Some “Winds of Change”?

As reported in Industry Insights in June 2016, in Persona Digital Telephony & Anor v The Minister for Public Enterprise & Ors [2016] IEHC 187, the Irish High Court confirmed that the offences and torts of maintenance and champerty survive under Irish law, so as to prohibit third party funding of litigation in the absence of a legitimate interest in the litigation. Therefore, there are similarities with the common law there and in jurisdictions such as (for example) Hong Kong and Singapore.

The case is headed for the Irish Supreme Court. The Irish Supreme Court has agreed with the applicants (the appellants) that the issues raised involve matters of public importance and that there are exceptional circumstances justifying a direct “leapfrog” appeal ([2016] IESCDET 106).

At issue in the final appeal is whether the Irish High Court was correct in refusing to order a declaration that the applicants (the plaintiffs) would not be engaging in an abuse of process and/or not contravening rules on maintenance and champerty if they entered into a litigation funding arrangement with Harbour Fund III, L.P.

Some commentators have suggested that the appeal has a decent chance of success, given the Supreme Court’s acknowledgment of the importance of the issues raised in the context of the principle of access to justice. That said, the Irish High Court’s judgment in Persona Digital Telephony emphatically upheld the general prohibition against third party funding and did so after having been referred to the case law of other common law jurisdictions. Given similar common law principles in Hong Kong the outcome in the case should be of significant interest.

In the meantime, jurisdictions such as England & Wales and Australia have well-developed litigation funding markets. As for New Zealand, the courts there appear to take a pragmatic view of third party funding.

In Hong Kong, going forwards, it looks increasingly likely that if there is to be an expansion of the miscellaneous and limited exceptions to maintenance and champerty, say, in the next few years or so, it will come in the form of an appeal to the Court of Final Appeal as opposed to legislative reform.

For now, the debate about legislative reform for third party funding in Hong Kong is focused on arbitrations (and mediations) governed by the Arbitration Ordinance (Cap. 609) – for which readers are referred to the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016introduced into the Legislative Council on 11 January 2017 and based on the Law Reform Commission Sub-Committee’s Report on Third Party Funding for Arbitration (in October 2016).

In the current local circumstances of Hong Kong, this is probably as much as can be expected in 2017.


Partner, RPC