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British bill on third-party funding delayed

The British Government is to wait for the outcome of a review of litigation funding in England and Wales before deciding on whether to introduce draft legislation on the issue.

The previous Conservative government had introduced a bill on litigation funding in March, but it did not pass before the general election in July.

The bill was designed to reverse the impact of the so-called PACCAR decision by the UK’s Supreme Court on third-party litigation-funding agreements (LFAs).

The court held that LFAs that provide for the funder to receive a fee calculated by reference to the damages achieved by the funded claimant were damages-based agreements (DBAs). This meant that many were unenforceable.

Review of market

In a note on the firm’s website, lawyers at Pinsent Masons say that Lord Ponsonby, parliamentary under-secretary for the Ministry of Justice, confirmed the Labour government’s position in a recent answer to a question posed in the House of Lords.

He said that the British Government would wait for a project being undertaken by the Civil Justice Council (CJC) to conclude before deciding on action to take.

The CJC is conducting a review of the litigation-funding market in England and Wales, and its regulation, and is expected to publish a full report next year.

Limits

Emilie Jones, an expert in dispute resolution at Pinsent Masons, said that the litigation-funding community would be disappointed that the effects of PACCAR would continue, at least for the time being.

“However, many will welcome the government’s decision to look at the third-party litigation-funding landscape in England and Wales in the round, before enacting legislation,” she added.

“The CJC’s review will look at topical and important issues, such as how funding is regulated and whether funders’ returns should be subject to certain limits,” Jones stated.

In Ireland, the Law Reform Commission last year published a consultation paper setting out the arguments for and against the liberalisation of the rules governing the third-party funding of litigation in Ireland.