Irish High Court's First Engagement With Litigation Funding

The Defendants in the ongoing Persona litigation (Persona Digital Telephony Ltd & Anor v Minister for Public Enterprise, & Ors [2015] IEHC 457) were successful in their recent application to the High Court seeking disclosure of the litigation funding agreement (the "Funding Agreement") which the Plaintiffs entered into with Harbour Fund III Limited Partnership ("Harbour"), a specialist litigation funding company. However, in the interests of ensuring the Plaintiffs' rights in the litigation were not irreparably damaged, the Court ordered that the Plaintiffs were entitled to redact specified key elements of the Funding Agreement.

The Plaintiffs, Persona Digital Telephony Ltd ("Persona") and Sigma Wireless Networks Limited ("Sigma"), were unsuccessful applicants in the competition for Ireland's second GSM mobile telephone licence in 1996. Persona and Sigma are suing the State for damages on the basis that the competition was unfairly conducted. As the Plaintiffs are impecunious, allegedly as a result of the Defendants' wrongdoing, they entered into the Funding Agreement with Harbour to fund the litigation, which they could not otherwise bring.

Persona and Sigma issued a motion seeking a declaration from the Court that, by entering into a litigation funding arrangement with Harbour, they are not engaged in an abuse of process and / or are not contravening the rules on maintenance and champerty (the "Funding Application").

However, the Plaintiffs refused to provide the State with a copy of the Funding Agreement in advance of the application, arguing that its disclosure would confer on the State an unnecessary, unfair and disproportionate litigation advantage in the main proceedings. In the case Thema International Fund plc v HSBC Institutional Trust Services Ireland Limited [2011] 3 IR 654, the Court stated that providing detailed information about funding to an adversary was bound to convey a litigation advantage. This would arise, for instance, because an opponent in litigation may take tactical steps with a view to exhausting the other side's financial resources and consequent ability to bring or defend the proceedings.

In order to avoid this outcome, yet still obtain the Court's approval of the Funding Agreement, the Plaintiffs made a number of averments as to the contents of the Funding Agreement on affidavit. In particular, they confirmed that they would have full control of the litigation with no interference from Harbour whose only...