Ireland: Contracts Manifestly Contrary To Irish Public Policy – Implications For Contingent Fee Arrangements And Third Party Funding?

The Irish High Court recently declined to recognise an English judgment in respect of a gambling debt on the basis that to do so would be manifestly contrary to Irish public policy. By close analogy, this has the potential to affect, amongst other things, the enforceability of contingent fee arrangements and third party funding arrangements entered into by Irish parties and their lawyers in relation to litigation outside Ireland.

Background

In Sporting Index Ltd –v- O'Shea1 the plaintiff sought to enforce two English judgments, in Ireland, pursuant to the Brussels Regulation.2 The judgments were in respect of:

  1. a debt incurred as a result of spread betting (the "Debt Judgment"); and
  2. the costs of obtaining the Debt Judgment (the "Costs Judgment").

The Brussels Regulation provides for almost automatic recognition of judgments from other EU Member States. In this case, the plaintiff obtained orders ex parte from the Master of the Irish High Court declaring the English judgments enforceable and served them on the defendant.

The defendant then appealed the Master's order to the High Court primarily on the basis that article 34.1 of the Brussels Regulation provides that a judgment shall not be recognised:

"if such recognition is manifestly contrary to public policy in the Member State in which recognition is sought".

Section 36 of the Gaming and Lotteries Act 1956 (the "1956 Act") provides:

"(1) Every contract by way of gaming or wagering is void.

(2) No action shall lie for the recovery of any money or thing which is alleged to be won or to have been paid upon a wager or which has been deposited to abide the event on which a wager is made...."

The defendant submitted that this section was a clear prohibition on the enforcement of betting contracts on public policy grounds and prevented the enforcement of the English judgments as it engaged the public policy exception provided by Article 34.1 of the Brussels Regulation.

The plaintiff contended that:

  1. it was seeking the enforcement of court orders, not gambling debts; and
  2. denying enforcement would require the Court to review the English judgments as to their substance, which is prohibited by the Brussels Regulation.

As regards the Debt Judgment, the court held that:

  1. While the Court was not permitted to go behind the judgment, for example to examine the merits of the case, it was not prohibited from knowing what the substance of the proceedings was.
  2. The intention of the legislature is perfectly clear in that the enforcement of any gambling contract is prohibited in Ireland.
  3. Section 36 of the 1956 Act constitutes a rule of law regarded as essential in the legal order of this State.
  4. There is a manifest conflict between the foreign court order arising from a gambling debt and Irish public policy as expressed in the 1956 Act. Because this rule was enacted by the Irish legislature, the court was bound to find that the rule is essential in the legal order of the State.
  5. It could see no reason to refer the matter to the Court of Justice of the European Union ("CJEU") as:
    1. it was not a matter for the CJEU to decide whether the Irish statutory provision constituted a rule of law regarded as essential in Ireland; and
    2. the CJEU could not decide whether there was a manifest conflict between Irish public policy and the order sought to be enforced. These were questions which only the authorities in Ireland were competent to assess.

As regards the Costs Judgment, the Court held that this did not constitute enforcement of a gambling debt. The monies were not owed from a betting transaction, rather they related to litigation expenses only. The Court therefore permitted the enforcement of the Costs Judgment.

Comment

Irish public policy diverges from that in other Member States of the EU only in a limited number of areas. One specific area of clear divergence is in relation to litigation funding.

In Ireland:

  1. Contingent fee arrangements, where a solicitor acts in relation to contentious matters for a percentage of the total monies recovered, are unenforceable, except in relation to debt collection or claims for liquidated sums.3
  1. After the event insurance is permissible, to cover the legal costs of the other side in litigation.4
  1. Other third party funding arrangements, where the funder does not have a bona fide interest in the proceedings, especially where the funder may obtain a share of any award,5 are generally unlawful, or unenforceable.6

In light of Sporting Index, the Irish courts may not give effect to a foreign judgment seeking to enforce payment pursuant to contingent fee arrangements and third party funding arrangements entered into by Irish parties and their lawyers in relation to litigation outside Ireland.7

It would therefore be appropriate for parties entering into such arrangements with an Irish litigant, in a jurisdiction where the arrangement is legal, either to:

  1. satisfy themselves that the arrangement would not be manifestly contrary to Irish public policy; or
  1. ensure that they can recover what they are entitled to under the arrangement, without the need to enforce a judgment through the Irish courts.

Footnotes

1 High Court, unreported, Mac Eochaidh J., 15 June 2015.

2 Regulation 44/2001, which continues to apply to proceedings instituted before 10 January 2015, despite the recast Brussels Regulation (Regulation (EU) No 1215/2012, Article 45.1 of which re-enacts Article 34.1 of 44/2001) now being in effect.

3 Section 68(2) of the Solicitors Act 1994.

4 After the event insurance is generally obtained to overcome applications for security for costs see: Greenclean Waste Management Ltd v Leahy & Co. Solicitors (No.2) [High Court] [2014] 6 JIC 0503.

5 Thema International [2011] 3 I.R. 654 at 662.

6 In O'Keefe –v- Scales [1990] 1 I.R. 290, the Supreme Court held that: "A person who assists another to maintain or defend proceedings without having a bona fide interest independent of that other person in the prosecution or defence of those proceedings acts unlawfully and contrary to public policy and cannot enforce an agreement with that other person for any form of benefit" contingent on the outcome of the litigation.

7 On the basis that such agreements are, in general unenforceable, or unlawful, if entered into in Ireland. What would constitute an unenforceable, or unlawful agreement is currently the subject of High Court proceedings. In Greenclean, Hogan J., stated that the question of what may amount to maintenance or champerty is "not frozen by reference to the social conditions and public policy considerations which pertained several hundred years ago". There are currently proceedings before the High Court, in which, partly in reliance on that statement, a declaration is being sought that that the plaintiffs entering into a commercial litigation funding arrangement are not engaged in an abuse of process and/or are not contravening rules on maintenance and champerty (Persona Digital Telephony Ltd & anor -v- Minister for Public Enterprise & ors, High Court Record Number 2001 9223 P).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
13 Nov 2018, Other, Dublin, Ireland

We will host our next Tech@MHC event on Tuesday 13 November in our offices on Barrow Street, Dublin 4.

14 Nov 2018, Seminar, Dublin, Ireland

We will host our commercial litigation seminar on Investigations and White Collar Crime on Wednesday 14 November in our offices on Barrow Street, Dublin 4.

 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions