 |
| credit: vinciworks |
A centuries-old Irish legal rule is creating an unexpected obstacle for consumers seeking to bring collective lawsuits against some of the world's largest technology companies.
The issue centers on Ireland's restrictions on third-party litigation funding, a practice that can provide financial support for expensive legal cases. The restriction is particularly significant because Ireland is home to the European headquarters of many major technology companies.
The European Union introduced its Representative Actions Directive in 2020, creating a framework for qualified organizations to pursue collective legal action on behalf of consumers. The system was designed in part to give Europeans greater access to compensation when large numbers of consumers suffer similar harm.
However, the rules create a difficult situation in Ireland. Under the EU framework, collective actions are generally brought by qualified nonprofit organizations, while Ireland restricts outside funding for legal cases unless the funder has a legitimate interest in the dispute.
Ireland is the only EU member state maintaining this particular restriction, according to the report. Its roots can be traced to the legal concepts of "maintenance" and "champerty," which originated in medieval English law and were formally incorporated into Irish law in the 17th century.
Maintenance generally involves supporting litigation without having a direct interest in the case. Champerty is a related arrangement in which a party finances litigation in exchange for a share of the potential proceeds.
While England abolished the offenses in 1967, Ireland has continued to enforce restrictions surrounding third-party litigation funding.
The result has been a significant financial challenge for organizations attempting to take on powerful technology companies. Johnny Ryan, director of the Irish Council for Civil Liberties' enforcement unit, said complex litigation in Ireland can cost at least €1 million at the outset.
“To take complex litigation like this in Ireland costs at least €1 million in the first instance. We cannot take multiple cases unless the State allows us to raise the necessary funds,” Ryan said.
Only one collective action has so far been filed in Ireland under the new framework. The Irish Council for Civil Liberties brought a case against Microsoft concerning its online advertising system, using money from its existing budget, donations and philanthropic grants to finance the action.
Irish lawyer Gerard Rudden, who has worked on major privacy cases involving Meta's Facebook, said the financial burden can make large-scale litigation difficult for nonprofits.
“They obviously have unlimited resources to put into litigation," Rudden said of the tech firms. "It takes a lot of time, a lot of effort, a lot of bodies and it costs a lot of money to do it.”
The debate has now reached Ireland's government. The country's Law Reform Commission is expected to examine whether the existing rules should be changed. Justice Minister Jim O'Callaghan has expressed reservations about introducing broader third-party funding, citing concerns about potentially "commodifying justice."
Supporters of litigation funding argue that without outside financial backing, consumers and nonprofit organizations may struggle to challenge companies with substantially greater financial resources.
Johannes Caspar, former head of Hamburg's privacy regulator, described collective redress as a mechanism that allows consumers to combine claims they might otherwise be unable to pursue individually.
“They are time-consuming and there is a high cost before even getting before a court,” he said.
The European Commission is also monitoring how EU countries are implementing the Representative Actions Directive. The Commission has said that when member states prohibit third-party litigation funding, they must ensure that legal costs do not prevent qualified organizations from pursuing collective actions.
For consumers across Europe, the dispute highlights a broader question about access to justice: whether legal rights established on paper can be effectively exercised when the organizations responsible for bringing cases lack the financial resources to pursue them.
0 Comments