Third party funding is currently prohibited in Ireland though this remains under consideration by the Irish Law Reform Commission (“LRC”). The LRC is currently examining responses to its 2023 Consultation Paper and its final report is awaited, see our previous update.
Michael Scully .v. Coucal Limited
The Supreme Court in Michael Scully .v. Coucal Limited [2025] IESC 20 recently considered an application for the enforcement of a Polish judgment in Ireland, under the Brussels Recast Regulation (“Regulation”) where the underlying proceedings were pursued using third-party funding.
Background
In this case, the applicant Mr. Scully secured financing from 73 investors to buy land and build a shopping centre in Poland. The venture was ultimately unsuccessful and the investors, having lost their money, set up an Irish company, Coucal Limited (“Coucal”) and executed a legal transfer of their rights to the company. This allowed Coucal to make claims on behalf of the investors in the Polish courts. Coucal's claim was initially dismissed by the Regional Court in Warsaw but later succeeded before the Polish Court of Appeal, which awarded Coucal approximately €6.33 million against Mr. Scully in June 2021. Coucal then sought to enforce this judgment in Ireland under Article 36 of the Regulation. However, Mr. Scully initiated proceedings to block recognition and enforcement of the judgment under the Regulation, arguing that enforcement would be "manifestly contrary to public policy".
Mr. Scully argued that a clause in the assignment concerning the sale of the debt to a third party, amounted to champerty (where a third party gives financial assistance to litigation in return for a share of any damages) which is prohibited under Irish law. Mr. Scully relied on the Irish Supreme Court decision in SPV Osus Limited .v. HSBC Institutional Trust Services (Ireland) Limited [2018] IESC 44, which determined that direct enforcement of such assignments violated Irish public policy.
While Mr. Scully was unsuccessful in the High Court, he succeeded in the Court of Appeal. The Court of Appeal found that the case involved “the assignment of a bare cause of action which although it could be assigned to a party with an interest in the litigation, could be assigned onwards”.
The court decided that it didn’t matter that there was no onward assignment in this case and relied heavily on the judgement in SPV Osus , which established that such assignments were against public policy.
The Supreme Court
The Supreme Court overturned the decision of the Court of Appeal and delivered judgments from the Chief Justice, Mr Justice O’Donnell and Mr Justice Hogan. O’Donnell CJ emphasised that the Irish Court was not being asked to enforce an assignment under Irish law. Instead it was being asked to enforce a judgment from another Member State where such an assignment without restrictions on onward assignment, was lawful. Referring to Mayo-Perrott .v. Mayo-Perrott [1958] I.R. 336, O’Donnell CJ emphasised that public policy in private international law should be narrower than in domestic law. Enforcement should only be restricted if it breaches fundamental moral, social, or economic principles. He also noted that under the Regulation, which prioritises the free movement of judgments within the EU, this principle is even more significant as it reflects the obligations of mutual respect and integration among Member States.
He further observed that the test for refusing to recognise a foreign judgment under Article 45 of the Regulation must be interpreted narrowly,. He cited the case of C-633/22 Real Madrid Club de Fútbol, which underlined that the public policy exception should only apply where recognition or enforcement of the judgment would “be at variance to an unacceptable degree with the legal order of the Member State in which it is sought” or “where it would infringe a fundamental principle”. O’Donnell CJ stated the public policy concerns against enforcing an assignment are “largely balanced, if not outweighed", by the strong public interest in recognising judgments made by courts in other Member States. This applies as long as those courts had proper jurisdiction and the parties had contested the proceedings. Similarly, the public policy against assignment is not said to be static and the law on assignments is developing and “narrowing the area of invalidity”. Therefore, the public policy objection to maintenance and third party funding cannot be considered “of such depth and strength as to be regarded as somehow essential to the Irish legal system so that it would simply be incompatible with it to give effect to a foreign judgment based on an assignment which is considered lawful by the law of that state”.
Finally, O’Donnell CJ highlighted that the case lacked any features of commodification or trading in litigation, which are recognised as public policy objections under Irish law in this area. He observed that it was significant that no assignment to an unconnected third party had taken place, despite being permitted under the terms, which was a key factor supporting the judgment’s recognition.
In his judgment, Mr Justice Hogan emphasised Article 36 of the Regulation, which prohibits the review as to substance of judgments from other Member States and clarified that we must “take the judgments as we find them save in exceptional circumstances”.
