'After The Event' Insurance – Contrary To The Law Of Champerty?

Further to the article in our January 2014 update, the Irish High Court's decision in Greenclean Waste Management Limited v Maurice Leahy p/a Maurice Leahy & Company Solicitors1, in which the High Court refused to award a security for costs order because the plaintiff had acquired 'after the event' insurance ("ATE Insurance"), was appealed to the Supreme Court and subsequently referred back to the High Court. The High Court was asked to decide whether or not, as a matter of principle, ATE Insurance was contrary to the law of maintenance and champerty.

Judge Hogan reviewed the operation of the ATE Insurance policy, in the context of a security for costs application, and found the following2:

(a) ATE Insurance is not contrary to the law of maintenance and champerty. Interpretation of the law is not frozen by reference to social and policy conditions which were applicable hundreds of years ago and must move on. Whether ATE Insurance amounts to trafficking in litigation must be assessed by reference to modern conceptions of propriety.

(b) Generally, the courts can only supplement the law of torts when such law is shown to be basically effective to protect constitutional rights in a particular case.

(c) The tort of champerty not only still exists in Ireland, but has a "practical vibrancy".

(d) ATE Insurance serves an important purpose by facilitating access to justice for persons who might otherwise be denied such access.

(e) Agreements which involve trafficking in litigation will be held to be void as champertous and contrary to public policy.

Although ATE Insurance has long been in vogue in the UK, and is inextricably linked with conditional fee arrangements, traditionally there has been little appetite for ATE Insurance amongst plaintiff firms. This may be due to...