knowledge 9 June 2025 |

Supreme Court Upholds Enforceability of Polish Agreement Assigning Right to Sue

In a recent briefing, we highlighted a European Commission study identifying Ireland as an outlier in its continued prohibition of third-party litigation funding.

The legal position in Ireland is the result of the continuation in force of ancient prohibitions against maintenance and champerty, which concern, in broad terms, the rights of individuals to take a role in proceedings they are not a party to, on foot of an assignment of rights or through funding.

While third-party litigation funding remains prohibited in most circumstances, the Supreme Court recently considered the enforceability in Ireland of a judgment obtained in another EU member state pursuant to an agreement which may offend the rules against maintenance and champerty under Irish law.

Scully V Coucal Ltd

The appellants in Scully were investors in a venture devised by the respondent to purchase land and construct a shopping centre in Poland. The venture was ultimately unsuccessful leading to the appellants losing their capital. In circumstances where the appellants alleged that the respondent had benefited despite the venture’s failure, they took proceedings in the Polish courts, alleging fraud.

Critically, to bring proceedings, the appellants incorporated an Irish company – Coucal Ltd – and assigned to it their right to sue the respondent.

After successfully obtaining judgment in the Polish courts, the appellants sought to enforce their judgment against the respondent in Ireland under Regulation 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast) (“Brussels Recast”).

The respondent sought to prevent the appellants from enforcing the judgment by relying on Article 45(1) of Brussels Recast which provides that a member state may refuse to recognise a foreign judgment where it would be “manifestly contrary to public policy” to do so.

The respondent argued that a clause in the assignment agreement stating that “the right to sell the debt to a third party has not been excluded” permitted the onward assignment of the right to sue to an unconnected third party. The respondent argued that this was contrary to the prohibition on maintenance and champerty and therefore it would be manifestly contrary to public policy for an Irish court to enforce a judgment obtained on foot of an agreement containing such a clause.

The respondent was unsuccessful in the High Court but succeeded before the Court of Appeal.

The Court of Appeal held that the assignment agreement allowed for the assignment of a bare cause of action to a third-party without an interest in the proceedings. The Court considered that SPV Osus Limited v HSBC Institutional Trust Services (Ireland) Ltd [2018] IESC 44 had established that such assignments were prohibited by the rules against maintenance and champerty and therefore enforcement of the judgment was contrary to public policy.

Supreme Court

The Supreme Court disagreed with the reasoning adopted by the Court of Appeal. O’Donnell CJ held that there was a clear difference between an Irish court being asked to enforce an assignment of rights and being asked to enforce a judgment obtained in another country on foot of such an assignment, particularly in circumstances where the assignment was perfectly legal in the other Member State:

Because public policy would preclude something if done in Ireland, under Irish law, it does not necessarily follow that an Irish Court must deny recognition when done elsewhere and in accordance with the law of the legal system of that Member State whose judgments we are generally bound to recognise and enforce. There is a significant space between the two propositions which it is critical to maintain.

O’Donnell CJ also placed emphasis on the fact that Irish law on assignment of claims is under development and that the range of forbidden practices was narrowing. Accordingly, the public policy against maintenance and champerty cannot be said to be:

of such depth and strength as to be regarded as somehow essential to the Irish legal system so that it would simply be incompatible with it to give effect to a foreign judgment based on an assignment which is considered lawful by the law of that state.

Notably, O’Donnell CJ took account of what had in fact happened in this case under the impugned assignment clause. In that regard, he noted that no assignment to an unconnected third-party had occurred. Therefore, he did not consider that the case had the characteristics of commodification of litigation.

Comment

This decision will be of considerable interest to all stakeholders observing the development of Irish law in the areas of assignment of rights and litigation funding. While it does not necessarily augur a fundamental shift in Irish law, it is a further development of Irish jurisprudence in the area following from the decision in Eugene McCool (substituted as plaintiff for McCool Controls and Engineering) v Honeywell Control Systems Ltd (which we covered here). Ultimately, Scully should provide some comfort to litigants in countries outside Ireland who have obtained judgment on foot of an agreement involving an assignment of rights that their judgment will not necessarily be blocked from enforcement by the continued presence of prohibitions on maintenance and champerty.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.