The Courts and Civil Law (Miscellaneous Provisions) Act 2023 (the "Act") has been signed by the President and third-party funding ("TPF") of international arbitration will be permitted in Ireland upon the relevant Commencement Order.
Historically, Irish legislation has remained silent on TPF for international arbitration and we have been faced with the continued recognition of the tort of Maintenance and Champerty, which precludes 3rdparty funding in Irish Civil litigation. However with the growing popularity of TPF for international arbitration and its increased popularity for commercial arbitrations internationally, Ireland has been faced with a challenge of how to promote Ireland as a centre for International arbitration. Realising the growing importance of aligning Irish Law with wider International law, the amendment to permit TPF for International Arbitration was initially announced by Minister Helen McEntee at an Ireland for Law event in New York in September 2022.
The Act introduces what may be seen as radical and significant amendments to the Arbitration Act 2010, under a new Section 5A. These amendments will permit TPF in international commercial arbitration, court proceedings stemming from an international commercial arbitration, and mediation and conciliation proceedings stemming from those same court proceedings or an international commercial arbitration. Under Section 5A, TPF cannot be found to be in violation of public policy or otherwise illegal or void before the Irish courts. This should be seen as an important and significant development for Ireland as a forum and centre of excellence for international arbitration.
The wording for Section 5A reads as follows:
A contract or agreement between a party or potential party to dispute resolution proceedings and a third-party funder, for the funding of all or part of the costs of the proceedings in return for a share or other interest in the proceeds or potential proceeds of the dispute resolution proceedings to which the party or potential party may become entitled.
Dispute Resolution Proceedings" refers to"(a) an international commercial arbitration; (b) any proceedings arising out of an international commercial arbitration before a court of competent jurisdiction performing any of the functions provided for in the Model Law; (c) any appeal from a decision of a court referred to in paragraph (b); (d) any mediation or conciliation proceedings arising out of an international commercial arbitration, proceedings or an appeal referred to in paragraph (a), (b) or (c)."
The Act at present only extends to TPF in international commercial arbitration. However, on 17 July 2023 the Law Reform Commission published a consultation paper on the possibility of permitting TPF on a much wider basis for Irish Civil litigation. The paper reviews models adopted in England and Wales, Hong Kong and New Zealand and the consultation will run until 3 November 2023. Similar reforms may follow in the wider litigation arena for Irish disputes. Watch this space!!
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
