Deminor Wiki - UK Supreme Court

History

The UK Supreme Court opened on 1 October 2009, marking a significant constitutional moment in British legal history. Its creation achieved a formal separation of judicial power from the legislature by removing senior judges from the House of Lords. Prior to 2009, the Lords of Appeal in Ordinary (commonly known as Law Lords) sat as the Appellate Committee of the House of Lords, exercising the highest appellate jurisdiction while also serving as members of the upper chamber of Parliament.

The Court comprises twelve Justices, including a President and Deputy President. Lord Reed of Allermuir has served as President since January 2020. Justices are drawn from across the UK's three distinct legal jurisdictions—England and Wales, Scotland and Northern Ireland—ensuring representation of each system. The Court is physically situated in the former Middlesex Guildhall on Parliament Square, directly opposite the Houses of Parliament, symbolising the institutional separation of the judiciary from the legislature.

The UKSC's jurisdiction encompasses appeals on arguable points of law of general public importance in civil matters throughout the UK. For criminal matters, its jurisdiction extends to England, Wales and Northern Ireland only; the High Court of Justiciary remains the supreme criminal court in Scotland. The Court also adjudicates on devolution matters concerning the powers of the Scottish Parliament, the Northern Ireland Assembly and the Welsh Senedd under the respective devolution statutes.

Litigation Funding Context

The UK Supreme Court has assumed a pivotal role in shaping the legal landscape for third-party litigation funding. Its decisions carry binding authority across all lower courts in the UK, meaning UKSC judgments on funding-related matters directly affect how litigation funding agreements are structured, enforced and regulated throughout the jurisdiction.

The PACCAR Decision (2023)

In July 2023, the UKSC delivered its landmark judgment in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal [2023] UKSC 28. By a majority of four to one, the Court held that litigation funding agreements (LFAs) providing for the funder's return to be calculated as a percentage of damages recovered constitute damages-based agreements (DBAs) under section 58AA of the Courts and Legal Services Act 1990. This ruling had profound implications: LFAs not compliant with the Damages-Based Agreements Regulations 2013 became unenforceable, and such arrangements were rendered entirely impermissible in opt-out collective proceedings before the Competition Appeal Tribunal, where DBAs are prohibited by statute.

The PACCAR decision sent shockwaves through the litigation funding industry. Many existing LFAs, drafted on the long-held assumption that pure funding arrangements did not constitute claims management services, faced potential unenforceability. Funders were compelled to restructure agreements, often shifting to returns calculated solely as a multiple of funds advanced rather than a share of damages. The ruling prompted the Civil Justice Council to undertake a comprehensive review of litigation funding, ultimately recommending in June 2025 that the PACCAR judgment be reversed through retrospective and prospective legislation.

Collective Actions and Access to Justice

The UKSC has also shaped the parameters of collective litigation through decisions such as Lloyd v Google LLC [2021] UKSC 50, which restricted the use of representative actions for data protection claims, and Merricks v Mastercard [2020] UKSC 51, which adopted a permissive approach to certification of opt-out collective proceedings in competition matters. These judgments affect the viability of funded group actions, as funders carefully assess whether procedural mechanisms will permit claims to proceed on a basis that justifies investment. The Court's evolving jurisprudence on class actions and collective proceedings thus directly influences funding decisions and market dynamics.

Market Implications

For litigation funders operating in the UK, UKSC decisions represent both opportunities and risks. A favourable ruling can validate funding models and open new markets for investment; an adverse decision can render existing portfolios vulnerable and necessitate costly restructuring. The Court's interpretations of statutory language, its approach to access to justice considerations and its willingness to depart from established practice all bear materially on funding strategy. The ongoing regulatory uncertainty following PACCAR underscores the importance of monitoring UKSC proceedings for any party engaged in or contemplating litigation finance activities in the UK.

Conclusion

The UK Supreme Court stands as the ultimate arbiter of legal disputes in the United Kingdom and wields considerable influence over the litigation funding sector. Through landmark decisions such as PACCAR, it has reshaped the enforceability framework for funding agreements, compelling the industry to adapt and prompting calls for legislative reform. For litigation funders, legal practitioners and funded parties alike, the UKSC's judgments carry far-reaching practical consequences, making it an institution of central importance to anyone engaged in the financing or conduct of complex litigation in the UK.