Costs ruling likely to boost NGOs

The Court of Appeal has spelled out the circumstances in which NGOs can be granted protective costs orders - guarantees that they will not have to pay the Government's legal costs if they lose a court case against it.

A recent judgment by the court meant that Corner House, the environmental and social justice organisation, became the first NGO to be granted a full protective costs order (Third Sector, 2 February).

The court published its reasons for the ruling last week. According to lawyers, the ruling means the courts will be more likely to grant costs orders in future cases, making it easier for poorly resourced voluntary organisations to take up cases.

In this case, Corner House had applied for a judicial review of the Department of Trade and Industry's decision to water down anti-corruption rules for British companies operating in developing countries.

The judges said protective costs orders can be granted in cases where there is public importance and the applicant is not financially able to take the case. But they also decided that if an organisation applies for a protective costs order and is not granted one, it will have to pay court costs of up to £2,000. If the NGO proceeds with the case and loses, it will probably have to pay the Government's costs.

Richard Stein, partner at law firm Leigh, Day & Co, which represented Corner House against the DTI, said: "This case should lead to the courts leaving behind their past reluctance to grant protective costs orders and go some way towards levelling the playing field in favour of those without wealth and power, when they are acting in the public interest."

Phil Michaels, legal adviser to Friends of the Earth, welcomed the judgment, but warned that it "still means individuals and public interest groups will be wary of taking a case to court for fear of having to pay the costs of the other side".

It also fell short of a new convention on environmental law, which requires access to justice to be "fair, equitable and not prohibitively expensive", he added.

FACT FILE

- Protective costs orders mean an organisation does not have to pay court costs if it loses a case

- Only two have been granted to NGOs in the past five years

- The Corner House was granted a PCO to bring a judicial review over DTI watering down of anti-corruption rules. Government settled out of court promising a public consultation.

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