Irish champerty rules out funders

Third party funders have been dealt a blow by the Supreme Court of Ireland, which ruled them unlawful as both a tort and a criminal offence in Ireland because of the laws of champerty.

Persona Digital Telephony v The Minister for Public Enterprise [2017] IESC 27 was the first case to come before the court concerning the potential use of professional third party funding.

The funder, Harbour Litigation, had agreed, subject to the approval of the Irish courts, to fund Persona and Sigma in proceedings against the Minister for Public Enterprise, Ireland, the Attorney General and Denis O’Brien. In April, however, the Irish High Court rejected Persona and Sigma’s motion for approval of this funding. The Supreme Court granted leave to determine ‘whether third party funding… 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’.

The high-profile case concerned a long-running dispute over the grant of mobile telephone licences in the 1990s, and had a strong public interest element. The plaintiffs could not afford to fund the litigation without third party help. Chief Justice Susan Denham said the agreement was clearly ‘champertous’, adding that statutes of the 14th, 16th and 17th centuries were declaratory of the common law, and the common law ‘has been stated clearly in recent cases’.

She said the case law of other jurisdictions was not helpful given the clear statements on the law. As to arguments that the court could develop the law, that would ‘involve complex situations more suited to legislation’, she said, and the case ‘was not brought as a constitutional challenge’.

Susan Dunn, head of funding at Harbour, said: ‘Both we and the claimants are disappointed by this outcome. We spent a lot of time reviewing this claim and still believe it to be one of the most meritorious cases we have ever considered, and one in the public interest, and that it should be pursued. It is a shame if meritorious claims such as this still cannot be pursued in Ireland, simply for lack of funding.’