Table of Contents
In Short
- Maintenance and champerty are historic doctrines that prevent third-party involvement in litigation without direct involvement.
- These rules have been relaxed in many regions, including England and Wales, but still apply in cases of improper behaviour.
- Third-party funding is increasingly accepted, especially in arbitration cases.
Tips for Businesses
If you are considering litigation, third-party funding could be an option to help cover costs. However, ensure that any arrangement does not give the third party undue control over your case. Arbitration may also offer a more flexible approach, with courts increasingly allowing third-party funding in these proceedings.
If your business faces a commercial dispute, you can resolve it informally or through alternative dispute resolution (ADR) methods such as mediation or arbitration. However, these approaches may not always succeed, and you may need to pursue litigation through the court system. Litigation can be time-consuming and expensive, and your business may lack the funds to proceed. In some regions, you can seek financial support from a third party under a litigation funding arrangement. This article explains how the doctrines of maintenance and champerty currently affect litigation.
What Does Maintenance and Champerty Mean?
Maintenance and champerty are historical doctrines related to litigation. They make it unlawful for third parties to assist with a legal case where they have no involvement. While similar, they have distinct meanings.
Maintenance makes it illegal for a third party with no direct connection to the litigation to assist with the case, such as by funding it.
Champerty is a more severe form of maintenance. It occurs when a third party funds the litigation in exchange for a share of the proceeds.
What is the History of the Maintenance and Champerty Doctrines?
The doctrines of maintenance and champerty originated in medieval England to prevent fraudulent court claims. In that period, corrupt nobles and royal officials would support false claims to make them appear legitimate in return for a share of the profits. These doctrines aimed to protect the integrity of the justice system. The concern was that third parties involved in a case in which they had no stake might unfairly influence the legal process.
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Why Do the Doctrines of Maintenance and Champerty No Longer Exist?
Although some jurisdictions still uphold the doctrines of maintenance and champerty, others, including England and Wales, have begun to phase them out. The reasoning is that these doctrines are outdated and may hinder an individual’s right to access the courts. With limited legal aid available in certain regions nowadays, the restrictions imposed by these doctrines can restrict access to justice.
Different regions take varied approaches to these doctrines, with public policy being the key factor in their enforcement. In Australia, for example, courts have decided there are no public policy reasons to prevent third parties from funding or controlling litigation. In contrast, courts in England and Wales will apply the doctrines only if there is evidence of impropriety in the third-party arrangement. This means that third-party involvement is only considered problematic if the third party:
- behaves dishonestly;
- acts socially unacceptable; or
- exercises excessive control over the litigation process.
For example, this could occur if the third party:
- influences or makes strategic decisions;
- interferes with the relationship between the client and their legal representative; or
- controls or influences settlement negotiations.
This guide outlines how to resolve commercial disputes.
Relevance to Arbitration
The doctrines of maintenance and champerty also apply to arbitration, an alternative to litigation where a neutral panel hears the case and issues a binding decision. As these rules have become more relaxed, third-party funding in arbitration has become more common. For instance, courts in Singapore and Hong Kong are taking steps to allow third parties to fund arbitration cases.
Key Takeaways
The doctrines of maintenance and champerty originated in medieval England to prevent third parties from funding or supporting litigation in which they had no involvement, thereby reducing the risk of vexatious or fraudulent claims. However, these rules are no longer strictly applied in all jurisdictions. In places like England and Wales, they have been relaxed because the right to access the courts is now seen as a fundamental right. Nonetheless, these doctrines can still apply if the involvement of a third party in a case is deemed improper, mainly if the third party exercises excessive control or gains disproportionately from the litigation.
If you require guidance on how the doctrines of maintenance and champerty may affect a commercial dispute in the UK, our experienced disputes and litigation lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
The doctrines of maintenance and champerty prohibit third parties from supporting litigation in which they have no direct involvement.
The doctrines are now applied less strictly in England and Wales, only when there is a clear public policy concern.
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