In early July, following a change of UK Government, lawyers waited expectantly for the King’s Speech, to hear the legislative priorities for the new parliamentary session. But among proposals for reform of the Arbitration Act and pensions there seemed to be something missing – litigation funding.
Prior to the dissolution of parliament, legislators had been progressing the Litigation Funding Agreements (Enforceability) Bill – a bill designed to effectively reverse the Supreme Court’s decision in PACCAR by rendering litigation funding agreements enforceable. As we have covered in previous articles (see links at bottom of this post), the PACCAR decision has caused a great deal of uncertainty since it was handed down in summer 2023. In parallel with the LFA Bill, the Civil Justice Council was commissioned to conduct a wider-ranging review of litigation funding.
However, when the General Election was called, the LFA Bill was not one of those whose passage was accelerated during the washup period, and so it fell when the election shutters came down. Unlike the Arbitration Bill though, the LFA Bill did not then resurface in the King’s Speech, leading to questions about its fate.
Those questions have now been answered with a written question in the House of Lords. In response to a question from Lord Sandhurst about whether the government intends to reintroduce the LFA Bill and, if not, what steps they plan to take to mitigate the impact of PACCAR, Lord Ponsonby responded:
“The Government recognises the critical role third-party litigation funding plays in ensuring access to justice.
Following the PACCAR judgment, concerns have been raised about the need for greater regulation of Litigation Funding Agreements, or greater safeguards for claimants.
The Government is keen to ensure access to justice in large-scale and expensive cases, whilst also setting up adequate safeguards to protect claimants from unfair terms.
The Civil Justice Council is considering these questions and others in its review of third-party litigation funding, and hopes to report in summer 2025. The Government will take a more comprehensive view of any legislation to address issues in the round once that review is concluded.”
While there is arguably some administrative logic in rolling the PACCAR amendments into a wider thematic review of funding, this response will be disappointing to funders and funded parties alike, who were previously expecting fairly swift enactment of the LFA Bill and an end to the uncertainty imposed by the PACCAR decision. It remains to be seen how this delay will affect the numerous cases, particularly in the Competition Appeals Tribunal, which are currently stayed in the expectation of legislative change. For now, the next eagerly awaited development will be the delivery of the Civil Justice Council’s interim report, which is slated for the end of summer 2024, and will we hope give a good indication of the direction of travel.
For more information on the PACCAR story so far, see our previous articles:
- Supreme Court makes waves in litigation funding (August 2023)
- Fracas post-PACCAR – what does this mean for litigation funding? (November 2023)
- Funding and games – Court approves funding agreement in Playstation litigation (December 2023)
- This vehicle is reversing – Government seeks to reverse PACCAR funding decision (March 2024)
Christopher Richards
Chris supports our dispute resolution lawyers in providing excellent client service by keeping them abreast of current awareness and legal developments in their practice areas. He also writes client insights and articles on topics of importance in the areas of litigation and arbitration.