The Court of Appeal has handed down judgment ([2025] EWCA Civ 841) in conjoined appeals from the Competition Appeals Tribunal (“CAT”) in which the defendants had challenged the enforceability of the litigation funding agreements (“LFAs”) entered into by the claimant Class Representatives.
The CAT granted the Defendants permission to appeal in each of the cases, which were heard together on the basis that they raised broadly common issues as to the enforceability of LFAs which had been revised following the Supreme Court’s seminal ruling in PACCAR [2023] UKSC 28. The PACCAR judgment had found that percentage based LFAs were damages based agreements, and thus unenforceable in ‘opt out’ collective proceedings, and unenforceable in the event of non-compliance with the DBA Regulations 2013 in ‘opt in’ collective proceedings (and more generally in civil litigation).
The Court analysed s58AA(3) of the Courts and Legal Services Act 1990, which defines damages based agreements as an agreement “which provides that (i) the recipient is to make a payment to the person providing the services if the recipient obtains a specified financial benefit in connection with the matter in relation to which the services are provided, and (ii) the amount of that payment is to be determined by reference to the amount of the financial benefit obtained”. In a judgment given by Sir Julian Flaux C (with which Green and Birss LJJ agreed), the Court dismissed the appeal and held that the revised LFAs were not unenforceable, and in so doing:
- rejected the appellants’ submissions that although the revised LFAs calculated the funders’ return by reference to a multiple of the amounts advanced by the funders, they were nevertheless DBAs because of express or implied caps on the level of recovery at the level of damages recovered, or because the return would be payable out of such proceeds: [115]-[123];
- rejected the appellants’ further submissions that conditional language providing for a percentage based recovery in the event that the law changed (i.e. to reverse PACCAR), but otherwise by reference to a multiple of the amounts advanced by the funders, nevertheless rendered the revised LFAs into DBAs: [124]-[128];
- as a result of the first two points, declined to decide a third point, which had become moot, as to whether the DBA was the LFA as a whole, or was properly to be located somewhere within the LFA, or alternatively whether it was possible to sever any language which otherwise had the effect of rendering an LFA into a DBA: [129].
A copy of the judgment is available here.
Richard Hoyle appeared on behalf of the Respondents (led by Nicholas Bacon KC and Daniel Saoul KC of 4 New Square), instructed by Milberg London LLP (on behalf of Alex Neill Class Representative Ltd in Neill v Sony), Harcus Parker Limited (on behalf of Commercial and Interregional Card Claims I Ltd and Commercial and Interregional Card Claims II Ltd in CICC I v Visa, CICC I v Mastercard, CICC II v Visa, CICC II v Mastercard), Hausfeld & Co LLP (on behalf of Dr Rachael Kent in Kent v Apple) and Charles Lyndon Ltd (on behalf of Justin Gutmann in Gutmann v Apple).
