously opposed the plaintiffs’ motion are beneficiaries if the case does not proceed”.

She continued: “This may be a matter for consideration at another time and place. There is a long history at the Bar, and amongst solicitors, of taking cases on a ‘no foal, no fee’ basis. Many of the most important cases have been taken in such circumstances. Or, perhaps an alternative route may be found, whereby the litigation would cost less.”

The court upheld, by a majority of four to one, a High Court ruling, which the judge noted that it was not a constitutional challenge where the court was asked to examine the constitutionality of the offences and torts of maintenance and champerty.

Mr Justice Clarke, concurring, said it was “at least arguable that there is a very real problem in practise [sic] about access to justice. An assessment of the precise extent of the problem would require detailed evidence and, therefore, nothing which I say should be taken as indicating a concluded view.

“Nonetheless it is worth recording that the experience of the courts suggests that there may well be problem, that it may well be significant and that there are at least arguable grounds for suggesting that it is growing.”

Susan Dunn, Harbour’s head of funding, said: “Both we and the claimants are disappointed by today’s outcome. We spent a lot of timing reviewing this claim and still believe it to be one of the most meritorious cases we have ever considered, and one in the public interest, and that it should be pursued.

“It is a shame if meritorious claims such as this still cannot be pursued in Ireland, simply for lack of funding.”

Steven Friel, an Irish solicitor who is chief executive of Woodsford Litigation Funding, said he thought the concerns expressed by Denham CJ’s indicated that she would prefer that litigation funding be permitted in a case like this.

“Notwithstanding the decision, I am confident that it is only a matter of time before Ireland permits litigation funding. The Supreme Court has effectively invited the Irish parliament, the Oireachtas, to legislate.

“Just as Singapore and Hong Kong are legislating to get rid of the ancient principles of champerty and maintenance, which are not fit for purpose in a modern dispute resolution system, so too should Ireland.”

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