Ministry of Justice to Introduce Legislation to Address Third-Party Litigation Funding Agreements

The Ministry of Justice in England and Wales is set to introduce new legislation aimed at leveling the playing field for individuals seeking justice against powerful corporations. The move comes in response to a Supreme Court ruling last year that made most third-party litigation funding agreements unenforceable.

The ruling in the PACCAR case in the Competition Appeal Tribunal (CAT) highlighted the need for clarity and reform in the litigation funding market. The government’s amendment to the Digital Markets, Competition and Consumer Bill addresses the impact of the ruling on opt-out collective proceedings in the CAT, but falls short of addressing all claims affected by the decision.

Lord Chancellor Alex Chalk has emphasized the importance of ensuring access to justice for all individuals, particularly when facing well-funded opponents in legal battles. The new legislation aims to make it easier for members of the public to secure third-party funding when launching complex claims.

In addition to the new legislation, the Ministry of Justice is considering a wider review of the litigation funding sector to explore the need for increased regulation and safeguards for claimants. Business minister Lord Offord has suggested that the Civil Justice Council may undertake the review to ensure access to justice and the attractiveness of the jurisdiction.

The move has been welcomed by legal professionals and industry experts, who see it as a positive step towards providing certainty for funders and funded parties. The legislation is expected to have a significant impact on the funding of opt-out collective actions in the CAT, where DBAs are expressly prohibited.

Overall, the new legislation and potential review of the sector signal a commitment to ensuring fairness and access to justice for all individuals involved in legal disputes in England and Wales.