Litigation Funding Reform Takes Shape: What the Civil Justice Council’s Final Report Means for Climate Litigation
On 02 June 2025, the Civil Justice Council published its final report, Review of Litigation Funding. The report calls for comprehensive reform to secure access to justice whilst introducing regulation of litigation funding. The CJC’s proposals (summarised in section 3 of the Report) include:
- Reversal of PACCAR: Legislation should make clear that litigation funding is not a form of damages-based agreement (“DBA”) and that is a distinct form of funding from that provided by a party’s legal representative. That legislation should reverse the effect of the Supreme Court’s decision in R (PACCAR Inc & Ors) v Competition Appeals Tribunal & Ors [2023] UKSC 28 (which held that litigation funding agreements which entitle funders to payment based on the amount of damages recovered are DBAs). The legislation should have prospective and retrospective effect (§3.2). See recommendation 1. Estelle Dehon KC and Alistair Cantor previously provided a deep dive on litigation funding and environmental claims in light of the PACCAR decision.
- Introduction of “light touch regulation”: Litigation funding should be subject to a formal, comprehensive regulatory scheme (§3.5). In addition, all forms of crowdfunding litigation should be regulated (§3.33), and ss.85-85 of the Criminal Justice and Courts Act 2015 (concerning the provision and use of information about financial resources) should be brought into force so as to apply to crowdfunded judicial review proceedings (§3.36). See also recommendations 4-23. Regulation by the Financial Conduct Authority is not recommended at this stage.
- Specific rules for collective or group litigation: Litigation funders should be subject to a regulatory Consumer Duty, and independent legal advice from a King’s Counsel should be given to the funded party, prior to entry into the funding agreement. Standard terms for LFAs should be developed and annexed to Regulations. The funded party should disclose to the court the terms of a funding agreement to enable a court to consider whether to approve the agreement. See also recommendations 17-23.
- Cost protection: Consideration should be given to the development of a pre-action protocol for mass claims applicable in civil proceedings and proceedings in the CAT (§3.38), with costs budgeting and costs management being mandatory for all funded collective proceedings, representative actions and group actions (§3.39). Recoverability of litigation funding costs should be permitted in exceptional circumstances (§3.42). There should be no presumption of security for costs to be ordered against a litigation funder or funded party (§3.44). See recommendations 37-44.
- Consolidated primary legislation: The report envisages that all primary legislation, insofar as necessary to implement recommendations 2-57 of the report, should be contained in a single statute, with all relevant existing legislation repealed, and making way for a Litigation Funding, Courts and Redress Act. See recommendation 58.
In a nutshell, the proposals could bolster funding certainty, enabling more robust financing of long-running environmental litigation. The proposals may also strengthen access to justice. Although crowdfunding faces increased scrutiny, regulatory oversight may boost credibility and accountability. For now, the proposals are merely recommendations, so all eyes on Westminster to see what happens next.
The CJC’s report and recommendations follow hot on the heels of another significant development concerning costs in environmental and climate proceedings.
In a judgment handed down on 13 May 2025, the Court of Appeal clarified the scope of Aarhus Convention claims under UK law in HM Treasury & Secretary of State for Business and Trade v Global Feedback Limited & WWF UK [2025] EWCA Civ 624.
- Procedurally, when applying for Aarhus costs protection, a claimant needs to explain in the claim which provision(s) of national law relating to the environment are said to be contravened (§73).
- Substantively, the Court’s approach was summarised at §151: “it would be wrong for a judge simply to ask whether a claim or ground of challenge is to do with the protection of the environment or with the effect of a decision or legal provision on the environment. Instead, it is necessary to return to the language of the Convention and its purposes as established in the case law, and to have in mind the principles for the interpretation of international treaties (see e.g. [88]-[90] and [121] above). Put in a nutshell, what matters is whether the purpose of the national law that has allegedly been contravened is to protect or regulate the environment, not, whether the decision being challenged has an effect on, or some connection with, the environment.”
The Court of Appeal’s decision seeks to clarify the ambit of Aarhus claims. It is not clear whether the unsuccessful party will appeal to the Supreme Court.
Article by Jack Barber, 11 June 2025
