The High Court should not use medieval laws to dismiss a legal claim against Denis O'Brien, the Irish State and former minister Michael Lowry, the High Court heard today.

A British company is funding the damages claim by the runner-up in the bid to win the 1996 competition for a mobile phone licence that was awarded to businessman Denis O'Brien's Esat Digifone consortium.

It claims Esat won the competition by bribing the then Minister for Communications Michael Lowry - which is denied.

The State has criticised the agreement between the British company Persona Digital Telephony and Sigma Wireless Networks, and Harbour Litigation Funding who are financing the legal action.

The plaintiffs have brought an application before the High Court for approval of the funding agreement, marking the first time the issue of “third party funding” has come directly before the courts of Ireland. Harbour Litigation Funding will get a share of the proceeds if members of the consortium bringing the case win their action.

In previous submissions to the court, the State argued that this arrangement was a breach of champerty law, a law that prevents unrelated third parties from financing legal actions in the hope of taking some of the proceeds of a victory.

Speaking at the High Court today Mr Michael Collins SC, representing Persona, said that champerty law was introduced in medieval times to protect people from the abuses of feudal lords.

He said it was designed to prevent feudal barons from funding litigation against an enemy, bringing them before a judge who was not independent and who could be relied upon to find in favour of the plaintiff.

“They belong to a time that is unrecognizable today,” he said.

He pointed out that other countries with similar legal systems to Ireland, including Britain, allowed this type of litigation on the grounds that it gives legal access to people or institutions who would otherwise not have the money to take such a case.

He said the statutory basis for champerty was “ancient and difficult to understand in a modern context”. He added the State would have to show that the agreement between the two parties undermined the integrity of the judicial process and he said that they could not as this is not the case.

The plaintiffs claim damages for alleged misfeasance in public office, breach of duty, including statutory duty, breach of contract, breach of legitimate expectations, breach of Constitutional rights, breach of rights under EU law and a declaration that the European Communities (Mobiles and Personal Communications) Regulations 1996 contravene EU law.

The case continues before Ms Justice Aileen Donnelly on Wednesday.