In R. (on the Application of PACCAR Inc) v Competition Appeal Tribunal  UKSC 28 (judgment handed down on 26 July 2023), the UK Supreme Court held that litigation funding agreements with third parties who play no part in the conduct of litigation, but who are to be paid a share of any damages recovered by the claimant, are “damages-based agreements” (or “DBAs”) within the meaning of the relevant UK legislation which regulates such agreements. Such agreements must therefore comply with the relevant regulatory regime and, if they do not, they are unenforceable under English law.
The likely effect of the UK Supreme Court’s decision is that most English law-governed third-party litigation funding agreements currently in place will be unenforceable, since participants in the litigation funding market have generally assumed that their agreements are not DBAs and therefore do not have to comply with the relevant regulatory regime. For an in depth coverage of the ruling see a full article by our London team. There is also an episode on this issue on our Commercial Litigation podcast. Continue reading