knowledge 6 May 2025 |

Third Party Litigation Funding in Ireland: Insights from European Commission Study

Introduction

On 21 March 2025 the European Commission published a study on Mapping Third Party Litigation Funding in the EU (the “Study”). The Study analysed the position of Third Party Litigation Funding¹ (“TPLF”) across EU Member States and found that Ireland is a distinct outlier in its continued outlaw of TPLF. The Study notes that there is no existing legislation on TPLF in Ireland and it remains essentially unlawful on grounds that it constitutes maintenance and champerty under common law.² Highlighting the difficulties with any changes in the area, the Study emphasises the continued divergence of views held by Irish stakeholders for how TPLF should be regulated. 

The debate over how to implement TPLF in Ireland has extended over many years and continues to be considered by the Law Reform Commission (the “LRC”), including at length in a Consultation Paper published in July 2023³ (the “LRC Consultation Paper”). The LRC is expected to publish a final report later this year and this is keenly awaited.

There have been limited legislative developments on TPLF in Ireland of late. While the Irish legislature recently considered TPLF in the Courts and Civil Law (Miscellaneous Provisions) Act 2023, which (once fully enacted) will permit third party funding of international commercial arbitration in Ireland (see our briefing note on this development here), these provisions have not yet been commenced.

At an EU Level, in September 2022 the European Parliament passed a resolution on the responsible commercial private funding of litigation, including recommendations to the Commission for a Directive in the area (the “Proposed Directive”) (see our briefing note on this development here). Nearly three years on, the Proposed Directive has not been enacted and appears far from being finalised. The Study examines some of the issues with the Proposed Directive, highlighting that stakeholders across the EU, including in Ireland, are unsure about its appropriateness and effectiveness.

The slow pace of legislation in the area and the divergent views on legislative proposals emphasise the complexity of regulating TPLF.

The Study

The Study analysed the position of TPLF across EU Member States, including Ireland, and selected third countries (Switzerland, UK, USA, Canada). The Study collected relevant information through a stakeholder survey and interviews with litigation funders, lawyers, academics, public authorities and businesses. The Study will be used by the Commission to prepare future policy decisions concerning TPLF.

Irish Stakeholder Views on TPLF

The Study provides a comprehensive analysis of stakeholder views on TPLF in Ireland. The findings of the Study indicate that Irish stakeholders generally acknowledge the potential benefits of TPLF in enhancing access to justice, particularly for high-value commercial claims and collective representative proceedings. However, some doubt is expressed as to the extent in which stakeholders believe TPLF can provide better access to justice as third party funders typically fund proceedings with a good prospect of a healthy return of investment and high value commercial claims. Concerns were also expressed by stakeholders in Ireland around the legal status of TPLF, its potential economic impacts, and the need for a balanced regulatory framework.

Divergent views on the regulation of TPLF in Ireland

Some stakeholders argued for TPLF to be permitted in Ireland without restriction, noting that existing legal frameworks and market mechanisms were sufficient to address potential issues. These stakeholders cautioned that over-regulation could stifle the development of a TPLF market in Ireland.

The Proposed Directive was scrutinised by stakeholders who contributed to the Study. Criticisms highlighted include that “the overall level of regulation that the draft directive anticipates could result in TPLF in Ireland being stillborn in the event that it was legalised.”

Other stakeholders advocated for comprehensive regulation to address the perceived negative effects of TPLF, prevent abuses and build confidence in the TPLF market. In particular certain stakeholders noted concerns with light touch legislation in this area, citing the position in England where a self-regulation regime applies and where the UK Supreme Court recently expressed concern about the scale and significance of the regulatory issues that are left entirely to the market to police.⁴

Commentary on TPLF in Ireland referred to in the Study

The Study cites comments from Mr Justice Frank Clarke in the Supreme Court judgment in Persona Digital Telephony v Minister for Public Enterprise ⁵ which confirmed that commercial TPLF constitutes unlawful maintenance and champerty, and this effectively prohibits TPLF in civil court proceedings.

In Persona, Clarke J indicated that if the legislature continues to avoid enacting legislation to allow for TPLF, the courts may have no alternative but to develop the common law in ways akin to other jurisdictions.

The Study also suggests that the Consumer Rights Act 2022 (the “2022 Act”) could apply to a litigation funding agreement where the agreement is made with a consumer. Where a litigation funder terminates a funding agreement arbitrarily and for no reason, the Study notes it could be deemed ‘unfair’ under the 2022 Act.

Next Steps

The Study will be closely examined here in Ireland given the ongoing review of TPLF by the LRC and potential further developments at an EU level.

While the general prohibition on TPLF remains the current law in Ireland, the Study highlights possible legislative developments and ongoing consultations by the LRC which show a potential shift towards legalising and regulating TPLF in specific contexts. However, change in the area has proven slow.

The Proposed Directive examined in the Study highlights that Ireland may be required to appoint an independent public regulator for TPLF. Such a step may overcome the perceived negative effects of TPLF but may also stifle its development in the legal market in Ireland.

Stakeholders should stay informed about these developments and consider the implications for their litigation strategies, particularly those open to consumer claims.