On 26 July 2023, the UK Supreme Court handed down its much-anticipated judgment in R (on the application of PACCAR Inc and others) (Appellants) v Competition Appeal Tribunal and others (Respondents), [2023] UKSC 28 (the “Judgment”). The Supreme Court ruled by a majority that litigation funding agreements (“LFAs”) in which funders are entitled to a payment by reference to a percentage of the damages recovered are Damages-Based Agreements (“DBAs”). As a result, these types of LFAs are likely to be unenforceable, unless they are compliant with the relevant regulatory regime for DBAs. This decision therefore will have wide-ranging implications across the litigation funding market, and in particular in the context of opt-out collective proceedings before the Competition Appeal Tribunal (“CAT”), where DBAs are unenforceable in any event.
In this article we discuss the background to the Judgment, the reasoning in the Judgment, and its likely implications for the growing number of parties involved in funded litigation.
