SFO & Anr v Thomas (Harbour/Orb Litigation) [2025] EWHC 2876 (Comm)

This was the substantive enforceability hearing in the Orb litigation, following the procedural ruling in [2025] EWHC 2876 (Comm). The Commercial Court was required to determine whether the Supreme Court’s decision in PACCAR rendered Harbour Fund II LP’s Investment Agreement unenforceable as a non-compliant damages-based agreement. The case was of exceptional significance because it represented one of the most important High Court tests of PACCAR’s impact on historical litigation funding agreements outside the CAT collective proceedings context. Unlike the CAT cases, which concerned revised post-PACCAR LFAs structured to avoid the DBA characterisation, the Orb litigation involved a pre-PACCAR funding agreement that had not been restructured. Nicholas Thomas argued that Harbour’s agreement, which provided for the funder to receive a percentage of the litigation proceeds, was a DBA within the meaning of section 58AA and was therefore unenforceable because it did not comply with the DBA Regulations 2013.

Harbour’s position was that the issue of the agreement’s enforceability had already been determined by the 2021 trial judgment (res judicata), and that Thomas’s attempt to reopen the question was an abuse of process. Even if the issue could be reopened, Harbour argued that the agreement did not fall within the DBA definition as properly construed, or alternatively that PACCAR should not be applied retroactively to invalidate pre-existing agreements. The case raised fundamental questions about the temporal scope of PACCAR, the interaction between the res judicata doctrine and subsequent changes in the law, and the extent to which parties can challenge the enforceability of funding arrangements after the conclusion of the funded litigation. The decision represented one of the most significant tests of how PACCAR applies to the substantial portfolio of historical funding agreements that predate the Supreme Court’s 2023 ruling.