Third party funding for English-seated arbitration—do the English DBA regulations apply?

Table of contents

• Implications for arbitration?

Article summary

Arbitration analysis: The English Supreme Court has confirmed in Paccar Inc v Road Haulage Association Ltd that litigation funding arrangements based on a share of recovery are damages-based arrangements (DBA) for the purposes of section 58AA of the Courts and Legal Services Act 1990 (CLSA 1990). The court held that such agreements fall within the scope of the provision because litigation funders provide ‘claims management services’ as defined for these purposes. Such litigation funding arrangements must therefore comply with the statutory requirements for DBAs. The decision only affects third party funders, as it was always clear that DBAs issued by law firms were within the scope of the legislation. Hannah Ambrose, partner, Vanessa Naish, professional support consultant, John O’Donoghue, head of legal operations, and Elizabeth Kantor, professional support lawyer all of Herbert Smith Freehills, examine the implications of the decision.