The High Court has refused an application by Persona Digital Telephony Ltd. and Sigma Wireless Networks Ltd. for a declaration that their litigation funding agreement with Harbour Fund III, L.P. did not amount to an abuse of process or breach Ireland’s rules on maintenance and champerty.
In a judgment delivered on 20 April 2016, Ms Justice Donnelly said the professional funder had no independent interest in the litigation. Under the Irish authorities considered by the court, funding litigation without such an interest in return for a share of its proceeds amounted to maintenance and champerty and was contrary to public policy.
The companies brought the application by notice of motion dated 25 March 2015. They argued that the doctrines should be applied in light of modern public policy and constitutional access to justice, and that the funding arrangement should be considered as a whole. They said they could not pursue the litigation without the funding. An affidavit from their major shareholder stated that the combined resources of the shareholder and another director fell far short of the estimated €10 million needed to finance the case.
The defendants argued that maintenance and champerty remained torts and criminal offences in Ireland, and that the funding agreement fell within the established prohibition. They also raised a preliminary objection to the court’s jurisdiction to grant the requested declaration. The judge rejected that objection, finding a real and substantial question, sufficient interest on the companies’ part, and proper contradictors. She considered the application under the High Court’s inherent jurisdiction.
The judgment reviewed Irish decisions including *O’Keeffe v. Scales*, *Thema International Fund plc. v. HSBC Institutional Trust Services (Ireland) Ltd.* and *SPV Osus Ltd. v. HSBC International Trust Services (Ireland) Ltd.* The judge concluded that the Irish authorities continued to prohibit professional third-party funding of litigation by a funder with no independent interest seeking a share of the proceeds. She said changing that position could require an appellate court or the legislature.
The court did not decide a constitutional challenge. The judge said the application did not ask the court to examine the constitutionality of the torts and offences or seek a declaration of unconstitutionality. She therefore did not determine whether those rules were consistent with constitutional rights, including access to justice.
The order was limited to refusing the relief sought in this application. The judgment noted that the funding arrangement arose as an issue during the proceedings and that its enforceability was not pleaded in the plenary summons; it did not make a separate order enforcing or setting aside the agreement.