Last year, the Supreme Court in the PACCAR case ([2023] UKSC 28) decided that litigation funding agreements which entitle the funder to recover a percentage of damages awarded is a Damages Based Agreement (“DBA”) and is accordingly unenforceable unless compliant with the DBA Regulations 2013.

One of the effects of this ruling was to potentially restrict the circumstances in which litigation funding was available to otherwise suitable cases.

Shortly after the ruling, on 31 August 2023, the Department for Business and Trade released a statement providing that: “The Department is aware of the Supreme Court decision in Paccar and is looking at all available options to bring clarity to all interested parties”. Accordingly, an amendment had been proposed to the Digital Markets, Competition and Consumers Bill, dealing with DBAs in opt-out collective proceedings before the Competition Appeal Tribunal. 

However, the Justice Secretary has confirmed the Government is going further. As reported by the Financial Times: “Justice secretary Alex Chalk told the Financial Times that he planned “at the first legislative opportunity” to reverse “the damaging effects” of a Supreme Court ruling last summer”.

This is a welcome development to ensure that the availability of litigation funding is available to enable cases to be issued which would otherwise not be possible. The importance of this has recently been highlighted by Mr Alan Bates in the context of the Post Office scandal. 

With multiple calls for the Government to act quickly to address the effects of the PACCAR decision, the Government are under pressure to legislate as soon as possible.