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UK to reverse top court's ruling on litigation funding

FILE PHOTO: Police officers stand on duty outside the Supreme Court in Parliament Square, central London

LONDON (Reuters) - Britain will reverse a landmark ruling that threw litigation funding into disarray, the Ministry of Justice (MoJ) said on Monday, in a boost for those seeking to bring class action-style lawsuits.

Britain's Supreme Court ruled in July that funding agreements in a multi-billion-pound lawsuit were unenforceable – a surprise decision that sent litigation funders scrambling to revise deals to keep cases going.

Litigation funding involves a finance company funding all or part of the cost of a lawsuit in return for a fee paid from the proceeds of a successful action.

The decision prompted some companies facing mass lawsuits in Britain valued at billions of pounds – including Apple, Facebook and Sony – to question claimants' funding arrangements.

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Litigation funding has also helped individuals take on large companies, most notably litigation brought by more than 550 former Post Office workers in a case that paved the way for dozens of wrongful convictions to be overturned.

The MoJ said on Monday that the government would introduce legislation to "restore the position that existed before the Supreme Court's ruling". The legislation will only apply in England and Wales.

Britain's Justice Minister Alex Chalk said in a statement: "It's crucial victims can access justice – but it can feel like a David and Goliath battle when they're facing powerful corporations with deep pockets.

"This important change will mean more victims can secure vital third party funding to level the playing field and support their fight for justice.

"The sub-postmasters were able to secure third party funding in their legal action against the Post Office. Now others will too."

The MoJ also said the government was considering options for a wider review of the litigation funding sector, which it said "could consider whether there is a need for increased regulation or safeguards for people bringing claims to court".

(Reporting by Sam Tobin; Editing by Alex Richardson)