Bankim Thanki KC, leading David Gregory of Monckton Chambers and Ian Simester, appeared for the Appellants, PACCAR Inc and DAF Trucks (‘DAF’), in the Supreme Court in their successful leap-frog appeal from a decision of the Divisional Court (Henderson, Singh and Carr LJJ:  1 WLR 3648), which had upheld a decision of the Competition Appeal Tribunal (Roth J presiding) by way of a preliminary issue in the certification of collective proceedings. They were instructed by Travers Smith LLP (Caroline Edwards and James Hulmes).
In its decision handed down today (R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others  UKSC 28) the Supreme Court has held by a majority (Lord Sales, giving the substantive judgment, with which Lord Reed, Lord Leggatt and Lord Stephens agreed) that litigation funding agreements which involve the funder being entitled to a proportion of any damages recovered are ‘damages-based agreements’, or DBAs, within the meaning of section 58AA of the Courts and Legal Services Act 1990. Lady Rose gave a dissenting judgment. The judgments can be accessed here and the Supreme Court’s press summary is available here.
As to the impact of the Court’s decision, Lord Sales noted (at ) that the Court had been informed that most third-party litigation funding agreements currently in place are likely now to be unenforceable. Lady Rose similarly referred (at ) to evidence that the conclusion reached by the majority was likely to mean that: (i) most (if not all) litigation funding agreements that have been agreed since litigation funding began would be unenforceable; (ii) no collective proceedings order could ever be pursued in the Competition Appeal Tribunal; and (iii) a radical review of the entire litigation funding sector in the UK would be required.
The issue arose in the context of follow-on proceedings in which compensation is sought for alleged loss caused by an arrangement between various truck manufacturers in breach of European competition law, as found in an infringement decision by the European Commission dated 19 July 2016 (Case AT.39824 – Trucks). It is alleged that the prices paid by consumers for trucks were inflated as a result of the infringement. The DBA issue was engaged by applications to bring collective proceedings against various truck manufacturers, including DAF, for breaches of competition law under section 49B of the Competition Act 1998. The Respondents had obtained an order from the Competition Appeal Tribunal to enable them to bring collective proceedings, as to which they had relied on damages-based litigation funding agreements to demonstrate their ability to meet their own costs and adverse costs orders. DAF argued that the funding agreements constituted DBAs within the meaning of section 58AA and were unenforceable by virtue of that section because they did not comply with the requirements made applicable by that provision.