Funds for Feuds - Recent challenge to landmark litigation funding decision

06 Jun 2013

The Royal Court of Jersey has handed down its judgment in the most recent hearing of the proceedings brought by Barclays Wealth Trustees (Jersey) Limited and Barclays Wealth Fund Managers (Jersey) Limited as trustee and manager of the R2R Funds against the former trustee and manager, Equity Trust (Jersey) Limited and Equity Trust Services Limited.
 
The significance of this judgment is that this was the first challenge to a litigation funding arrangement. The earlier landmark decision reached In the Matter of the Valetta Trust [2011] JRC 227, on the validity of third party litigation funding arose out of a Beddoe application and was therefore uncontested.

The most recent judgment reinforced the earlier decision, namely that a properly structured litigation funding agreement will not infringe the laws against champerty and maintenance and will not be contrary to the Code of 1771.
 
Prior to the Valetta Trust case, whilst it had long been recognised by Third Party Litigation funders based in the United Kingdom that the Channel Islands have a well established litigation market, there had been no established domestic market for funding. Moreover, until the decision of the Royal Court in the Valetta case, the legality and enforceability of funding agreements in Jersey remained untested, unlike in the United Kingdom and elsewhere.
 
However, as a result of the arguments presented to it by Advocate Lisa Springate of Bedell Cristin (who acts on behalf of the Representors and the new trustee together with Advocate Robert Gardner), the Royal Court concluded that public policy strongly pointed towards the agreement in question being regarded as valid and enforceable.
 
The importance of the most recent decision to litigation funders and those contemplating litigation in Jersey is that once again it has been recognised that a funding agreement is in the interests of justice and is to be encouraged, provided that it is properly structured.

In the most recent judgment, the Bailiff stated "A person bringing an action is entitled to get his case before the Court. Access to justice is of the first importance. There is a strong public interest in persons being able to obtain funding to enable them to bring proceedings to vindicate their rights."
 
For further information, please contact Lisa Springate or Robert Gardner.