Dispute Resolution Update: Key Developments in 2017
12 January 2018
We review some key developments in the area of litigation and dispute resolution in Ireland during 2017.
The Law Society of Ireland v the Motor Insurer’s Bureau of Ireland
This case is a reminder of the importance of drafting agreements in a clear and unambiguous manner. Where ambiguity exists in an agreement, Irish courts will look at the agreement as a whole taking into account the context in which it was drafted.
In May 2017, the Supreme Court upheld the appeal of the Motor Insurance Bureau of Ireland (MIBI) against a decision of the Court of Appeal that would render the MIBI liable for claims brought against the collapsed insurer, Setanta.
In 2014, the Maltese insurance company, Setanta went into liquidation. At the time of its liquidation, Setanta had approximately 1,750 claims pending with a combined value of €90 million. The Court of Appeal held that the MIBI should be liable for claims brought against the collapsed insurer. The MIBI appealed this decision to the Supreme Court. The core issue to be decided was whether the 2009 Agreement between the Irish Government and the MIBI covered claims to be met by an insolvent insurer.
The Supreme Court held that the 2009 Agreement contained a number of ambiguities and was “both complex and not free from doubt”. On a literal interpretation of the Agreement, the Court stated that the MIBI could be liable for claims against an insolvent insurer. However, the Court held that the Agreement must be looked at as a whole, taking into account not just the terms of the Agreement but also its context and its predecessors. Accordingly, the Court held that the MIBI was not liable for unpaid Setanta claims.
Decision on Champerty and Third Party Funding of Litigation
In the Supreme Court case, Persona Digital Telephony v The Minister for Public Enterprise, it was determined that professional third-party funding of litigation remains unlawful in Ireland. This decision was based on the grounds that it offends against the rules of champerty and maintenance. This was the first case decided by an Irish court which directly concerns the validity of professional third-party funding.
Persona brought the case as a result of perceived irregularities surrounding the granting of mobile telephone licences to Esat Digifone in the late 1990s following findings of the Moriarty Tribunal of Inquiry. However, it later became apparent that Persona could not fund the litigation. As a result, Persona entered into an agreement with a British firm to fund the case in return for a share of the proceeds if it were successful.
The Supreme Court decided that since the firm who agreed to fund the litigation had no independent interest in the underlying litigation, the agreement was deemed to be champertous and was, therefore, contrary to statute and common law. Notably, the Court commented that these laws could be open to constitutional challenge in the future and required consideration given Ireland’s status as an international trading state.
The Mediation Act 2017
The Mediation Act 2017 (Act) was signed into law on 2 October 2017 and took effect from 1 January 2018. It imposes a legal obligation on solicitors to advise their clients to consider mediation as an alternative means of dispute resolution prior to issuing proceedings.
Under section 14 of the Act, solicitors are now required before issuing proceedings to:
- Advise clients to consider mediation
- Provide clients with information on mediation services available, the confidentiality and the enforceability of mediation settlements
- Swear a statutory declaration to be filed with the originating document confirming the above advice and information has been provided to the client
The Act promotes mediation as a viable and cost-effective alternative to the expensive trial process, allowing for reduced costs for clients and often achieving better outcomes for the parties.
The restatement of the laws against maintenance and champerty means that Ireland lags behind its common law counterparts in the area of third party funding of litigation, which has become an industry in itself in jurisdictions such as the UK and the US. In 2018, perhaps a constitutional challenge to these archaic laws, which are over 800 years old, may be on the horizon.
We should also see the Mediation Act begin to take effect by encouraging more parties to engage in mediation at the outset of disputes, thereby easing the strain on the courts system and reducing litigation costs.
For more information on any of these developments and how they may potentially affect your business in 2018, please contact a member of our Dispute Resolution team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.