Restrictions on Litigation Funding

The Restrictions on Litigation Funding in Ireland

The prohiLitigation Fundingbition on certain parties litigation funding in Ireland is provided for through the doctrines of Maintenance and Champerty.

Maintenance is the provision of financial support by a party who has no interest in a case, but who assists another party who has an interest in bringing the case. Champerty is the provision of financial support by a party who has no interest in a case to a party engaged in the proceedings on the basis that they get a portion in return from any damages awarded to the assisted party.

In many jurisdictions both Maintenance and Champerty are allowed in some shape or form and this is generally the case in most Common Law jurisdictions. In Ireland however such doctrines are prohibited by virtue of the Maintenance and Embracery Act 1634. This Act adopted the law in England at the time but even though English Law has since reversed this decision Ireland has maintained this original position on the two doctrines.

In a very recent case of Persona Digital Telephony Ltd v Minister for Public Enterprise (No.2) [2016] IEHC, the prohibition on Maintenance and Champerty was challenged. The plaintiff here would only be able to bring an action if they received funds from a third party with no interest in the case. The third-party would then receive a share of the damages awarded to the plaintiff. This of course is Champerty and the provision of funds for the legal costs to bring and see the case through is Maintenance because the third party had no interest in this case. The Supreme Court will hear this matter in 2017 and only then will we see if the doctrines of Maintenance and Champerty remain in force.

The prohibition on these doctrines stems fromĀ the fear that the courts may be overrun with cases and there is a very serious risk that cases may be run as investment opportunities. The argument for the prohibition on Maintenance and Champerty to be quashed presumably rests on the premise that all persons should be allowed access to justice.

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