In Australia, litigation funding arrangements have not previously been considered to be managed investment schemes – however class action funders are now being forced to review procedures. According to Allens Arthur Robinson, the 2-1 majority decision by Australia’s Federal Court in Brookfield Multiplex Ltd v International Litigation Funding Partners Pte Ltd, which was handed down this week:
- may result in litigation funders being forced to register class actions with the Australian Securities or Investments Commission (ASIC), or obtain appropriate exemptions, in order to comply with the Corporations Act 2001 managed investment scheme provisions; and
- highlights the need for regulation, including prudential regulation, of third-party litigation funders and, more generally, litigation funding arrangements.
This decision may be appealed to the High Court and Maurice Blackburn is als reportedly exploring ways to amend the way the case is funded.
The appeal by Brookfield Multiplex Limited relates to a class action suit by shareholders seeking to recover damages over alleged failures of disclosure by Multiplex between 2004 and 2005 in relation to its Wembley Stadium project. Maurice Blackburn is running the class action on behalf of the plaintiffs, which is being funded by International Litigation Funding Partners Pte Ltd.
Allens Arthur Robinson: Briefing
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