Funding Other’s Case

Maintenance and champerty

Maintenance is the of giving assistance to or encouraging of another in taking legal action by a person who does not have an interest in the action or other motive sufficient to justify his involvement.  At common law, barratry was committed by a person who moved, encouraged and maintained suits or quarrels.

Barratry was an indictable offence at common law, which has largely became obsolete. Maintenance is a misdemeanour at common law.  It is also prohibited by various statutes.  Maintenance is a civil wrong and a person may be liable in damages to the other party to the action.  The action may be brought by a party to the proceedings which have been maintained if he has suffered special damages.

Maintenance applies only to civil proceedings.  It arises only if an action is commenced.  However, a person who without reasonable and probable cause instigates another to bring action may incur civil liability to the defendant similar to that incurred in maintenance.

There are exceptions to the general principle against maintenance of an action that have been recognised at common law.  Charity may justify what would otherwise constitute maintenance.

Permitted Maintenance

A person may maintain near kinsmen, employees, neighbours, coreligionists from charitable motivations.  He must have a bona fide belief in the justice of the action.  He need not have made a full inquiry into the matter, provided that he has reasonable ground.  A mercenary bargain if accompanying the charitable motive may take it out of the exception. Where there is no question of poverty, the kinship exception may not be available.  Some cases have restricted it to relatively near relatives.

A persons may encourage another’s litigation, where he reasonably believes that they have a common interest in the action.  It  must be a common interest recognised at law on the subject matter of the action or issues between the parties to the case.  The common interest must be directly in  issue and must be real and definable.  The interest is most commonly a proprietary interest. It must not be sentimental or incidental to the matter in hand.

Champerty

Champerty is a type of maintenance.  It is maintenance in consideration of a promise to share in the proceeds of recovery of litigation.  Champerty is not subject to a defence of the types mentioned above.

An agreement with the champertist will not be enforced.  This extends to all agreements which “savour of“ champerty”  They are said to be against the public policy by tending to promote unnecessary litigation.

Assistance

An agreement to give information in return for getting a share of property recovered is potentially legal.  If however, the person giving the information is to recover or actively assist in recovering the property, the agreement may not be enforced.

An agreement to supply funds or legal assistance for litigation in return for a share of the proceeds is void as champertist.  An agreement which is champertist is void and unenforceable.  An agreement to indemnify a person against a civil wrong is unenforceable and may constitute a civil wrong in itself.  However an agreement to indemnify a person against costs and damages made in for some legitimate interest is permitted.

Solicitor No Foal No Fee

Some cases indicate that an agreement by a solicitor to charge no costs is unobjectionable.  If the solicitor acts bona fide and seeks to discover whether there is a proper cause of action, it is permissible to take a case on the basis of not receiving a fee.  An agreement to pool fees for recoveries by a copyright society has been upheld.

Funding, being made by a party without an interest in the litigation and for the purpose of a share in the profits amounts to maintenance and champerty on those authorities. In so far as maintenance and champerty are rules of public policy, it has already been determined that these professional third-party funding agreements give rise to legal impropriety, which offends those rules.

Offences

The ingredients of the offences (and also the torts) of maintenance and champerty have been stated clearly by the Superior Courts of Ireland to prohibit professional third-party funding; there are no grounds for entering into an examination of whether the interpretation given to the torts and offences is in accordance with the Constitution.

Maintenance and champerty continue to be torts and offences in this jurisdiction. There is a prohibition on an entity funding litigation in which it has no independent or bona fides interest, for a share of the profits. A professional third party litigation funder, will generally haves no independent interest in present litigation.

Funding, being made by a party without an interest in the litigation and for the purpose of a share in the profits amounts to maintenance and champerty on those authorities. In so far as maintenance and champerty are rules of public policy, it has already been determined that these professional third party funding agreements give rise to legal impropriety which offends those rules.

The ingredients of the offences (and also the torts) of maintenance and champerty have been stated clearly by the Superior Courts of Ireland to prohibit professional third party funding, there are no grounds for entering into an examination of whether the interpretation given to the torts and offences is in accordance with the Constitution.

Maintenance and Champerty

The offences and torts of maintenance and champerty do not apply to dispute resolution proceedings.

A third-party funding contract that meets the criteria (if any) prescribed below  shall not, insofar as it relates to dispute resolution proceedings, be treated as contrary to public policy or otherwise illegal or void.

The Minister may, by regulation prescribe criteria, including criteria relating to transparency in relation to funders and recipients, for third-party funding contracts.

Dispute resolution proceedings means:

• an international commercial arbitration;
• any proceedings arising out of an international commercial arbitration before a court of competent jurisdiction performing any of the functions provided for in the Model Law;
• any appeal from a decision of a court above
• any mediation or conciliation proceedings arising out of an international commercial arbitration, proceedings or an appeal referred to above;

A ‘third-party funding contract’ means a contract or agreement between a party or potential party to dispute resolution proceedings and a third-party funder, for the funding of all or part of the costs of the proceedings in return for a share or other interest in the proceeds or potential proceeds of the dispute resolution proceedings to which the party or potential party may become entitled.”.

Contrast with UK

There is a difference in approach between the Irish courts and those of England and Wales. Maintenance and champerty continue to be torts and offences in Ireland. There is a prohibition on an entity funding litigation in which it has no independent or bona fides interest, for a share of the profits. A professional third party litigation funder, will generally haves no independent interest in present litigation.

Third party funding arrangements cannot be viewed as being consistent with public policy in this jurisdiction or that modern ideas of propriety in litigation have expanded to such an extent to afford this Court the opportunity to characterise this funding arrangement as acceptable.

Third party funding arrangements cannot be viewed as being consistent with public policy in this jurisdiction or that modern ideas of propriety in litigation have expanded to such an extent to afford this Court the opportunity to characterise this funding arrangement as acceptable.