UK Supreme Court Archives - EURO LIT INSIGHTS

UK General Election: Anti-PACCAR Bill Torpedoed

by Jack Thorne and Harry Denlegh-Maxwell | May 31, 2024 | Legislative Update, United Kingdom

In a previous blog post, we discussed the introduction to Parliament of the Litigation Funding Agreements (Enforceability) Bill (the Bill), which was designed to introduce legislation that would reverse the outcome of the UK Supreme Court’s decision in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others.[1]

As we previously set out, the ruling in PACCAR was set to have significant ramifications for litigation funders, claimants and claimant law firms in the UK that rely on third-party funding, potentially threatening the financial viability of swathes of the litigation funding industry. In PACCAR, the Supreme Court held that litigation funding agreements that entitle funders to be paid a portion of any damages recovered (as opposed to a multiple of the investment made by the litigation funder) are “damages-based agreements”, as defined in the Courts and Legal Services Act, and are therefore unenforceable unless they comply with the relevant regulatory regime.

The Bill proposed amending s58AA of the Courts and Legal Services Act, to insert a provision that “an agreement is not a damages-based agreement if or to the extent that it is a litigation funding agreement”. A litigation funding agreement

Supreme Court Clears the Air on ‘Force Majeure’ Clauses

by Jack Thorne and Sadaat Cheema | May 28, 2024 | Court Judgment, Transportation & Logistics, United Kingdom

The UK’s Supreme Court has issued an important judgment clarifying the extent to which parties are required to use reasonable endeavours to avoid force majeure. Force majeure, or in layman’s terms ‘act of god’, is a specified, and generally unforeseen and disruptive, event which may mean that one or both parties to a contract are relieved from having to fulfil their obligations under it. In the present case, the underlying contract contained a force majeure clause, which included a provision requiring the party which was affected by the force majeure event to exercise reasonable endeavours to overcome it.

The relevant force majeure event took the form of US sanctions which effectively prevented payment by the charterer under an affreightment contract being made to a shipowner using US dollars. The charterer instead offered to make payments in euros and to cover any losses arising to the shipowner through the conversion of those payments into US dollars. However, in what seems a somewhat counterintuitive decision, the Supreme Court unanimously found against the charterer, on the basis that the requirement on the shipowner to exercise reasonable endeavours to overcome the force majeure event did not mean that it had to accept performance that

New Government Bill to Reverse Supreme Court’s Decision on Litigation Funding

by Jack Thorne, Briana Walley, Harry Denlegh-Maxwell and James Dobias | Mar 27, 2024 | Legislative Update, Regulatory/Compliance, Transportation & Logistics, United Kingdom

The Litigation Funding Agreements (Enforceability) Bill was introduced to Parliament this week, following the UK government’s announcement earlier this month that it would introduce legislation that would reverse the outcome of the UK Supreme Court’s recent decision in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others.[1]

In PACCAR, a part of the well-known “Trucks” litigation in the Competition Appeal Tribunal (CAT), the Supreme Court held that litigation funding agreements (LFAs) that entitle funders to be paid a portion of any damages recovered (as opposed to a multiple of the investment made by the litigation funder) are “damages-based agreements” (DBAs), as defined in the Courts and Legal Services Act, and were therefore unenforceable unless they complied with the relevant regulatory regime (DBA Regulations 2013).

The ruling in PACCAR was set to have significant ramifications for litigation funders, claimants and claimant law firms in the UK which rely on third-party funding, potentially threatening the financial viability of swathes of the litigation funding industry. Typically, LFAs have been structured as the greater of a multiple of monies invested by the funder and a percentage of damages recovered. This percentage element is

Landmark UK Supreme Court Ruling Strikes a Blow to Litigation Funding

by Harry Denlegh-Maxwell | Jul 26, 2023 | Court Judgment, United Kingdom

On July 26, 2023, the UK Supreme Court gave judgment in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others[1].

By a majority of four to one, the Supreme Court held that litigation funding agreements (LFAs) (which entitle funders to be paid a proportion of any damages recovered) are “damages-based agreements” (DBAs), within the meaning of section 58AA of the Courts and Legal Services Act 1990 (the 1990 Act). As a result, LFAs are unenforceable unless they comply with the relevant regulatory regime for DBAs and cannot be used at all to fund opt-out collective proceedings before the Competition Appeal Tribunal (the CAT).

This ruling will have significant ramifications for litigation funders in the United Kingdom as well as claimants and claimant law firms that rely heavily on third-party funding. This impact was acknowledged by the Supreme Court, with Lord Sales noting (in the leading judgment) that the Court had been informed that “most third-party litigation funding agreements would…be unenforceable as the law currently stands”[2].

The Supreme Court’s Decision

This issue arose in the context of the well-known “Trucks” litigation before the CAT.

In 2016, the European Commission found that

The Quincecare Duty: A Victory for the Banks?

by Harry Denlegh-Maxwell | Jul 12, 2023 | Court Judgment, Banking & Finance, United Kingdom

On July 12, 2023, the UK Supreme Court delivered a landmark decision on the so-called “Quincecare duty” owed by banks to their customers.

In a unanimous judgment in favour of Barclays Bank, the UK’s highest Court held that banks did not owe customers a duty of care in fraud cases where transactions were authorised by the customers directly. As Lord Leggatt said in his judgment: “It is not for the bank to concern itself with the wisdom or risks of its customer’s payment decisions”.

This important clarification will be welcomed by financial institutions, particularly as the level of online fraud continues to soar. However, there are a number of other claims that are currently before the courts that will still be watched with interest, as will this present case as it is remitted to the High Court to decide arguments about the scope of any duty to attempt to claw back payments once a fraud has come to light.

The Supreme Court’s decision also follows the recent passing of the Financial Services and Markets Act 2023, which provides for a mandatory reimbursement scheme, albeit limited to certain payment types within the United Kingdom. In practical terms, therefore, claimants may look