In the recent decision of Persona Digital Telephone Ltd. and Sigma Wireless Networks Ltd v The Minister for Public Enterprise & Ors [2017] IESC 27, the Supreme Court of Ireland confirmed that third-party litigation funding by an entity with no independent interest in the underlying proceedings is prohibited under Irish law.

This case arose as a consequence of the plaintiffs’ allegations that there was impropriety in a tender process resulting in the award of a mobile phone licence in 1996. The plaintiffs were unsuccessful in their bid, alleged a resulting loss and so looked to sue a number of parties for that loss. However, financial constraints led to the plaintiffs seeking to avail of litigation funding from a third party and the ensuing application for a declaration by the High Court as to the validity of the proposed funding arrangement, given the existence of the torts (and criminal offences) of maintenance and champerty in this jurisdiction.

The Supreme Court found that funding of this nature is contrary to the torts of maintenance and champerty, which prohibit financial assistance to a party to litigation by a person who has neither an interest in the litigation, nor any legally recognised motive justifying interference. Both maintenance and champerty are still recognised torts (and criminal offences) in Ireland and the Supreme Court in its judgment left it to the legislature to develop this complex area.

Jul-Sep 2017 issue

William Fry