A law concerning third-party funding of legal cases in Ireland comes from an era when people thought the earth was the centre of the universe, witches were burned at the stake and the rule of law paled in comparison to the rule of the sword, the High Court has heard.

Ms Justice Aileen Donnelly today heard a second day of submissions in an application for approval of a funding agreement as part of a legal claim against Denis O'Brien, Michael Lowry and the Irish State.

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 case was brought against the Minister for Enterprise and the State. Mr O'Brien secured an order allowing him to be joined in the proceedings last year while Mr Lowry, now an Independent TD, is a third party to the case.

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.

It is the first time the issue of "third-party funding" has come directly before the courts of Ireland.

This type of agreement is prohibited by the law of champerty, which prevents third parties funding a case in the hope of benefiting if the litigant is successful.

Today at the High Court Michael Collins SC, acting for Persona, said the law has not been updated since the 1600s and needs to be reinterpreted.

He said the Irish Constitution and the Oireachtas have nothing to say on the law of champerty, therefore it is up to the judge to introduce a common law judgement.

"It is a matter for the courts that has been left to the courts," he said. "It is clear that the Court is at rights in ascertaining public policy where the legislature has not legislated."

"The Constitution has nothing to say about third-party funding or maintenance and champerty but a great deal to say about the fundamental entitlement of access to the courts."

Persona has said that it does not have the money to take the case on its own and therefore is relying on Harbour to fund the litigation.

Speaking to Ms Justice Aileen Donnelly, Mr Collins said the Court must weigh up the champerty law, which has not been updated since the 1600s, with Persona's right, enshrined in the Constitution, to have access to the courts.

He said the champerty law is "ill defined" and flexible enough to adapt to changing circumstances and heralds from an era when people thought the earth was the centre of the universe, witches were burned at the stake and the rule of law paled in comparison to the rule of the sword.

He added: "There can be no question that in interpreting public policy that the court would be impinging in any way on the proper function of the Oireachtas or the Constitution."

Mr Collins acknowledged that the court should not overstep its powers by introducing new laws but said it is within its remit to develop common law for the public good.

Mr Collins also detailed elements of the deal between Harbour Litigation Funding and Persona, saying it in no way infringes on the fair and proper administration of justice.

The case continues in front of Justice Donnelly tomorrow.