The European Centre for International Political Economy (ECIPE), a Brussels-based think tank, produced the analysis for the pro-business European Justice Forum.

The report, which includes a foreword from former Tánaiste Mary Harney, has been welcomed by the American Chamber of Commerce (AmCham) Ireland.

The transposition of the EU Representative Actions Directive (RAD) into Irish law “opens the door to new collective claims, including those backed by commercial funders that invest in such litigation in order to make a profit”, the report argues.

In May, the Irish Council for Civil Liberties (ICCL) was granted permission by the High Court to bring the first representative action under the new regime against Microsoft.

The ECIPE report argues that Ireland could experience a disproportionately greater rise in collective action cases than other EU member states as Ireland has a unique combination of common law procedural tools, EU legal alignment and English-language litigation.

The presence of the headquarters of so many multinational businesses in Ireland could also be a factor in encouraging mass litigation here, it claims.

Should third parties be permitted to fund legal actions in the Irish courts, the potential cost to the Irish economy could range from between €1.2 billion and €3.6 billion per year, it estimates.

Writing in the foreword, Ms Harney said the report had highlighted “a new and underappreciated risk: the unchecked rise of third party-funded mass litigation”.

She added: “This ECIPE study is a valuable and timely contribution. By combining rigorous analysis with clear policy recommendations, it shows how Ireland can safeguard its economic miracle.

“With foresight, we can remain one of the world’s best places to innovate and invest — not a playground for speculative litigation.”

Commenting on the report, Paul Sweetman, chief executive of AmCham Ireland, said: “The ECIPE study highlights the need to safeguard Ireland’s competitiveness and reputation as a stable, predictable environment for global business.”