A Bill to dramatically change the funding of civil litigation in Scotland has been introduced to the Scottish Parliament.

The Civil Litigation (Expenses and Group Proceedings) (Scotland) Bill was introduced to the Scottish Parliament on 2nd June 2017. Following the review into funding of Scottish civil litigation that was carried out by Sheriff Principal Taylor and completed in 2013 the new Bill introduces measures which will prevent courts making awards of expenses against pursuers in personal injury claims. The Bill also ensures the enforceability of success fee agreements in civil litigation and makes provision for group proceedings to be brought in Scotland.

The most controversial provision contained in the Bill is the introduction of qualified one way costs shifting in Scottish personal injury claims. The move has been anticipated since Sheriff-Principal Taylor’s review and now the Scottish Government has drafted legislation to so that pursuers can avoid liability for expenses in much the same way as is currently the case in English PI practice.

The Bill stipulates that a court cannot award expenses against a person who brings a personal injury action. The only exceptions to that rule are where the person has been found to make a fraudulent representation during the course of the proceedings; or has behaved in a manner which falls below the reasonable standards expected of a party in civil proceedings; or the claimant conducts themselves in a manner the court considers to amount to an abuse of process. The result will be that in the vast majority of PI actions the defender, even when successful at proof, will not be able to recover the expense they went to in successfully defending themselves.

However the Bill does make provision for possible awards of expenses against legal representatives or third party funders in the litigation. The Bill requires that any party receiving financial assistance requires to identify the funder to the court at the outset of the proceedings and following any judgement by the court, or settlement. This provision (proposed section 10) perhaps raises the possibility that a defender, successful at proof, could invite the court to make an award of expenses against the third party funder for funding a litigation against a defender who has been found to be without fault. The question might be why should the defender’s insurer meet their insured’s costs in the litigation rather than the funder behind the pursuer in those circumstances? Guidance on whether or not the proposed section 10 might be used as a way for defender insurers to recoup the cost of a successful defence will hopefully be provided as the Bill makes its way through the committee stages of the Scottish Parliament and is debated in the Parliament itself over the coming months.