Prior to 2025, the recoverability of pure economic loss in negligence under Irish law remained limited but the judicial approach to the issue was somewhat unclear. In its landmark decision, the Supreme Court judgment in Barlow[1] considered and summarised the circumstances under which pure economic loss may be recovered in negligence, albeit in the context of a claim against the State regarding the exercise of a statutory duty. The principles determined by the court could equally be applicable, in appropriate factual circumstances, to non-state defendants – and we have already seen the case be relied on in legal submissions.
The judicial background
The Irish courts have approached the issue of economic loss cautiously, having been traditionally reluctant to allow compensation for economic loss that did not arise from physical injury or property damage. Some Irish High Court decisions had suggested that economic loss should be assessed using the standard negligence framework of proximity, foreseeability, and policy[2] like other any other type of damage. However, the Irish Supreme Court’s decision in Glencar[3] introduced a more restrictive view. In that case, Chief Justice Keane implied that recovery for pure economic loss might be confined to cases of negligent misstatement, reflecting a narrower interpretation of duty of care in such contexts.
This has led to uncertainty for litigants and insurers alike, particularly in areas such as professional indemnity and construction, where economic loss without accompanying physical damage is common.
Facts
Between 2002 and 2004, the plaintiffs invested a total of €14.25m in four new mussel dredging vessels, encouraged by the defendants and part funded by EU aid. The defendants, who controlled access to the mussel seed stock, actively promoted the development of the State's mussel fishing sector. By the time the vessels were fit for use in 2005, the yield from the mussel seed had dropped significantly and it collapsed entirely in 2006. The plaintiffs contended that they suffered significant losses as a result of the manner in which the mussel seed resource was allegedly mismanaged by the defendants and sought, amongst other things, damages reflecting those losses.
The Supreme Court considered the context of the claim and the minutiae of the engagements between the parties, e.g., the active encouragement by the defendants to invest. It found that the public state bodies had behaved in a manner very far removed from their core governmental functions, making this more akin to a commercial arrangement.
Conditions for recovering pure economic loss
The court ultimately held that pure economic loss can be recovered in negligence when certain conditions are met. In summary, these are where:
- The defendant assumes responsibility to prevent such loss, which is made to a defined, identifiable and limited class
- The plaintiff relies on that defendant to prevent such loss
- The reliance is known or reasonably foreseeable
- The relationship allows the defendant to disclaim liability by agreement
- The defendant has not actually disclaimed liability.
The details of the interaction between the parties were "key" to the claim, and in particular to the plaintiffs' argument that the defendants "assumed a responsibility to them such as to give rise to a liability in negligence."
Conclusion
Barlow provides much-needed clarity on the scope of recoverable economic loss and reinforces the importance of assessing whether there has been an assumption of responsibility in negligence claims. The court has, helpfully, considered both Irish and UK jurisprudence and the judgment is likely to become a "one-stop shop" for the law in this area and a very useful guide to litigants before the courts. As such, it will be of assistance to defendants, and their insurers, in identifying with a degree of clarity what the potential quantum of any given claim is and enabling a clearer basis for setting reserves.
For further advice on the impacts of Barlow, get in touch with our experts.
[1] [2025] IESC 14
[2] E.g., McShane Fruit v Johnston Haulage Co Ltd [1997 HC] 1 ILRM 86
[3] [2002] 1 IR 84
