On Friday 4 July 2025 the Court of Appeal handed down judgment in four conjoined appeals concerning the enforceability of litigation funding arrangements put in place in the context of collective actions in the Competition Appeal Tribunal (CAT). Nicholas Bacon KC and Daniel Saoul KC of 4 New Square Chambers acted for the successful Respondents, leading Richard Hoyle of Essex Court Chambers, and instructed by Milberg London LLP, Harcus Parker LLP, Hausfeld & Co LLP and Charles Lyndon Limited.
The challenges were brought by the defendants to the underlying claims, who alleged that the funding arrangements – namely the litigation funding agreements in place between the relevant litigation funders and the class representatives or their solicitors – were impermissible, because they amounted to unenforceable Damages Based Agreements (DBAs).
These arguments were pursued in the wake of the Supreme Court’s decision regarding the lawfulness of other funding arrangements, which were found to be unenforceable DBAs, in PACCAR [2023] UKSC 28.
The Court of Appeal rejected the arguments pursued by the Appellants, to the effect that litigation funding agreements providing for funders to be remunerated by way of a multiple of their investment, but capped by reference to proceeds recovered, satisfied the statutory requirements for a DBA, finding that this was not the correct interpretation of Section 58AA(3) of the Courts and Legal Services 1990. The Court of Appeal also rejected the Appellants’ alternative arguments that conditional language providing for a percentage return in the event that such a return was enforceable or permissible in law, made the agreements unenforceable DBAs.
