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Recent developments at both EU level and in the UK reflect an ongoing focus on third-party litigation funding, albeit with different approaches starting to emerge between the EU and UK. Domestically, the subject remains under active consideration by the Irish Law Reform Commission.
Developments in the UK
On 17 December 2025, the UK Government announced its intention to legislate to mitigate the effect of the UK Supreme Court decision in the PACCAR case in 2023. The legislation will also provide for regulation of litigation funding agreements ("LFAs").
Currently, litigation funding in the UK operates via self-regulation (albeit with oversight by representative bodies) together with judicial scrutiny of funding agreements.
The changes announced follow consideration of the subject by the UK Civil Justice Council ("CJC") and its resulting report published in June 2025 (discussed in our previous update here). The stated intention of the legislation is to accept two of the primary recommendations coming out of that review, namely:
- to clarify that LFAs are not damages based agreements, with prospective effect (this will mitigate the effect of the PACCAR decision). The CJC Report had recommended that the legislation should have retrospective effect, which does not appear to have been replicated in the UK Government's announcement; and
- to introduce proportionate regulation of LFAs to improve transparency and fairness for claimants.
The UK Government has indicated the changes will be introduced "when parliamentary time allows".
The UK Government has also stated its intention to further consider the CJC's wider litigation funding recommendations once these two changes have been implemented.
Developments in the EU
In contrast, the European Commission recently put on hold any plans to introduce EU legislation to regulate third-party litigation funding across EU Member States. Although a European Parliament resolution in September 2022 recommended the establishment of common minimum standards for third-party litigation funding across the EU, at the final meeting of the EU's High Level Forum on Justice for Growth last month, European Commissioner for Justice, Michael McGrath, stated that, following feedback from participants of the forum, it had concluded that there is (currently at least) no need to regulate third-party litigation funding at EU level.
Commissioner McGrath also stated that the focus of the forum would be to prioritise monitoring the implementation of the Representative Actions Directive ("RAD").
Position in Ireland
As we have discussed previously (including here), the current prohibition on third-party funding in Ireland has been cited by some commentators as a potential barrier to the practical use of the RAD in the State given that entities qualified to bring actions under the legislation must be non-profit in nature. However, the Irish funding position remains under consideration by the Irish Law Reform Commission ("LRC"), with the LRC currently examining responses to its 2023 Consultation Paper. Its final report continues to be awaited, with current indications that this will be published in Spring 2026.
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