Insights Litigation Funding: Concerns expressed after legislation reversing PACCAR failed to pass ahead of the general election


Members of the litigation funding industry have expressed deep concern that legislation aimed at reversing the Supreme Court’s ruling in R (on the application of PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28 (“PACCAR”) failed to become law before Parliament was dissolved. We have previously commented here on the proposed Litigation Funding Agreements (Enforceability) Bill, which came as a great relief for litigation funders after the Supreme Court had called into question the enforceability of many litigation funding agreements.

Despite enjoying cross-party support, the Bill failed to be included in the ‘wash up’ period before Parliament was dissolved. As a result, many are in limbo, waiting to see if the next Government will pick up where the previous one left off and pass a law to the same effect as the Bill. Susan Dunn, Chair of the Association of Litigation Funders, warned of the “potentially catastrophic consequences” of hundreds of funded claims coming to an end, while Neil Purslow, chair of the international Legal Finance Association, told the Law Society Gazette that “the fall of the Bill is disappointing for us, but more importantly for SMEs and individuals, like the sub postmasters, who rely on litigation funding to hold corporate wrongdoers to account and secure justice…It will also perpetuate the uncertainty that has been created by the Supreme Court’s PACCAR judgment, fuel the growth in satellite litigation that we are already seeing as interested parties seek to re-litigate previously settled cases, and undermine the sector’s ability to support meritorious cases in the future”.

Separate from the passing of any new legislation, the Civil Justice Council (“CJC”) appears to be continuing its review of third-party litigation funding. The review will examine the current position in relation to third party funding in England and Wales, and its approach to regulation as compared to other jurisdictions. It will also explore whether “the current arrangements for third party funding deliver effective access to justice and identify possible alternatives and limitations”. Recommendations will include consideration of, for example: whether, and if so by whom, third party funding should be regulated; whether a funder’s return should be capped; the role of courts in controlling the conduct of litigation supported by third party funding; and potential conflicts of interest between funders, legal representatives, and funded litigants. The CJC is planning to publish an interim report by this summer, with the full report to follow in summer 2025.

To read the terms of reference of the CJC review, click here.