- Legislation to ensure access to funding for
ordinary people in ‘David vs Goliath' cases confirmed
- Safeguards will mean
more collective action proceedings can be brought
against rich and powerful opponents
- Measures will bring stability to the litigation funding
sector after the PACCAR ruling
Ordinary people will have greater access to justice thanks to
Government's plans for legislation to help claimants receive
the funding they need to take on powerful organisations in
court.
Since the Supreme Court ruling in PACCAR in 2023, claimants have
faced uncertainty about whether they can secure funding from
third parties in order to bring a civil case against a
well-resourced opponent.
Third-party litigation funding allows people to bring complex
legal cases against powerful organisations when they cannot
afford the costs themselves. Under these arrangements, a funder
pays for the legal case in exchange for a share of any
compensation won.
The PACCAR judgment, which classed these funding arrangements as
‘Damages Based Agreements', made it harder
to access to third-party funding and has resulted in a drop
in collective action lawsuits.
Today (Wednesday 17 December), the government is confirming
that it will take action to remove this barrier to
justice by clarifying that Litigation Funding
Agreements are not Damages Based Agreements,
protecting victims and claimants.
Minister for Courts and Legal Services, Sarah Sackman KC MP,
said:
The Supreme Court ruling has left claimants in unacceptable
limbo, denying them of a clear route to justice.
Without litigation funding, the Sub-postmasters affected by the
Horizon IT scandal would never have had their day in
court.
These are David vs Goliath cases, and this Government will ensure
that ordinary people have the support they need to hold rich
and powerful organisations to account.
Justice should be available to everyone, not just those who can
afford it.
The Supreme Court ruling has also threatened the UK's status as
global leader in dispute resolution - a cornerstone of our
booming legal sector and vital to driving economic
growth.
The UK's legal services industry is worth £42.6 billion a year to
the economy, with a highly skilled workforce of
384,000.
A new framework will ensure that agreements are fair and
transparent, so that third-party litigation
funding actually works for all those
involved.
These changes follow a comprehensive and wide-ranging review by
the Civil Justice Council (CJC), published earlier this year. The
government will continue to consider
the recommendations set out in
the CJC review.
Notes to editors:
- In the 2023 PACCAR judgment, the Supreme Court
ruled that third-party litigation funding agreements are legally
classed as ‘damages-based agreements.'
- This decision means funding agreements are only valid if they
meet strict rules and are banned in certain group
claims.
- The Government will introduce legislation to address this
when parliamentary time allows
