On 17 December 2025, the Ministry of Justice <a href="https://questions-statements.parliament.uk/written-statements/detail/2025-12-17/hcws1192" target="_blank" class="news-text_link">announced</a> that the Government intends to legislate to reverse the effects of the Supreme Court’s decision in <span class="news-text_italic-underline">R (on the application of PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28</span>.
In a written statement to Parliament, the Minister of State for Justice, Sarah Sackman KC MP, confirmed that legislation will be brought forward to address the consequences of the judgment and to introduce what was described as proportionate regulation of third-party litigation funding agreements (“LFAs”).
In <span class="news-text_italic-underline">PACCAR</span>, the Supreme Court held that most LFAs fall within the definition of damages-based agreements and must therefore comply with the applicable regulatory regime. Agreements that do not comply risk being unenforceable. The Ministry of Justice acknowledged that this position has created significant uncertainty in the litigation funding market.
The statement recognises that uncertainty surrounding the enforceability of LFAs may restrict access to justice for claimants and could undermine the international standing of England and Wales as a leading forum for commercial litigation and arbitration.
The Government confirmed that forthcoming legislation will pursue two main objectives. First, it will clarify, on a prospective basis, that LFAs are not damages-based agreements. Second, it will introduce a proportionate regulatory framework for LFAs. These measures reflect the two primary recommendations set out in the Civil Justice Council’s Final Report on Litigation Funding published in June 2025.
The statement does not address the Government’s position on the remaining recommendations in the Civil Justice Council’s report. It also notes that while a previous administration had announced similar intentions and introduced draft legislation, this was not completed before the July 2024 general election.
No timetable has yet been provided for the introduction of the proposed legislation.
