Third Party Funding: Irish Courts Refuse to Diverge from “Established and Consistent” Case Law and Legislation
The issue of third party funding of litigation came before the Irish High Court for the first time recently in the decision of Ms. Justice Donnelly in Persona Digital Telephony Ltd v The Minister for Public Enterprise. This case saw the Plaintiffs seeking an Order from the High Court that, entering into a litigation funding arrangement with a professional third party funder, did not constitute an abuse of process or contravene rules on maintenance and champerty.
Litigation funding in Ireland is subject to the rules prohibiting maintenance and champerty which were the issues at the heart of Ms. Justice Donnelly’s Judgment. Maintenance means where a party without an interest in the action funds the litigation of another. Champerty means where a party without an interest in the action funds the litigation of another with a view to sharing in the profits of the action.
Maintenance and champerty have been both torts and criminal offences in Ireland dating back to as early as 1634.
Although other jurisdictions have seen legislative change in this area of law, the Irish Courts have shown a reluctance to diverge from the longstanding position, mainly due to public policy concerns to do with the integrity of the legal systems and, to prevent improper influence on litigation.
After the Event Insurance versus Third Party Funding:
Within the Judgement, the Court considered After the Event Insurance (ATE Insurance) and accepted, as outlined in Greenclean Waste Management v Leahy, that it was a legitimate service which provided access to justice in Ireland. However, AET insurance differs from third party funding because the insurer pays the costs of the action.
The Court noted that to attempt to change the law on third party funding would mean changing legislation prohibited by the separation of powers prescribed in the Constitution. The Court stated that its role in this application was to determine whether third party funding would amount to a breach of the torts and offences of maintenance and champerty. It relied on the fact that these offences are still enshrined in legislation and the fact that a long line of authority from the Courts has consistently recognised them as torts and offences in refusing the relief sought by the Plaintiffs. It also noted that it had not been asked to consider the constitutionality of the rules on maintenance and champerty.
The Court noted that public policy and abuse of process considerations were the core issues in most of the jurisprudence when retaining maintenance and champerty. While the Court did appear to have some sympathy with the Plaintiffs in relation to their constitutional right to access of justice, it was not a matter for this application and indeed would be beyond the scope of the Court in the present case.
This Judgment reaffirms Ireland’s consistent and established line of authority on the issue. However, given the change in attitude toward ATE insurance, it does appear that the attitude of the Courts is changing slightly to this area of law but it will require a constitutional challenge or legislative change to the law before it will be accepted by the Courts.