Third Party Litigation Funding in Ireland (2)

The Study stems from the adoption by the European Parliament on 13 September 2022  of a resolution on responsible private funding of litigation and it seeks to map the landscape of Third Party Litigation Funding (“TPLF”) primarily, across the EU.

Fragmented Regulatory Framework

The Study reveals a lack of harmonised TPLF regulation across the EU. Most Member States have no specific rules, relying instead on general civil, contract, and consumer law principles.

Ireland remains the sole EU jurisdiction prohibiting TPLF under its laws on maintenance and champerty. 

The TPLF market operates in a type of legal grey zone, guided more by practice than formal rules.

Market Insights and Stakeholder Practice

Nonetheless, TPLF is increasing in popularity across the EU and is used in commercial, antitrust, and consumer claims. The Study indicates that typical funded claims range from €1 million to over €100 million and funders, generally, seek 20–30% of the award or a multiple of the funding amount.

Despite this growth, transparency remains limited and funding agreements are rarely disclosed to courts outside of collective actions, and little is publicly known about funder financial structures or capital adequacy.

Legal and Ethical Concerns

The Study highlights several concerns: funder control trumping legal decisions, conflicts of interest between lawyers and funders, and lack of protection for claimants in poorly regulated markets. These risks have led to calls for enhanced disclosure and minimum standards for funders’ financial stability and ethical conduct.

While some jurisdictions impose banking or investment fund rules on funders depending on their structure, there is no consistent application.

What’s Next: Three Regulatory Pathways

The Study outlines three policy options:

• No regulation, relying on existing laws;
• Light-touch regulation, focusing on transparency and basic safeguards; or
• Comprehensive regulation, aligned with a European Parliament draft directive.

In Ireland

As alluded to in the first article in this series, the Irish Arbitration Act was amended in 2023 to allow TPLF funding for international commercial arbitration and related proceedings. Also, in 2023 the Law Reform Commission (“LRC”) initiated a review of the law in this area and while, at the time of writing our said first article, it was anticipated that the LRC’s final report would be published in early 2025, this report is now not expected until later this year.

Nevertheless, as TPFL funding becomes more central to EU litigation strategy, it seems to us more likely that the prohibition on TPFL currently in place in Ireland will eventually be repealed.

We will provide a further update when the LRC’s final report is published.

For further information on the topics outlined above, or on practice and procedure in relation to litigation in Ireland, please contact Hugh Kane, Partner or David Walsh, Senior Associate, of our Commercial Litigation Department.

The Study can be found at the below link:-

https://commission.europa.eu/strategy-and-policy/policies/justice-and-fundamental-rights/civil-justice/civil-and-commercial-law/third-party-litigation-funding-tplf_enhttps://commission.europa.eu/strategy-and-policy/policies/justice-and-fundamental-rights/civil-justice/civil-and-commercial-law/third-party-litigation-funding-tplf_en

This document has been prepared by Kane Tuohy LLP for general guidance only and should not be regarded as a substitute for professional legal advice.