The Royal Court of Jersey's approval of third party funding
has given businesses and individuals in the Island improved access
In a recent judgment (In the Matter of the Valetta Trust), the
Royal Court has given its approval, in principle, to third party
funding arrangements, facilitating access to justice in the Jersey
courts by plaintiffs (claimants) who would not otherwise be able to
bring a claim. This development takes on added importance in these
times of recession where the legal costs associated with pursuing
litigation can often be prohibitive.
So what is third party funding? It is where someone who has no
connection with the dispute provides financial support for
litigation on the basis that they receive a percentage of the sums
recovered if the action succeeds, but nothing if the action fails.
Historically such arrangements were considered unlawful in the UK
but in recent years the English courts have taken the view that
third party funding is acceptable in the interests of access to
justice, particularly where the prospective claimant is unable to
fund their claim by any other means. It has been said that although
a claimant funded by a third party forgoes a percentage of his
damages, it is better for him to recover a substantial part of his
damages than to recover nothing at all.
Litigation funders will likely consider most types of
litigation, apart from personal injury. Third party funding could
be used, for example, for breach of contract, professional
negligence, international arbitration, insolvency matters and
intellectual property claims. Cases considered for funding are
likely to be commercial litigation of some value, however, the
funders consider their part in it an investment and want to ensure
that the return justifies their involvement.
In the Valetta case, the Royal Court concluded that Jersey law
ought to mirror English in this area. It said access to justice was
extremely important and the public policy reasons leading to
jurisdictions such as England and Australia allowing third party
funding were equally applicable here, although whether any third
party funding agreement is acceptable will depend on its particular
terms. In the Valetta case, the Court was satisfied that the
funding agreement could not "be said in any way to corrupt the
purity of justice". The arrangement allowed the plaintiffs to
bring proceedings where they would otherwise have been unable to do
so due to a lack of resources. There were two important aspects of
the arrangement from the court's perspective: the plaintiffs
(not the funder) would be in control of the proceedings and the
funder would meet any adverse costs order in the event that the
claim was unsuccessful or withdrawn, thereby protecting the
defendants to the claim.
Whether the court's judgment prompts a flood of claims in
Jersey funded by third parties remains to be seen but there is
certainly interest from third party funders in the Channel Islands
litigation market. It is perhaps an unwelcome development for the
likes of trustees and other professionals who may find themselves
on the end of claims brought with the backing of the resources
available to a litigation funder.
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.
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The claim followed the conclusion of two years of litigation (ORD 12/0035 & ORD 12/0034) between the parties in respect of the Bank's contractual claim for amounts owed by TSEL to the Bank pursuant to certain business loans.
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