Ruling on disclosure of third-party funding
Lawyers at Byrne Wallace Shields say that a recent High Court decision provides useful guidance on the circumstances in which parties may seek disclosure of litigation-funding arrangements.
In QPQ Limited v Schute, the court ordered disclosure amid allegations that the plaintiff’s proceedings had been unlawfully supported by third-party funders.
In a note on the firm’s website, its lawyers note that third-party litigation-funding is prohibited in Ireland, except in limited circumstances.
The proceedings in this case concerned an intellectual-property dispute.
WhatsApp messages
In course of making discovery, the plaintiff disclosed certain WhatsApp messages, which the defendant asserted suggested that a third party had already provided some funding for the Irish litigation and that additional funding might become available in the future.
He asked the High Court to order the plaintiff to disclose its litigation-funding arrangements, saying that he had a right to know his true adversary.
The plaintiff argued that the High Court did not have a general power to order such disclosure.
High Court’s general power
Mr Justice Twomey, however, held that the High Court did have a general power to make the disclosure order, irrespective of how the existence of the funding arrangement came to the attention of the court.
Citing Thema International Fund plc v HSBC Intrenational Trust Services (Ireland) Ltd, the judge said that if funding for litigation came from a party who already had an interest in the litigation (such as a shareholder or creditor of the plaintiff) then it would not be necessary or proportionate to make a disclosure order regarding that funding in order for the defendant to know its true adversary.
He added, however, that the reverse was also true.
“Certain forms of third-party funding of litigation, namely those amounting to maintenance or champerty, constitute a tort or crime. Accordingly, there is a public interest in the exposure of such funding, if it exists,” Mr Justice Twomey concluded.
Restrictions
Byrne Wallace Shields say that the decision is a reminder that, amid a continuing debate about litigation-funding, restrictions continue to apply.
The firm’s lawyers note the judge’s comment that “there would not seem to be a pressing need for the removal of the current prohibition on third-party funding of litigation in Ireland”.
They conclude that judgment is likely to be of particular interest to non-Irish parties involved in commercial disputes, where questions may arise about the source of litigation funding.