Home Knowledge Professional Third Party Funding of Litigation Continues to be Prohibited in Ireland

Professional Third Party Funding of Litigation Continues to be Prohibited in Ireland


In a judgment delivered yesterday (20 April 2016), the High Court has confirmed that the traditional understanding of the doctrines of maintenance and champerty continues to apply and, as a result, litigation funding arrangements entered into with third parties with no bona fide connection to the litigation remain prohibited.

Maintenance and champerty are both torts and criminal offences and appear to date back to 1634 in an Irish context and much longer in the context of English law generally. Maintenance occurs where a person unconnected with the underlying litigation provides improper assistance to a party involved in the litigation. Champerty is generally thought of as a subset of maintenance and occurs where the unconnected person seeks a share of any of the proceeds of the litigation as a result of his funding. The rationale behind the prohibition is the fear that the involvement of otherwise unaffected third parties would detrimentally affect the administration of justice and lead to oppression by those with the necessary financial resources. Many other countries have abolished the prohibition and now allow for third party funding of litigation.

The judgment arose from the longstanding litigation into the award of mobile phone licences in the 1990s. The plaintiffs in the case alleged that there was impropriety in the award process and, as a consequence, their bid was not successful and they suffered loss. They seek to sue a number of parties for that loss, however, they were unable to continue to do so unless they could avail of litigation funding from a third party. Having found a willing third party, they asked the High Court to make a declaration as to the validity of the proposed funding arrangement.

The High Court, after examining the long history of the doctrines, found there to be a long line of authoritative Irish cases both recognising the doctrines and identifying their ingredients. While some of the more recent cases appeared to suggest that the doctrines needed to be developed to take into account modern realities, the majority of the pronouncements found that the third party funding of litigation continued to be prohibited on public policy grounds. The Court also noted the Oireachtas had chosen to retain the underlying statutes when it was tidying up the statute book in 2007.

The Court also felt itself unable to develop the doctrines by virtue of the doctrine of the separation of powers. Even though there is a constitutional guarantee of access to justice, that did not allow a court to overstep its own jurisdiction and further develop the doctrine, particularly where the doctrines are criminal offences recognised in statute.

The judgment therefore recognises that if the doctrine is to change, it either requires legislative action or possibly the involvement of a higher court. It is also of note that the plaintiffs did not attempt to have the constitutionality of the doctrines tested and the Court did not offer any opinion on this potential avenue of challenge. Until one of the above options occurs, third party litigation funding will continue to be inaccessible to Irish litigants. 

Contributed by Martin Scanlon