A High Court judge has refused to allow an English company to fund a legal action against the State, businessman Denis O’Brien, and former government minister Michael Lowry.
The decision, based on a law that dates back to 1634, means the case will not go ahead, as the plaintiff does not have enough money to pay the legal fees.
Ms Justice Aileen Donnelly said yesterday that third-party funding in such cases is illegal under Irish law. The plaintiff, James Boyle, of Persona Digital Telephony, said he does not have the €10m required, so would have to drop the case.
Mr Boyle had sought to take a case after his company lost out on a mobile phone licence that was issued to Denis O’Brien’s Esat Digifone consortium in 1996.
He claimed Esat won the competition by bribing the then minister for communications, Michael Lowry, which is denied.
While third-party funding of legal cases is common in Britain, it is banned in Ireland under the ancient law of “champerty”.
It states that no third party should be allowed to fund a legal case in the hope that they will take a share of any financial award.
The law is believed to date to Roman times and became part of Irish law during British rule, when the Maintenance and Embracery Act was passed in 1634.
This case was the first time the law was directly challenged in an Irish court.
In her judgment, Justice Donnelly said she had considered arguments made by Persona’s legal team that the constitutional right to access to the courts should supersede an ancient law that had been abandoned in Britain and elsewhere.
She said Mr Boyle had confirmed that if the funding arrangement was not approved, he would have no means of prosecuting the case.
However, citing numerous judgments by Irish courts upholding the law of champerty, she said third-party funding arrangements, “cannot be viewed as being consistent with public policy in this jurisdiction”.
She said third-party funding remains a civil wrong and a criminal offence in Ireland, regardless of changes in attitude to similar arrangements in Britain or elsewhere.
She also pointed out that Persona had not challenged the constitutionality of the law and that the Superior Courts of Ireland have upheld the elements of champerty.
Justice Donnelly further noted that the legislature upheld the law on champerty in 2007, when it held a review of ancient laws and disposed of some of them.
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