Dispute Resolution Funding In Ireland

Dispute resolution funding has been in the spotlight in Ireland following the delivery of the Persona judgment by the Irish Supreme Court in May last year. In this edition of Vannin Capital's In Conversation Series, Managing Director Rosemary Ioannou talks to Gavin Smith, Partner at Walkers Global on the growing demand for dispute resolution funding in Ireland with reference to the Persona judgment and other industry developments that are driving demand for change.

Rosemary Ioannou (RI): What is the current state of the law in respect to litigation funding in Ireland?

Gavin Smith (GS): A third party professional litigation funding agreement to support a party in legal proceedings ("LFA") is prohibited under Irish law as matters stand. I should add for completeness sake that a third party with legitimate interest in the proceedings, e.g. a creditor or a shareholder of a company that is a party to the litigation in question is permissible under Irish law . However, such third party funders risk being made liable for the costs of litigation if the party that they are funding ultimately loses the case in question.

The principal restrictions on professional third party litigation funding in Ireland arise from the torts of maintenance and champerty that were originally legislated for in the Maintenance and Embracery Act 1634 which was retained by the Statute Law Revision Act 2007. Whilst certain sections of the Maintenance and Embracery Act 1634 were repealed by the Land Law and Conveyancing Reform Act 2009, the sections addressing maintenance and champerty remain in force and were recently applied in the high profile Irish Supreme Court 2017 decision in Persona Digital Telephony Limited & Anor v Minister for Public Enterprise & Ors2 ("Persona").

In that case, the Supreme Court of Ireland were, on appeal, asked to consider the legality of LFA to support a plaintiff in a public procurement a case relating to the historic award of Ireland's second mobile telephone licence. The five judge panel ruled 4:1 in favour of dismissing the appeal and held that the LFA offended against the rules of maintenance and champerty. However, in so doing, the Irish Supreme Court stressed that it might well be appropriate to have a modern law on champerty and third party funding of litigation but that this choice of policy solution was very much a matter for the legislator or the Executive and not for the Courts.

Whilst after-the-event insurance policies, which cover the risk of adverse costs orders and certain disbursements, are considered permissible under Irish law3 they do not address the principal issues faced by parties funding litigation.

RI: Do you perceive there to be a need for the position to change?

GS: Yes I do. I think it is fair to say that the generally held view, today, among commercial litigation and dispute resolution practitioners in Ireland, is that a reform of the law that facilitates, albeit subject to appropriate criteria and parameters, litigation funding is something that clients really want and need.

Ireland is not alone in this, but the costs of...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT