Originally from Handbook on Third-Party Funding in International Arbitration

Ireland stands apart from many other common law jurisdictions in its continued prohibition on the use of third-party funding in litigation. The prohibition was recently affirmed by a decision of the Supreme Court in which it was held that professional third-party funding offends against long-standing Irish rules against maintenance and champerty.  Those rules have stunted the emergence of a market in third-party funding in Ireland.

1.1.   Cost Regime in Ireland

1.1.1. How are costs of litigation (counsel fees and expenses) typically allocated in your Jurisdiction? Will each side pay its own legal fees or are there cost shifting rules under which a party which loses the case will be required under an adverse costs order to reimburse all or some costs of the other side under a “loser pays” or “costs follow the event” system?

The normal rule in Irish litigation is that “costs follow the event”, meaning that the winning party will typically be entitled to recover its costs from the losing party unless special circumstances dictate otherwise.  In complex cases which raise multiple issues, a more sophisticated approach has emerged whereby the courts will inquire as to whether a winning party has added significantly to the costs of the litigation by raising unmeritorious substantive issues at trial, and whereby the costs award may take account of such matters.  Once awarded, costs are determined on an indemnity (“party on party”) basis allowing the successful party to obtain all such costs as were necessary for enforcing or defending its rights.  The process of determining the precise level of costs recoverable in a given case is known as “taxation” which is carried out by an independent “Taxing Master”. 

Indigent plaintiffs are often represented on a “no foal, no fee” basis, meaning that they won’t be charged by their solicitor unless they prevail in the litigation. Such arrangements are less common in commercial disputes, not least because impecunious corporate plaintiffs may be ordered to provide security for costs, failing which, the litigation will not be permitted to proceed. Against that background, there is certainly scope for a market in third-party funding in Ireland.