Sackman: Claimants in limbo
The government is to legislate to reverse the Supreme Court’s 2023 PACCAR ruling, which has brought huge uncertainty to the litigation funding market.
This was the urgent recommendation of June’s Civil Justice Council (CJC) report on litigation funding [1] but the Ministry of Justice has not set out its views on any other of the recommendations at this point.
The PACCAR judgment classed litigation funding arrangements (LFAs) as damages-based agreements (DBAs), meaning all those in place fell foul of the DBA regulations and future ones needed to comply with them. DBAs are also not allowed in opt-out actions in the Competition Appeal Tribunal.
Recent research said the number of collective actions filed at the tribunal has “collapsed” to only three this year, due mainly to the “chilling effect” of PACCAR [2] on funding.
The MoJ said PACCAR “has also threatened the UK’s status as global leader in dispute resolution”
The previous government sought to legislate to overturn the ruling but the bill did not make it through Parliament before last year’s election was called – and Labour decided not to reintroduce the bill [3] until the CJC had completed its review.
Since its report was published, lawyers and funders have been urging the government to act, frustrated by the delay in action.
Today the MoJ said that it would introduce legislation “when parliamentary time allows”. It will clarify that LFAs are not DBAs.
Sarah Sackman, the minister for courts and legal services, 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 MoJ said the government “will continue to consider the recommendations set out in the CJC review”.
These included the introduction of “light-touch regulation” of funding, while it rejected a cap on funders’ returns.