Third Party Funding A Matter For Legislature - Supreme Court Confirms Old Parameters Still Apply

In a recent Supreme Court decision, which considered whether third party litigation funding is permissible in Ireland, the Court has indicated that developments in relation to such funding arrangements are a matter for the legislature to decide.

In what was an eagerly awaited judgment, the Supreme Court in Persona Digital Telephony Ltd and another v The Minister for Public Enterprise and others 1 dismissed the plaintiffs' appeal by a majority decision and in so doing, upheld a centuries-old prohibition on litigation funding by a third party in return for a share of the proceeds.

High Court Decision

In what was the first Irish case to directly concern the acceptability of third-party funding, the plaintiff sought a declaration that the proposed funding arrangement (whereby a UK company was willing to provide litigation funding in return for a share of the proceeds, should the plaintiff be successful), was not in contravention of the principles of maintenance 2 and champerty 3. In refusing to grant the declaration, the High Court felt that the plaintiffs were asking the court "to develop the law of maintenance and champerty beyond what has been generally understood in this jurisdiction" and reiterated that the "law of maintenance and champerty continue to exist in this jurisdiction".

Supreme Court

The public importance and significance of the case, in light of constitutional principles of access to the courts and to justice, was reflected in the fact that the Supreme Court granted special leave for a 'leapfrog' appeal 4 to determine the question of:

"Whether third party funding, provided during the course of proceedings (rather than at their outset) to support a plaintiff who is unable to progress a case of immense public importance, is unlawful by reason of the rules on maintenance and champerty."

Noting that "the torts and crimes of maintenance and champerty have been retained in Ireland", Denham CJ stated that this case raised the "single issue" as to whether the professional funding agreement "is contrary to public policy and is champertous".

In dismissing the appeal and finding that the third party litigation funding was unlawful (where none of the exceptions apply), Denham CJ stated that it would not be appropriate for the Supreme Court to develop the common law on champerty, pointing out that it is a "complex multifaceted issue, more suited to a full legislative analysis". The Chief Justice...