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 that the case will not go ahead as the plaintiff does not have enough money to pay the legal fees.

Ms Justice Aileen Donnelly said today 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 €10 million needed, and will therefore 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 that 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 back 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 that a direct challenge has been made to the law in an Irish court.

In her judgment, Justice Donnelly said that 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 that she accepted an affidavit filed by Mr Boyle in which he said that he is “nowhere near the estimated €10million required to finance the proposed litigation.”

She said that Mr Boyle had confirmed that if the funding arrangement is not approved, he will have no other means of prosecuting the case.

She added that Persona’s legal team had said their claim is “of great public importance” and that if she allowed the funding arrangement she would ensure “the constitutional guarantee of access to justice”.

But 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.

Citing a previous judgment from 2011, she wrote: “In Ireland it is unlawful for a party without an interest to fund the litigation of another at all and, in particular, it is unlawful to fund litigation in return for a share of the proceeds.”

At a brief hearing she concluded: “In the circumstances, I refuse the relief sought by the plaintiffs.”

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