Access to justice is at the heart of a society governed by the rule of law. Without access to the courts, people and businesses risk being denied their most basic rights.
On 26 July 2023, in Re (on the application of PACCAR Inc & Ors) v Competition Appeal Tribunals & Ors [2023] UKSC 28, the Supreme Court had ruled that litigation funding agreements were damages-based agreements and, as such, needed to comply with the Damages-Based Agreement Regulations 2013. If they did not do so – which no litigation funding agreements have ever done – then those agreements are unenforceable.
This ruling was a disaster for litigation funding and those who care about access to justice. It is hard enough to persuade funders to back litigation as it is, given that the costs of an after-the-event insurance policy are no longer recoverable from a losing defendant. Rendering all litigation funding agreements unenforceable meant that litigation funding as an industry would be dead in England & Wales, and access to justice would be even further curtailed than it has been since the coalition government introduced the Legal Aid, Sentencing & Punishment of Offenders Act 2012.
With characteristic sloth, on 19 March 2024, the government finally acted and Lord Evans of Rainow introduced the Litigation Funding Agreements (Enforceability) Bill in the House of Lords. As it is a government bill, it ought to pass in both Houses of Parliament relatively quickly.
The Bill, to be piloted through the House of Lords by the Advocate General for Scotland, Lord Stewart of Dirleton, applies only to England & Wales and looks to amend section 58AA of the Courts & Legal Services Act 1990. It will ensure that litigation funding agreements are enforceable (and, importantly for those engaged in litigation funded by such agreements, always have been). Its second reading, when there is a general debate on all aspects of the Bill, is scheduled for 15 April.
This legislative change ought to merit one cheer for the protection of access to justice.
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