Supreme Court Confirms Continued Prohibition On Professional Third Party Litigation Funding In Ireland

Author:Mr Colin Monaghan, Michael Twomey, Cecelia Joyce, Gemma O'Farrell and Domhnall Breatnach
Profession:Arthur Cox
 
FREE EXCERPT

The Supreme Court of Ireland has confirmed, in its decision in the case of Persona Digital Telephony Ltd v The Minister for Public Enterprise, that professional third party funding is not permitted in Ireland as it offends against the rules on maintenance and champerty.

The Court found that it was bound by the existing law, saying that any change to the position would require new legislation or, potentially, a successful constitutional challenge.

BACKGROUND

The applicants in Persona claimed they needed funding to pursue their case against various parties, including the State. The matter relates to allegations made by the applicants arising from the granting of a mobile telephone licence by the State in 1995.

The applicants argued that their funding arrangement with a professional third party funder did not constitute unlawful maintenance or champerty but was rather an arrangement which would enable access to justice for a claim of public importance to be heard. The respondents argued that the proceedings should not be allowed to go ahead in light of the funding arrangement as the offences of maintenance and champerty remain on the Irish statute books, having been retained in 2007, and that the Law Reform Commission has not recommended a change in the law to allow professional third party litigation funding.

DECISION

Chief Justice Denham gave the leading judgment, with Dunne J, McMenamin J and Clarke J concurring, and McKechnie J dissenting.

In concluding that the funding arrangement was unlawful by reason of the rules on champerty, Denham CJ observed as follows:

This was the first case to come before the Irish Courts which raises the issue of the potential use of a third party professional funding agreement to support a party in legal proceedings. The issue to be considered is whether an agreement to fund, as in this case, where there is no connection between the plaintiffs and the funder other than the funder's decision to fund, is contrary to law. The offence of champerty still exists in Ireland, albeit there are exceptions which might arise where a party has a genuine interest in providing funds, such as for example, a shareholder of an impecunious company. The arrangement in this case did not fall within any of those exceptions. The facts that the funding was to be provided during the course of the proceedings (rather than at the outset) and that the proceedings concerned what was described as a matter of public importance were not...

To continue reading

REQUEST YOUR TRIAL