The Competition Appeal Tribunal ("CAT") has today handed down an important judgment on the litigation funding aspects of the Road Haulage Association's application for a Collective Proceedings Order ("CPO"). The decision clarifies the law on Litigation Funding and Class Representative Authorisation.

The RHA seeks to represent more than 10,000 claimants who are signed up for a follow-on damages action relating to a cartel in medium and heavy trucks. The claim is currently stayed pending an appeal to the Supreme Court in separate proceedings (Merricks v MasterCard Inc) which concerns the legal test for granting a CPO. In the meantime, the CAT heard arguments in which the Proposed Defendants to the RHA's claim sought to challenge the RHA's Litigation Funding Agreement on the basis that it was an unlawful Damages Based Agreement and, separately, challenged the funding and After The Event insurance arrangements in connection with the Collective Proceedings Order application.

The Tribunal was unanimous in rejecting the Proposed Defendants' arguments on both issues.

This is an important decision on a number of fronts:

  • it confirms that s. 58AA of the Courts and Legal Services Act 1990 does not apply to litigation funding agreements with litigation funders, which would otherwise have significantly impacted the funding industry;
  • it provides further insight into the standards that the CAT will apply when considering the funding and insurance position of prospective Class Representatives in collective proceedings.

Addleshaw Goddard act alongside Backhouse Jones for the RHA. The firm said: "We are delighted that the judgment supports the RHA's position, and in particular that progress is able to have been made whilst the proceedings are delayed pending the Supreme Court's determination of the Merricks appeal.