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PACCAR: Implications for Institutional Investors

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Just the Facts

On July 27, 2023, the much anticipated verdict of the United Kingdom's Supreme Court was delivered in the case of R (on the application of PACCAR Inc & Ors) v Competition Appeal Tribunal & Ors [2023] UKSC 28. Understandably, the decision raises several uncertainties about the prospective path of litigation funding in the UK. In this Spotlight, we explore the potential ramifications of the Supreme Court's judgment on institutional investors with current litigation funding arrangements, along with factors to contemplate as we look ahead.

PACCAR1 was on appeal to the Supreme Court after the Competition Appeal Tribunal found in March 2021, that the litigation funding agreements entered into by the two applicants were not regulated Damages Based Agreements (and therefore unenforceable under the Damages Based Regulations 2013). The Court of Appeals declined the appeal, which then opened the door for the Supreme Court’s consideration.

In a pure exercise of statutory interpretation, the Supreme Court (4:1, Lady Rose dissenting) overturned the Tribunal by finding that third-party litigation funding agreements (to which the funder is entitled to recover a percentage of damages) are DBAs and unenforceable based off a plain understanding and natural reading of “claims management services” under s.58AA Courts and Legal Services Act 1990. In essence, the majority of the Court found that the Parliament contemplated LFAs when drafting the definition and deliberately intended the Act to cover LFAs.

Lady Rose, in a 59 page dissent, began by acknowledging that litigation funders play a key role in cases before the Competition Appeal Tribunal, and ultimately concluded that the provision of financial assistance (funding here) only falls within the definition of “claims management services” if it is “given by someone who is providing claims management services within the ordinary meaning of that term.” However, the “litigation funders here are not managing claims but are funding the litigation and advocacy services or claims management services provided to the claimants by others [emphasis added].” 

What are the key takeaways for Institutional Investors?

First, do not panic. This is not going to turn the litigation funding market on its head in the UK as the market had already been anticipating the Supreme Court taking this position. If anything, this decision provides crucial guidance for LFAs moving forward, so that they may be drafted unambiguously and explicitly to avoid any suggestions that the parties have negotiated an unlawful DBA.

Rest assured that any existing LFAs you may be part of will be looked at closely by the funder and ultimately may need to be amended depending on the specific terms and phrasing with any amendments being economically neutral – a process that Broadridge stands ready to assist you with as part of its world-class global class actions service.

As a final note, it is important to understand that this decision does not affect any proceeding which is funded directly by the law firm, as is becoming more common place as the securities litigation market evolves in the UK.

Each year billions of dollars are being left on the table. Find the right advocate who can help you maximize recoveries.

Having the ability to navigate the complexities of the global landscape is vital and with that there’s tremendous opportunity to capitalize on investment recovery opportunities. Outside of the US, successful registration and recovery requires not just expertise, but also local knowledge and deep strategic relationships with law firms and litigation funders who work with investors to recover losses.

That’s why so many financial services firms and institutional investors choose Broadridge.

Broadridge has the experience and global footprint you need to identify opportunities and maximize recoveries in every region and jurisdiction. Our advocacy model ensures you get hands-on service and the right support at every step. From onboarding and intake to filing preparation and settlement processing, our legal and operations experts personally manage each stage of the process and set you up for success in this growing and increasingly dynamic space.

Discover how we can help you confidently handle class actions and collective redress proceedings, worldwide.

Each year billions of dollars are being left on the table.

Find the right advocate who can help you maximize recoveries.


1 The underlying case in PACCAR concerned two applicant groups to the Competition Appeal Tribunal seeking to bring collective proceedings on behalf of persons who acquired trucks from the defendant European truck manufacturing groups, who had earlier been charged by the European Commission with infringing UK competition law. The applications included both opt-in and opt-out collective proceedings with funding from Therium, Calunius Capital, and Yarcombe Ltd respectively. At the time of the Tribunal Decision, over 15,000 claimants were registered with one of the applicant groups.

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