DAF v RHA judgment decision

This case raises an important issue of general concern to those engaged in the business of litigation funding in England and Wales and their clients. The issue arises in the context of collective proceedings brought before the Competition Appeal Tribunal (“the Tribunal”) pursuant to section 47B of the Competition Act 1998 (“CA” or “the Act”).

The issue, which I will call ‘the substantive issue’, is in general terms whether funding agreements entered into with claimants by third parties who play no part in the conduct of the litigation, but whose remuneration is fixed as a share of the damages recovered by the client, are “damages-based agreements” within the meaning of the relevant legislation which regulates such agreements. If they are, the likely consequence would be that most, if not all, litigation funding agreements currently in existence would be unenforceable, as would the specific agreements which the Tribunal was asked to approve in the present case.