CLASS ACTIONS – REFORM OR BUSINESS AS USUAL?
On 24 January 2019, the Australian Law Reform Commission’s (ALRC’s) comprehensive report from its inquiry into class action proceedings and third-party litigation funders was tabled in the Australian Federal Parliament. The ALRC report makes 24 recommendations to address concerns and procedural difficulties that class actions have generated in Australian law.
With the increase of class actions over the past 27 years in Australia – since the Federal system was first introduced in March 1992 – particularly in shareholder class actions, there was wide-ranging interest in the ALRC’s inquiry by key players in the class action space, including Australian companies, foreign companies operating in Australia, lawyers and litigation funders, with 107 submissions lodged by a variety of stakeholders, taking different perspectives on a range of issues. The inquiry was overseen by the honourable justice Sarah Derrington, who was seconded from the Federal Court of Australia. The ALRC report took over a year to complete, demonstrating the complexity of the issues the inquiry grappled with, the views of stakeholders affected by class actions and the depth of the inquiry.
Central to the ALRC’s inquiry was the current status of the class action regime in Australia and the increase in the role of litigation funders, which presently operate in Australia without regulation, including as to capital adequacy requirements. This issue had been the subject of ongoing debate over an extended period, and among other things, was the subject of a position paper for the Law Council of Australia in 2011. It was anticipated that the ALRC would recommend that litigation funders should be subject to a licensing system, such as being required to hold a financial services licence.
Jul-Sep 2019 issue
Clifford Chance