Government considers concerns over retrospective effect of Litigation Funding Agreements Bill

The government is facing concerns over the retrospective effect of a bill aimed at overturning a Supreme Court ruling from last year, as members of the House of Lords have backed the retrospective element during the committee stage of the Litigation Funding Agreements (Enforceability) Bill.

Lord Stewart, speaking for the Ministry of Justice, acknowledged the concerns raised about the possibility of claimants facing the prospect of two funding agreements that could be enforced once the bill comes into effect. He also referenced a suggestion that the retrospective effect may interfere with the government’s obligations under the European Convention on Human Rights.

The Ministry of Justice had received a letter before action challenging the retrospective element earlier this month. Barrister Lord Carlile argued that the bill “would be absolutely pointless if it were not retrospective” and was created to right a wrong that nobody expected.

Fellow barrister Lord Sandhurst supported the retrospective element, stating that the government needed to give good reasons for legislation to have retrospective effect, which he believed they had done in this instance. He emphasized the importance of ensuring access to justice, particularly against monopolists.

The Lords approved two technical government amendments to widen the bill’s definition of a litigation funding agreement. The first change covers an agreement to pay the expenses of unrepresented litigants, such as those of an expert witness. The second amendment clarifies that payment of adverse costs funded under an LFA can follow court, tribunal, or arbitration proceedings, or as part of a settlement.

Overall, there was support across the chamber for the terms of reference of the Civil Justice Council review of third-party litigation funding, with many peers emphasizing the importance of regulating the industry and ensuring access to justice for all.