The Supreme Court has dismissed the appeal of a High Court decision prohibiting third party litigation funding in Ireland.

The background to the appeal involved a claim by the Plaintiffs that the tender process for the mobile phone licence awarded to East Digifone in 1996 was conducted improperly.

The Plaintiffs were unable to fund the litigation and secured a funding arrangement with a third party. This resulted in an application to the High Court for a declaration to confirm that this arrangement was valid. However, the High Court prohibited the third party funding on public policy grounds.

In Persona Digital Telephony Limited & Sigma Wireless Networks Limited v The Minister for Public Enterprise, Ireland and the Attorney General [2017] IESC 27, the Plaintiffs’ appealed the High Court decision in the Supreme Court, bypassing the Court of Appeal by way of a “leapfrog” application.

The issue to be determined by the Supreme Court was:

“Whether third party funding, provided during the course of proceedings (rather than at their outset) to support a plaintiff who is unable to progress a case of immense public importance, is unlawful by reason of the rules on maintenance and champerty”.

In considering the issue, Clarke J observed that the case involved “serious allegations” against the State. He acknowledged that a “source of disquiet” for him, arising from the appeal, was the real possibility that the Plaintiffs’ case might not go to trial without third party funding and as such it was arguable “that there is a very real problem in practice about access to justice” which could raise constitutional concerns.

Despite these concerns, Clarke J and the majority of the Supreme Court (4:1) upheld the High Court decision finding that the funding arrangement was prohibited due to Ireland’s laws on maintenance and champerty.

As clearly stated by Chief Justice Denham “Champerty remains the law in the State….A person who assists another’s proceedings without a bona fide independent interest acts unlawfully.”

Whilst recognising that a modern law on champerty may be required, Denham stated that the area was a “complex multifaceted issue, more suited to a full legislative analysis” and was not to be developed on a piecemeal basis.

This decision of the Supreme Court provides significant clarity on the judiciary’s attitude to the law in this area, even where such apparent public policy concerns exist.

Third party funding in litigation is common place in many other jurisdictions and litigation finance solutions is big business in many other common law countries.

For now, however, such arrangements remain unlawful in Ireland unless coming within certain limited exceptions.

In Thema International Fund v. HSBC Institutional Trust Services (Ireland) [2011] 3 I.R. 654, Clarke J held that whilst the Plaintiff was in receipt of some form of third party funding, he was satisfied that on evidence the funder had a “sufficient connection with the plaintiff to take that funding outside the scope of maintenance and/or champerty”. Namely, the funder had a legitimate interest in the litigation beyond providing financial assistance.

In April 2017, it was reported that the world’s largest litigation finance provider intended to establish offices in Dublin in the expectation that the Supreme Court would permit the third party funding arrangement. Considering the decision of the Supreme Court, such plans are likely to be on hiatus.