SubscribeOn July 26, 2023, the UK Supreme Court gave judgment in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others[1].
By a majority of four to one, the Supreme Court held that litigation funding agreements (LFAs) (which entitle funders to be paid a proportion of any damages recovered) are “damages-based agreements” (DBAs), within the meaning of section 58AA of the Courts and Legal Services Act 1990 (the 1990 Act). As a result, LFAs are unenforceable unless they comply with the relevant regulatory regime for DBAs and cannot be used at all to fund opt-out collective proceedings before the Competition Appeal Tribunal (the CAT).
This ruling will have significant ramifications for litigation funders in the United Kingdom as well as claimants and claimant law firms that rely heavily on third-party funding. This impact was acknowledged by the Supreme Court, with Lord Sales noting (in the leading judgment) that the Court had been informed that “most third-party litigation funding agreements would…be unenforceable as the law currently stands”[2].
The Supreme Court’s Decision
This issue arose in the context of the well-known “Trucks” litigation before the CAT.
In 2016, the European Commission found that
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