Phone companies suing State must reveal terms of funding arrangement

They are suing the State over claims the process was conducted unfairly and that Esat allegedly won the competition by bribing the then Minister for Communications, Michael Lowry – which is denied.

A British-based “third-party funder”, Harbour Litigation Funding, will get a share of the proceeds if Persona and Sigma are successful and the plaintiffs “quite properly” have asked the High Court to approve of this arrangement in July.

It is the first time that the issue of “third party funding” has come directly before the courts of Ireland, Ms Justice Aileen Donnelly stated today.

She said the plaintiffs' application for approval was not a two-way discussion between them and the court and it was necessary for the defendants to see certain parts of the funding agreement for the hearing in July.

“Uundoubtedly, this is a unique case,” she said, “for the reasons set out by the Supreme Court” in its decision to allow the action despite objections on the basis of delay and because the case presented a “novel and unusual set of circumstances”.

James A Boyle, a director of Persona and Sigma, claims the plaintiffs have little or no money and “he blames this on the [alleged] wrongdoing of the defendants,” the judgment stated.

He says the plaintiffs do not have the ability to continue the prosecution of the proceedings and that “to date, the continuation of the proceedings has only been possible because of funds provided by the shareholders of the plaintiffs”.

Mr Boyle outlined how a funding agreement was negotiated and entered into in March between the plaintiffs and HF III, a limited partnership incorporated under Cayman Island laws in 2015, which has STG£230m available to invest in commercial litigation and arbitration worldwide.

On the evidence before her, Ms Justice Donnelly said the plaintiffs were impecunious and it was only because third party funding had been obtained that they will be in a position to proceed with this “unique action”.

“The plaintiffs are asserting their rights of access to the courts for the purpose of vindicating their rights”.

They “quite properly understood that they had to reveal, at least at a minimum, the existence of the funding agreement, its general terms and the identity of the funder, so that the court may rule on the issues of abuse of process or breach of maintenance or champerty”.

In circumstances where this was an entirely “novel application to these courts, it is appropriate that both the court and other parties to the proceedings should have sight, in general terms at least, of the third party funding agreement”.

Ms Justice Donnelly said she rejected the plaintiffs' submission seeking to characterise their application for approval of the funding arrangement as a two-way discussion between them and the court.

Only in exceptional circumstances will the court conduct a two-way discussion with a single party, she said.

She said the defendants were affected because “as the plaintiffs state” themselves they “simply do not have the werewithal to continue to prosecute these proceedings” without the funding.

Ms Justice Donnelly said the application for approval appeared capable of determination by the disclosure of a redacted copy of the funding agreement.

The redactions covered details of the funding budget, timeline, terms and conditions on which the funder will release funding from time to time, details of the funders remuneration and the precise circumstances in which funding may be terminated.

Ms Justice Donnelly said a redacted disclosure of the document may be sufficient to determine whether the agreement contravened the rules on maintenance and champerty or is an abuse of process.

She added that a point may be reached during the hearing of the funding application where those precise details may be determined to be relevant to the issues before the court.

The matter was listed for mention on Friday next with the application for approval set down for two days hearing in July.

The case was brought against the Minister for Enterprise and the State. Mr O’Brien secured an order allowing him to be joined in the proceedings last year while Mr Lowry, now an Independent TD, is a third party to the case.

The plaintiffs claim damages for misfeasance in public office, breach of duty, including statutory duty, breach of contract, breach of legitimate expectations, breach of Constitutional rights, breach of rights under EU law and a declaration that the European Communities (Mobiles and Personal Communications) Regulations 1996 contravene EU law.

The claims are denied.