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ARTICLE · 13 JANUARY 2026

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Legislation To Reverse PACCAR Decision And Regulate Litigation Funding Agreements Accelerated

Lewis Silkin
Lewis Silkin
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Lewis Silkin

Lewis Silkin

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In a recent written statement, Minister of State for Justice announced that the Government intends to take action to "mitigate the impact of the 2023 Supreme Court judgment in PACCAR...

United KingdomLitigation, Mediation & Arbitration
Andrew Wanambwa
Andrew Wanambwa
Leo Meredith
Leo Meredith
Nicola Thompson
Nicola Thompson
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In a recent written statement, Minister of State for Justice announced that the Government intends to take action to "mitigate the impact of the 2023 Supreme Court judgment in PACCAR and implement proportionate regulation of third-party litigation funding agreements (LFAs)".

The PACCAR case

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.

This judgment introduced significant uncertainty in the third party funding market, including as to the validity of many funding agreements, and a drop in class action claims. As recognised by the Government, this adversely impacted access to justice, particularly for less powerful or well-resourced claimants who need funding to bring large cases against more powerful and wealthy opponents.

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