The Irish Supreme Court Recognizes That Champerty Law is Outmoded
In a recent ruling, the Irish High Court held that third-party litigation funding is unlawful because it is contrary to the common-law doctrines of champerty and maintenance, which were first developed in the Middle Ages. The Irish Supreme Court even more recently affirmed this ruling because existing law mandated it; but the Supreme Court’s opinion also called for existing law to be changed. In particular, the Supreme Court noted that litigation finance should not be prohibited because it can play an important role in providing access to justice.
The case is Persona Digital Telephony Lt’d v. Minister for Public Enterprise, which arose from the government’s awarding of mobile phone licenses. Unsuccessful bidders for the licenses challenged the government decision, but they could not afford to pay their litigation expenses themselves. They received funding from a third party, raising the question whether such third-party funding was lawful.
This question implicated the medieval common law doctrines of maintenance and champerty. Maintenance is the provision of financial assistance to a litigant by a third party who has no interest in the litigation. Champerty occurs if the third party giving the assistance will receive a share of any award of damages from the litigation.
The Irish High Court had ruled that these doctrines made it unlawful for third parties to provide financial assistance to litigants. The Supreme Court affirmed this ruling, recognizing that these doctrines were still a viable part of the common law. But the Court also noted that legal reform was necessary to make it easier for financially strapped parties to defend their rights in court. In particular, the Supreme Court noted that litigation in common law countries (such as Ireland) is unusually expensive. This is because, in common-law countries, the parties bear so much of the burden of fact-finding and legal research. The Supreme Court also noted that the enforcement of the rules prohibiting champerty and maintenance might violate constitutional principles regarding the right of access to courts. But the Supreme Court did not rule on this issue because the constitutional question had not been raised in the case.
Thus, the Supreme Court suggested that that the legislature might need to address the problem of third-party funding and make Irish law better adapted to the economic realities of modern litigation. This is a lesson for American jurisdictions that, like Ireland, cling to outdated doctrines that make it harder for the less-well-off to find justice. Where maintenance and champerty are still part of the law, legal reform is necessary to make it possible for litigation finance to broaden access to justice.
Topics: litigation finance, legal reform, third-party funding, litigation costs, Ireland, common law, champerty, Persona Digital Telefonia
Works Cited: Persona Digital Telephony Lt’d v. Minister for Public Enterprise, [2017] IESC 27, available at http://www.courts.ie/Judgments.nsf/09859e7a3f34669680256ef3004a27de/30b4f1eeaaf5d9a480258129003925fe?OpenDocument
