This week, the Government has introduced a bill which seeks to reverse the effect of the Supreme Court’s much-publicised PACCAR decision on litigation funding. That decision, arising out of the “trucks cartel” litigation, effectively rendered many litigation funding agreements unenforceable. There has been clamour since, both from the funding industry and from claimant groups, to legislate to mitigate the effects of this decision for fear that it may have a chilling effect on access to justice – particularly in collective group actions (although the effects of the decision were not limited to such claims). In the wake of renewed attention on class actions in recent months, discussion of litigation funding has expanded beyond the purely legal arena and entered the wider public consciousness, which has arguably given additional political capital, and thus momentum, to wider reform of the law in this area.
The Government had already taken some steps towards regularising the position when it tabled amendments to its existing Digital Markets, Competition and Consumers Bill last November. While these amendments sought to address some concerns relating to the PACCAR decision, they would have been of limited effect because they only applied in certain types of collective action, without changing the legislation at the core of the PACCAR decision. Even had these changes been progressed therefore, litigation funding agreements outside of the collective action sphere could still have been caught by the PACCAR decision and thus unenforceable.
As signalled by its title though, the new Litigation Funding Agreements (Enforceability) Bill 2024, which had its first reading on Tuesday 19 March, takes a more holistic approach which stands (subject to passage through Parliament) to reverse the effect of PACCAR completely. The Bill seeks to do this by amending s.58AA of the Courts and Legal Services Act 1990 (the provision at the heart of PACCAR) to provide that a litigation funding agreement is not a damages based agreement. This new approach, which goes to the legal core of the Supreme Court’s decision, means the more peripheral amendments which had been tabled to the Digital Markets Bill are now redundant, and have been withdrawn.
The Bill is scheduled for its second reading on 15 April. We will continue to chart its progress through Parliament. In the meantime, if you would like to catch up on the PACCAR story so far, please see our previous articles on the topic:
Supreme Court makes waves in litigation funding (August 2023)
Fracas post-PACCAR (November 2023)
Funding and Games – Court approves funding agreement in Playstation litigation (December 2023)
About the author(s)
Emma has over 17 years' experience in providing timely and pragmatic advice to her clients on commercial disputes, including breach of warranty, contractual disputes, negligence claims and public procurement challenges.
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.