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The MoJ is making positive signals on a PACCAR response, but we lack crucial detail

December 18, 2023

The MoJ is making positive signals on a PACCAR response, but we lack crucial detail

In positive news for litigation funders, the government has recently indicated that it is actively looking at how it can resolve the access to justice problems posed by the Supreme Court’s summer ruling in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others.

But while two ministers have said words to this effect in this past few weeks, there is still no detail about what precisely the government plans to do, and when.

The PACCAR ruling in July called into question the enforceability of many litigation funding agreements (LFAs). The government stepped in relatively quickly in relation to opt-out claims in the Competition Appeal Tribunal by making a narrow amendment via clause 126 of the Digital Markets, Competition and Consumer (DMCC) bill aimed at preserving LFAs in these claims.

There were hopes that as this bill came under scrutiny in the House of Lords, further changes would be made to resolve LFA enforceability problems for the full gamut of civil claims. But in closing the second reading of the bill in the House of Lords on 5 December, Viscount Camrose, a minister for artificial intelligence and intellectual property, said that while the Ministry of Justice was ‘actively considering options for a wider response,’ he had been advised that ‘this bill is not the appropriate vehicle to deliver this aim’.

The minister said: ‘I note the interest from my noble friend Lord Sandhurst in the recent Supreme Court judgment on the status of litigation funding agreements – LFAs – and its potential impact on the ability to bring collective actions on behalf of consumers across the legal system. The government has urgently addressed the potential implications of the judgment on claims under competition law, and we feel this has provided some much-needed certainty to funders and claimants.

‘I also note the interest from my noble friend and others across the House in extending this to all parts of the civil legal system. While I am advised that this Bill is not the appropriate vehicle to deliver this aim, I can assure noble Lords that the Ministry of Justice is actively considering options for a wider response.’

Meanwhile in a parliamentary written answer on 13 December, justice minister Lord Bellamy made a similar comment, noting that ‘The government is assessing the impact of the [PACCAR] judgment and considering options for non-CAT proceedings.’

During the House of Lords debate on the DMCC, Lord Sandhurst (Guy Mansfield KC) made a compelling case for why a broader amendment was needed.

He explained: ‘The key issue is that the Supreme Court’s PACCAR ruling affects LFAs in all courts, not just in the CAT, and not just, as this clause 126 is designed to address, in so-called opt-out cases. You need it for opt-in cases as well.

‘In fact, such funded cases throughout the court system, particularly in the High Court, make up the majority of cases that litigation funding supports. I am told that CAT cases are just the tip of the iceberg.

‘While the current Clause 126 goes a little way, it will put matters right for so-called opt-out cases, but will not help in opt-in cases, nor in conventional bi-party litigation – one large against one small. The small company fighting Apple will, effectively, not be able to go to a funder.

‘Worse still, in the High Court – outside the CAT – in, for example, drug damages litigation, or the diesel exhaust emissions litigation…the current Clause 126 will achieve nothing. Claimants will have no effective access to litigation funding agreements and many cases already in the pipeline face considerable problems.’

He added: ‘It is necessary, therefore, to restore what I would say was the government’s original 2013-14 intention, which was for litigation funding agreements not to be subject to the damages-based agreement regulations.

‘Clause 126 needs to be redrafted and expanded or it will not meet these important issues. This is critical to provide certainty and effective access to justice, and to protect and expand consumer rights: the Bill’s stated aim.’

These are important points, and it seems the government may be listening. But we are now playing a waiting game to find out what solution it will produce, and how it will be delivered. And given that – behind closed doors – disputes between litigation funders and their clients are now on the rise, these answers cannot come soon enough.

  • Sentry’s Rapid Raise funding is calculated on an interest basis, based on the length of time that capital is deployed. Sentry is therefore unaffected by the Supreme Court’s ruling in PACCAR

 


December 18, 2023

Insights