Jurisdiction(s):
United Kingdom

After PACCAR: CAT scrutiny of LFAs, multiples over percentages, appellate uncertainty, and stalled legislative fix shape funders’ returns in UK collective actions

Published on: 30 July 2024

Published by a Law360 reporter

Legal News

Article summary

In July 2023, the highest UK court sprang a surprise, contrary to earlier assumptions, by determining that numerous funding arrangements used by litigation financiers amounted to damages-based agreements (DBAs) and would be unenforceable unless they complied fully with the DBA regulations. The ruling created a hurdle for claimants and funders seeking to make use of Britain’s growing collective action regime, as DBAs cannot bankroll opt-out claims before the Competition Appeal Tribunal (CAT). A period of intense lobbying followed, and the previous Conservative government moved to push through legislation intended to reverse the judgment’s effect, before politics got in the way. In the months following the Supreme Court’s decision in R v Competition Appeal Tribunal, known as PACCAR, defendants to collective proceedings — including Apple, MasterCard and Visa, as well as Sony — sought to challenge the agreements struck by class representatives and the claim funders. According to Andrew Leitch, a partner at Bryan Cave Leighton Paisner LLP, funders were committed to finding a commercial resolution and almost invariably did. It then fell to the CAT to scrutinise class representatives’ funding arrangements closely...

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