After-The-Event Insurance Passes Champerty And Maintenance Test

Author:Ms April McClements
Profession:Matheson
 
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Introduction Following an appeal to the Supreme Court, Greenclean Waste Management Limited v Leahy has come before the High Court for a second time. The High Court upheld the validity of an after-the-event insurance policy and expressly confirmed that after-the-event insurance does not fall foul of the tort of maintenance or champerty. Unlike in many other common law jurisdictions, the torts of maintenance and champerty continue to exist in Ireland. Litigation funding is an issue that has recently come to the fore, putting the ancient laws of maintenance and champerty under the spotlight. The High Court confirmed that the rules against maintenance and champerty remain applicable in an Irish context and after-the-event policies must comply with these rules in order to be valid and enforceable. However, the court found that the policy did not breach the common law principles of champerty or maintenance. The law of champerty must be interpreted in line with modern ideas and realities. After-the-event insurance serves an important purpose in allowing those who would otherwise have no access to the courts to enjoy such access. Background After-the-event insurance is a relatively new form of insurance product, at least in Ireland. It is a form of insurance taken out in the wake of a specific event and is often closely linked to 'no win, no fee' arrangements. The High Court delivered a previous judgment in this case in 2013, in the context of an application for security for costs (for further details please see "Can after-the-event insurance substitute security for costs?"). It considered whether an after-the-event insurance policy could effectively substitute security for cost and concluded that the policy in question could provide adequate security to a defendant only in circumstances where the plaintiff's insurer gave an assurance that it would not rely on a prospect of success clause to deny cover. The defendant appealed to the Supreme Court and the matter was remitted to the High Court for a determination as to whether after-the-event insurance was champertous, illegal or otherwise unenforceable in Irish law. The Supreme Court also made an order joining the after-the-event insurer as a notice party to the proceedings. High Court judgment The High Court acknowledged that the torts of maintenance and champerty were first formulated at a time when: the legal system was weak; the independence of the judiciary was not necessarily secure; and...

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