Chief Justice Frank Clarke launched a report by the EU Bar Association and the Irish Society of European Law relating to Third Party Litigation Funding (TPLF) and class actions in Ireland on in January 2020 (the Report). While the Report does not make any specific recommendations for the implementation of TPLF in Ireland, the European Union Bar Association and Irish Society for European Law have both recommended that proper provision be made in Ireland for TPLF and class actions.
Third Party Litigation Funding
TPLF occurs when a party, with no interest in the litigation, provides funding to enable litigation to progress. Currently, the torts of maintenance and champerty prohibit TPLF in Ireland, see our previous articles on these prohibitions here, here and here. Given the Supreme Court decisions upholding the torts of maintenance and champerty any future changes will have to be legislative.
The Report highlights that TPLF could be used as an effective and attractive tool to promote access to justice in Ireland in situations where the less financially buoyant party may run out of funds and be forced to discontinue proceedings. It is recommended that adequate provision is made in law for clear guidelines in participation in TPLF to ensure clarity and protection for all parties involved.
The Report discusses varying degrees of governance which are applied to TPLF in other jurisdictions. For example, in the United Kingdom there is a voluntary code of conduct dealing with TPLF. In other jurisdictions, such as the Netherlands and New Zealand, parties are afforded more discretion to deal with TPLF on individual terms and conditions.
While they are currently not permitted in Ireland, class actions could potentially facilitate easier and more cost-effective access to justice for a variety of currently disenfranchised parties.
Irish courts do recognise, in limited circumstances, representative actions, when multiple parties can be identified with the same interest. One or more of such parties can sue or be sued or can be authorised by the court to appear on behalf of for the benefit of all persons with the same substantial interest in the proceedings. However, there a number of limitations to representative actions in Ireland. For example, the remedies available are limited to injunctive and declaratory relief; damages are not available. The “same interest” requirement is interpreted very strictly and there is no legal aid available for representative actions.
There is also a precedent in Ireland for “test cases”, whereby numerous separate claims arise out of the same circumstances and one claimant instigates proceedings. A recent example of a test case involved a case taken against GlaxoSmithKline over allegations that the swine flu vaccine caused a sleeping disorder. Furthermore, Article 80 of the EU General Data Protection Regulation (GDPR) introduced to all EU member states, a collective action mechanism whereby not-for-profit bodies dedicated to personal data protection can initiate claims on behalf of claimants who allege their rights have been infringed. See some of our previous articles on class actions here, here, here and here.
EU Unity on Collective Redress?
In the last number of years, the European Commission (EU Commission) has sought to achieve greater cohesiveness publishing “Towards a European Horizontal Framework for Collective Redress” and Recommendation 2013/396/EU. These list non-binding principles relating to collective redress mechanisms which the EU Commission suggests should be common across all members of the European Union. The recommendations state that all Member States should have collective redress mechanisms available in all cases concerning EU law.
However, it remains that while there are some representative action mechanisms available in Ireland, they are limited to specific instances.
The current economic and societal climate represents a real opportunity for change in relation to both TPLF and class actions mechanisms in Ireland. Litigation costs can have a massive impact on a company’s viability. Given the potential impact of Brexit on common law options available within the EU and the unavoidable long-term societal and financial impact of COVID-19 it is likely that Ireland will come under increasing focus in respect of its approach to class actions and TPLF in order to achieve some cohesiveness across the EU.
We will continue to keep you updated on any developments in this area.
Contributed by Simona Mulligan