Ciarb responds to UK government’s plan to regulate third-party funding

The UK government recently announced plans to regulate third-party litigation funding agreements (LFAs) to minimise the impact of the UK Supreme Court’s 2023 judgment in PACCAR and ensure that the funding sector ‘works fairly and efficiently for all’.  

Following the release of a government-commissioned report on litigation funding from the Civil Justice Council (CJC), which recommended that PACCAR be reversed, the UK’s  

Minister of State for Justice, Sarah Sackman KC MP, confirmed the government will legislate that LFAs are not damages-based agreements (DBAs) and introduce ‘proportionate regulation’ of LFAs.  

In response, Ciarb’s Senior Professional Practice Advisor (Arbitration), Mercy McBrayer FCIArb, said: “We’re aware the government has responded to the findings of the CJC report with plans to introduce legislation. This will bring the UK’s interpretation of these types of agreements more in line with those in international jurisdictions and provide parties in dispute with a wider range of funding options to allow them to see their dispute through to an effective and justiciable conclusion.” 

To learn more about how third-party funding in arbitration works, download Ciarb’s Guideline on Third-Party Funding.