Ministry of Justice set to introduce new law on litigation funding
The Lord Chancellor and Justice Secretary Alex Chalk is set to introduce a new law to make it easier for the public to secure financial backing when launching claims against big businesses.
The Ministry of Justice (MoJ) unveiled its plans on Monday that a new law will be introduced to address the issue of litigation funding.
The MoJ outlined that the law will restore the position that existed before the Supreme Court’s ruling last year.
Last year, the Supreme Court handed down a ruling in the so-called PACCAR case. PACCAR is a truck haulier company and is one of the parties in a case involving five major European manufacturing groups, which are being sued for allegedly breaching competition law.
The Supreme Court ruled that the litigation funds backing the claims against the truck companies did not have the correct financial arrangements in place to be able to properly support the court’s actions.
This ruling has left the litigation funding sector in limbo ever since.
However, earlier this year when the Post Office scandal took the spotlight, the founder of the Justice for sub-postmasters Alliance, Alan Bates, took the issue of litigation funding to the centre stage. In an op-ed for the Financial Times, he highlighted that litigation funding was an “essential financing tool” in his case against the Post Office.
Back in January, the Justice Secretary vowed to reverse “the damaging effects” of a Supreme Court ruling last year “at the first legislative opportunity”.
Following that news, City lawyers welcomed the promise to change the laws around litigation funding, but many raised major concerns with City A.M., about whether litigation funds can continue to back certain court cases.
On the new law he highlighted today, according to the MoJ legislation will be introduced shortly and will only apply to England and Wales,
The MoJ also added that the next steps and any terms of reference of the review will be set out in due course.
Commenting on the news today, Chalk, said: “It’s crucial victims can access justice – but it can feel like a David and Goliath battle when they’re facing powerful corporations with deep pockets.”
“This important change will mean more victims can secure vital third party funding to level the playing field and support their fight for justice. The sub-postmasters were able to secure third party funding in their legal action against the Post Office. Now others will too,” he added.
Commenting on the news, Gary Barnett, executive director for the International Legal Finance Association, said: “We’re pleased to see the Government grasp the importance and urgency of this issue with a commitment to introducing a dedicated bill.”
“We hope ministers continue to push the bill through at pace to resolve the uncertainty created by the PACCAR decision. We are fully aligned with the Government on the importance of legal finance to the UK legal sector, business and citizens,” he added.