The Ministry of Justice today pledged to come forward with legislation to reverse the PACCAR ruling on litigation funding. The government said a new bill will clarify that litigation funding agreements are not damages based agreements.
The legislation, which does not have a start date, is intended to introduce safeguards for collective action proceedings to be brought against rich and powerful opponents. It also aims to bring stability to the litigation funding sector after the 2023 Supreme Court ruling in PACCAR.
The MoJ said this judgment, which classed third-party funding arrangements as ’damages based agreements’, made it harder to access to funding and has resulted in a drop in collective action lawsuits.
Sarah Sackman, minister for courts and legal services, said: ‘The Supreme Court ruling has left claimants in unacceptable limbo, denying them of a clear route to justice.
‘Without litigation funding, the sub-postmasters affected by the Horizon IT scandal would never have had their day in court. These are David vs Goliath cases, and this government will ensure that ordinary people have the support they need to hold rich and powerful organisations to account. Justice should be available to everyone, not just those who can afford it.’
The government is also concerned to retain the UK’s status as a global leader in dispute resolution, with the legal services industry being worth £42.6bn a year to the economy.
As well as the PACCAR element, the government will also bring into law a new framework to ensure that agreements are fair and transparent. Legislation will be introduced 'when parliamentary time allows'.
These changes follow a review by the Civil Justice Council (CJC), published earlier this year. The government will continue to consider the other recommendations set out in the CJC review.
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