Legislation that allows third-party funding in cases linked to international commercial arbitration has been signed into law.
Apert from some limited exceptions, third-party funding of cases is currently prohibited under Irish law as it is contrary to the rules of maintenance and champerty.
Yesterday (17 July), the Law Reform Commission published a consultation paper setting out the arguments for and against a wider legalisation of third-party funding.
Lawyers from William Fry point out, however, that the Courts and Civil Law (Miscellaneous Provisions) Act 2023 will amend the Arbitration Act 2010 to allow for third-party funding in “dispute-resolution proceedings”.
These are defined as:
- International commercial arbitration,
- Any proceedings arising out of international commercial arbitrations before a court of competent jurisdiction (in Ireland, the High Court),
- Any appeal from a decision of such court proceedings,
- Any mediation or conciliation arising from an international commercial arbitration, court proceedings or appeal.
In a note on the firm’s website, the William Fry lawyers say that the legislation also provides for the introduction of regulations prescribing transparency requirements for funders and recipients.
Where the third-party funding contract complies with these regulations, it will not be contrary to public policy, illegal or void.
“It remains to be seen whether such regulations will follow,” the William Fry note says, adding that a commencement order for the act has yet to be signed.
The Minister for Justice has previously said that the rationale behind this change was to promote Ireland as a choice for international commercial legal business under the Ireland for Law initiative.