A comparative study of seven leading litigation funding markets concludes that uncertainty following PACCAR is eroding the UK\u2019s competitive position and threatening its status as a global disputes hub.<\/p>\n
The United Kingdom risks ceding ground to rival litigation funding markets<\/a> unless the government acts fast to restore legal certainty following the Supreme Court\u2019s now notorious PACCAR judgment, according to a new report which ranks Singapore and parts of the US ahead of England and Wales for certainty and competitiveness.<\/p>\n The report, Competitiveness at a Crossroads: Assessing the UK Litigation Funding Sector in a Global Market, published by claims administration and collective redress specialist Angeion Group International, one of the sponsors of Global Legal Group\u2019s Global Class Actions Symposium<\/a>, posits that England and Wales retains many of the ingredients that made London one of the world\u2019s leading centres for funded litigation, including a respected judiciary, mature case law and an established collective proceedings regime<\/a>. However, it contends that uncertainty over the enforceability of litigation funding agreements following the Supreme Court\u2019s 2023 decision in PACCAR v Competition Appeal Tribunal<\/a>, coupled with the absence of a legislative timetable, is undermining investor confidence.<\/p>\n The report assesses seven litigation funding markets \u2013 England and Wales, Singapore, the Netherlands, Australia, Ontario, New York and Pennsylvania \u2013 against three criteria: legal certainty, commercial viability and procedural efficiency. While the UK scores strongly for the maturity of its legal infrastructure, it receives only an amber assessment for certainty because of continuing uncertainty surrounding PACCAR, whereas Singapore receives a green rating owing to what the authors describe as its stable statutory framework.<\/p>\n Lord Carlile writes<\/p>\n Former MP and head of chambers at Foundry Chambers in London, Lord Carlile, who wrote the report\u2019s foreword, maintains that litigation funding has become \u201can essential piece of our legal infrastructure\u201d, enabling individuals, small businesses and consumer groups to pursue claims they could not otherwise afford. He cites the Post Office Horizon litigation as a prominent example of the role external funding can play in exposing wrongdoing. \u201cThe lesson of that experience is that legal uncertainty is never neutral in its effects,\u201d Carlile writes. \u201cIt does not merely inconvenience sophisticated institutional investors. It denies access to justice to the claimants who depend upon funded litigation to hold powerful defendants to account.\u201d<\/p>\n Carlile is particularly critical of the government\u2019s failure so far to legislate following PACCAR. Although the government has indicated that it intends to reverse the effects of the decision<\/a>, no bill appeared in this year\u2019s King\u2019s Speech and the government has yet to clarify whether any legislation will apply retrospectively.<\/p>\n The price of uncertainty<\/p>\n According to the report, that uncertainty has already had measurable commercial consequences. It points to an immediate fall of more than 75% in anticipated domestic funding activity after the PACCAR judgment and argues that funders are increasingly examining alternative jurisdictions offering greater legal certainty. The report also identifies structural issues affecting the UK market beyond PACCAR, contending that England and Wales\u2019 loser-pays costs regime, together with the widespread need for after-the-event insurance and security for costs applications, increases the cost of bringing funded claims and narrows the range of cases that remain economically viable. Long-running collective proceedings, particularly before the Competition Appeal Tribunal (CAT), are also said to reduce the attractiveness of the jurisdiction because they tie up capital for many years.<\/p>\n Nevertheless, the authors emphasise that the UK retains considerable advantages. London remains one of the world\u2019s principal centres for litigation funding, alongside New York, with the Association of Litigation Funders\u2019 voluntary code, the CAT\u2019s collective proceedings regime and the high international standing of English law continuing to attract international disputes. The report notes that third-party funders\u2019 assets in the UK increased roughly tenfold between 2011 and 2021 before the market was disrupted by PACCAR.<\/p>\n In her introduction, Jade Tess Weiner, Angeion Group International\u2019s vice president of group actions, argues that governments are increasingly competing to attract litigation funding capital as part of wider efforts to establish themselves as leading dispute resolution centres. \u201cAccess to justice and economic competitiveness should not be viewed as competing objectives,\u201d she writes. \u201cThe most successful international regimes recognise that they are mutually reinforcing.\u201d<\/p>\n Restricting returns<\/p>\n The report ultimately presents policymakers with two clear options. One would involve tighter regulation, including greater disclosure obligations and restrictions on funder returns, which the authors argue could further reduce the UK\u2019s competitiveness without delivering corresponding consumer benefits. The alternative is a targeted approach centred on reversing PACCAR retrospectively, preserving the existing light-touch regulatory model recommended by the Civil Justice Council<\/a> and maintaining commercial flexibility for litigation funders.<\/p>\n