Ireland
Class actions in Ireland have taken a significant step forward with the recent enactment of the Representative Actions for the Protection of the Collective Interests of Consumers Act 2022 (the Act). The Act, which transposes the EU Directive 2020/1828 (the EU Directive) into Irish law, introduces a new regime for representative actions aimed at protecting consumer interests.
While the EU Directive expressly provides for litigation fundings for collective actions, the Act does not alter the current position in Ireland that litigation funding, save for limited exceptions, is not permitted. Nonetheless, this development marks a profound change in the rights available to consumers in Ireland, enabling them to bring collective and cross-border actions in relation to a wide range of EU consumer protection legislation.
Recent changes to the civil litigation and insolvency landscape in Ireland have significantly impacted the responsibilities of directors of limited liability companies in financial difficulty. Legislative changes now impose further duties on directors when their company is in financial trouble with amendments to the Companies Act putting duties to creditors of companies in financial difficulty on a statutory basis. This follows the recent landmark decision in Powers v Greymountain Management Limited in which the court ruled that company officers of limited liability companies can be held liable for company debts in certain circumstances.
1. Is third party funding permissible for disputes?
In Ireland, the general rule is that third-party funding is not permitted. This prohibition is rooted in the traditional legal principles of maintenance and champerty, which prevent third parties with no legitimate and independent interest in a dispute from funding litigation. However, there are exceptions to this rule. These exceptions typically apply when the funder has a legitimate and independent interest in the dispute.
Ireland has recently permitted third party funding for international commercial arbitration – a change brought about by the Courts and Civil Law (Miscellaneous Provisions) Act 2023 – which came into effect on 5 July 2023. The Irish Law Reform Commission (LRC) has been reviewing the law governing third-party funding of civil litigation in Ireland.
The LRC has not yet made any recommendations, but it has been considering key issues such as the potential increase in legal costs, the impact on insurance premiums, and the appropriateness of third party funding in different types of disputes. Any further reform is to await the outcome of the LRC’s review which is expected this year (2024).
2. Are lawyers able to work on a contingent basis in the jurisdiction and are there any restrictions?
Yes, lawyers in Ireland are permitted to work on a contingent basis, commonly known as ‘No Win, No Fee’ or ‘No Foal, No Fee’ arrangements. These contingency fees are governed by Section 149 of the Legal Services Regulation Act 2015, which stipulates that solicitors cannot charge fees as a percentage or proportion of any damages or other monies, except under very limited circumstances. Although these arrangements are lawful, the Law Society of Ireland’s regulations prohibit solicitors from actively advertising or promoting ‘No Win, No Fee’ services.
3. Can the court or tribunal order one party to pay the other’s legal costs?
Yes, in Ireland, a court or tribunal can order one party to pay the other’s legal costs. The principles applicable to the award of costs in civil cases was put on a statutory footing by the Legal Services Regulations Act 2015. In addition, a recent decision of the Court of Appeal in Word Perfect Translation Services Ltd v Minster for Public Expenditure and Reform confirmed the approach the courts should take when addressing costs. In short, although the award of costs is ultimately at the discretion of the court, the starting point in exercising that discretion is that a party who is entirely successful is entitled to their costs.
4. Is insurance available to protect against adverse outcomes for funded litigation?
Yes, in Ireland, insurance is available to protect against adverse outcomes for litigation. This type of insurance is often referred to as litigation insurance or legal expenses insurance, and it encompasses “After the Event” (ATE) insurance. These policies are permitted in Ireland as they do not violate the principles of maintenance and champerty.
Contact
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.
Share this page