UK to Reverse Ruling, Allowing Third-Party Funding for Class Action Lawsuits
UK to Reverse Ruling, Allowing Third-Party Funding for Class Action Lawsuits
The British government will reverse a recent court ruling that threw the practice of litigation funding into disarray. This move is seen as a boost for those who are seeking to bring class-action lawsuits.
The Supreme Court of Britain ruled in July last year that funding agreements in a multi-billion-pound lawsuit were unenforceable. This decision surprised many and caused litigation funders to scramble to revise deals in order to keep cases going. Litigation funding involves a finance company covering all or part of the cost of a lawsuit in exchange for a fee paid from the proceeds of a successful case.
The court's decision prompted some companies facing mass lawsuits in Britain, valued at billions of pounds, to question the validity of the funding arrangements of the claimants. These companies included Apple, Facebook, and Sony. On the other hand, litigation funding has also been used to help individuals take on large companies, such as the case of more than 550 former Post Office workers who sued the company and were able to overturn dozens of wrongful convictions.
The Ministry of Justice (MoJ) announced on Monday that the government would introduce legislation to restore the legal situation to what it was before the Supreme Court's ruling. This legislation will only apply in England and Wales. According to Britain's Justice Minister, Alex Chalk, it is crucial for victims to have access to justice; however, when facing powerful corporations with significant financial resources, they can feel like they are in a David and Goliath battle. Chalk said that this important change will allow more victims to secure vital third-party funding to level the playing field and support their fight for justice. He also mentioned the Post Office case as an example of how third-party funding can be beneficial.
The MoJ is also considering a wider review of the litigation funding sector to see if there is a need for increased regulation or safeguards for people bringing claims to court.
