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Legislation proposed by government to overturn UK Supreme Court’s PACCAR decision

UK Ministry of Justice Introduces Legislation to Ensure Enforceability of Litigation Funding Agreements

The UK’s Ministry of Justice has taken a significant step towards ensuring the enforceability of litigation funding agreements with the introduction of the Litigation Funding Agreements (Enforceability) Bill in Parliament. This move comes in response to the high-profile Supreme Court PACCAR decision last July, which had rendered many such agreements unenforceable.

The ruling in the PACCAR case had a major impact on the litigation funding industry, particularly in cases involving collective claims. The decision deemed litigation funding agreements that allowed funders to receive a share of damages as Damages-Based Agreements, leading to uncertainty and challenges for both funders and claimant lawyers.

In light of this, the government has swiftly acted to reverse the Supreme Court’s judgment through the introduction of this new legislation. BCLP partner Andrew Leitch, a specialist in competition litigation, highlighted the importance of this move in providing clarity and removing uncertainty surrounding litigation funding agreements.

Susan Dunn, chair of the Association of Litigation Funders, expressed optimism about the bill and its potential impact on the industry. She emphasized the importance of working with the government to ensure that the wording of the bill achieves the desired result of removing all remaining uncertainty about the use of funding for legitimate claims.

Julian Chamberlayne, a risk and funding partner at Stewarts, praised the government’s decision as a testament to the industry’s lobbying efforts. He believes that this swift action will soon relegate the controversial PACCAR decision to the history books, bringing much-needed stability to the litigation funding landscape.

Overall, the introduction of the Litigation Funding Agreements (Enforceability) Bill marks a significant development in the legal landscape of England and Wales, providing clarity and certainty for both funders and claimants involved in litigation funding agreements.

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